The United Kingdom has officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact encompassing countries across the Asia-Pacific region. The agreement includes 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, with the UK becoming the first non-founding member to join.
The CPTPP represents a significant trade bloc, covering 13% of global income, and bringing together economies totaling £11 trillion. As the second-largest economy within the pact, following Japan, the UK’s membership is expected to enhance access to the markets of these nations, collectively home to over 500 million people.
The immediate economic benefits for the UK are expected to be modest. The UK already had trade deals with most of the CPTPP nations prior to its membership, having carried over agreements from its time in the European Union. Following Brexit, the UK established trade deals with Australia and New Zealand, leaving Brunei and Malaysia as the remaining countries without an agreement. Together, these two nations account for less than 0.5% of the UK’s total trade.
While the short-term impact on the UK’s economy is expected to be small—projected at a 0.08% increase in GDP over the next decade—the agreement is viewed as offering future opportunities, particularly with rapidly growing markets like Vietnam. In contrast, the UK’s departure from the EU is estimated to have resulted in a 4% reduction in the country’s economic growth.
A key provision of the agreement is the reduction or elimination of 95% of tariffs between member nations. However, some sectors, such as Japan’s rice farming, are exempt from these tariff reductions to protect sensitive industries. Additionally, manufacturers with global supply chains can benefit from relaxed rules of origin, allowing goods to qualify for preferential treatment as long as 70% of their components come from CPTPP countries.
The agreement also facilitates increased investment, with investors from CPTPP nations receiving the same treatment as domestic investors in member states. In 2017, these nations accounted for approximately £1 in every £12 of foreign investment in the UK, and similar amounts flowed in the opposite direction.
Despite the potential benefits, concerns have been raised regarding the UK’s commitments under the pact. Some critics, including members of the House of Lords, have questioned how the UK will ensure the maintenance of environmental and animal welfare standards, particularly in light of increased access for Canadian farmers and reduced tariffs on Malaysian palm oil, which has been linked to deforestation.
The CPTPP is not a single market or customs union, meaning member countries retain the flexibility to set their own regulations. This contrasts with the European Union’s single-market approach, which requires harmonized standards across member states. The UK’s membership in the CPTPP does not preclude it from establishing independent trade deals with other nations, but it does rule out rejoining the EU.
While the agreement is still subject to ratification by member states, including the UK, it is expected to have a growing impact as the global trade landscape evolves. Potential future members, such as China and Taiwan, could further expand the significance of the CPTPP in the coming years, though it remains to be seen if the US will rejoin the pact, as some have advocated.
Ultimately, the UK’s accession to the CPTPP is seen as a step toward deepening trade relationships with some of the world’s fastest-growing economies, though the full impact on the UK economy will become clearer over time.
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