UK to join Asia-Pacific free trade pact CPTPP
London: The UK government has announced that it is applying to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), one of the world’s largest free-trade areas made up of 11 developed and emerging economies in the Pacific, under its post-Brexit plans.
Joining the CPTPP reflects the UK’s post-Brexit Pacific tilt and is dubbed as a critical part of the Prime Minister Boris Johnson led government’s wider trade strategy, which aims to deepen links with faster-growing parts of the world and partnering with countries who believe in free and fair trade, including India.
The decision to join the CPTPP, comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, marks one year since the UK left the European Union (EU) on January 31 last year and entered a Brexit transition period which concluded at the start of this year.
“One year after our departure for the EU we are forging new partnerships that will bring enormous economic benefits for the people of Britain,” said UK Prime Minister Johnson.
“Applying to be the first new country to join the CPTPP demonstrates our ambition to do business on the best terms with our friends and partners all over the world and be an enthusiastic champion of global free trade,” he said.
UK International Trade Secretary Liz Truss will speak to Japanese Minister for CPTPP Yasutoshi Nishimura, who is the Chair of the 2021 CPTPP commission, and Damien O’Connor, Minister for Trade and Economic Growth in New Zealand, which stores official documentation for all CPTPP members, on Monday morning to make the official request to join, with formal negotiations for its first major post-Brexit multilateral trading move set to start this year.
“Joining CPTPP will create enormous opportunities for UK businesses that simply weren’t there as part of the EU and deepen our ties with some of the fastest-growing markets in the world,” said Truss.
“It will mean lower tariffs for car manufacturers and whisky producers, and better access for our brilliant services providers, delivering quality jobs and greater prosperity for people here at home. We’re at the front of the queue and look forward to starting formal negotiations in the coming months,” she said.
The government says the CPTPP would deepen the UK’s access to fast-growing markets and major economies, including Mexico, Malaysia and Vietnam, for the benefit of British business.
The Department for International Trade (DIT) hopes joining the 9 trillion-pound partnership will cut tariffs for UK industries, including food and drink and cars, while also creating new opportunities for modern industries like tech and services, ultimately supporting and creating high-value jobs across the UK.
Unlike EU membership, joining does not require the UK to cede control over our laws, borders, or money, it highlights.
“This ambition marks a new chapter for our independent trade policy. As one of the largest free trade agreements in the world, these 11 countries contribute over 100 billion pounds to our economy,” said Lord Karan Bilimoria, the President of the Confederation of British Industry (CBI).
“Membership of the bloc has the potential to deliver new opportunities for UK business across different sectors. The CBI will continue to work with the government to ensure that firms get the most out of an agreement that will create jobs and deliver wide-ranging benefits to communities across the country,” he said.
According to official statistics, UK trade with the group was worth 111 billion pounds last year, growing by 8 per cent a year since 2016.
The benefits of CPTPP membership highlighted by the DIT include: modern digital trade rules that allow data to flow freely between members, remove unnecessary barriers for businesses, and protect commercial source code and encryption.
Also, eliminating tariffs quicker on UK exports including whisky (down from 165 per cent to 0 per cent in Malaysia) and cars (reducing to 0 per cent in Canada by 2022, two years earlier than through the UK-Canada trade deal);“Rules of Origin” that allow content from any country within CPTPP to count as “originating”, for example which would mean that cars made in the UK could use more Japanese-originating car parts, such as batteries; and also easier travel for businesspeople between CPTPP countries, such as the potential for faster and cheaper visas.
“The UK has been a major beneficiary of the rise of digital trade with over 67 per cent of service exports worth 190.3 billion pounds being digitally delivered. CPTPP will open up new markets for innovative tech SMEs [small and medium enterprises] looking to grow and expand beyond our borders,” said Julian David, CEO of techUK.
“Crucially, at the very heart of this agreement is an SME chapter, something that we have lobbied for the inclusion of in every FTA [free trade agreement], ensuring that no business is left behind.This is truly a world-leading agreement and one that will genuinely help small firms to thrive and succeed more than ever,” added Mike Cherry, Chair of the Federation of Small Businesses (FSB).
The UK says its membership will complement the bilateral FTAs it has already concluded or is negotiating with nine of the CPTPP members, including Japan and Canada.