The UK’s accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) was confirmed at a virtual meeting between Business and Trade Secretary Kemi Badenoch and the Trade Ministers of member nations, during the early hours of 31 March 2023. This process began with the launch of a public consultation in July 2018, the outcome of which was published by the Department for International Trade on 18 July 2019. The UK Government then formally applied for accession on 1 February 2021. The CTTP Commission agreed to commence accession negotiations with the UK on 2 June, whereupon the UK published its Negotiating Objectives on 22 June 2021. Ratification of the UK’s membership followed 21 months of painstaking negotiation.
The CPTPP is a regional, multilateral, legally binding, high-level free trade agreement between eleven “Pacific Rim” nations, located in the Asia-Pacific region. The thirty chapters of the agreement cover many aspects of global trade, including tariffs on goods, cross-border services, e-commerce rules, intellectual property rights, labour and environmental standards, rules on transparency, and dispute resolution mechanisms. The signatory nations, spread across four continents, are home to over 500 million people, with a combined GDP of £9 trillion, representing over 13 per cent of global GDP, and account for 15 per cent of global trade, including £110 billion of UK trade. Upon ratification as a signatory, the UK will become the second largest economy in the CPTPP after Japan, extending the partnership’s global GDP coverage to 17 per cent (£11 trillion). Unlike the EU, the CPTPP is neither a single market nor a customs union and has no parliament or court. In place of unfettered free trade, access to domestic markets can at times be restricted, as in the case of Japan’s tariff-protected rice farming industry.
The original Trans-Pacific Partnership was signed in Auckland, New Zealand, on 14 February 2016, and formed the basis for the CPTPP negotiations, which concluded on 23 January 2018. The CPTPP was signed in Santiago, Chile, by the relevant Trade Ministers on 8 March 2018, coming into force on 30 December that year for Australia, Canada, Japan, Mexico, New Zealand, and Singapore. Following ratification, Vietnam joined on 14 January 2019, Peru on 19 September 2021, Malaysia on 29 November 2021, and Chile on 21 February 2023, while the accession of Brunei Darussalam is imminent. Other countries, including Costa Rica, Ecuador, Uruguay, and even China and Taiwan, are seeking to join, while South Korea and Thailand are apparently interested. Not everyone can see the benefits of membership. President Trump’s worries over the loss of American manufacturing jobs, an increased US trade deficit, and the threat of currency manipulation by trade partners, led him to withdraw the US, on his first full day in office in 2017, from negotiations that had been initiated by George W. Bush in 2008 and continued under Barack Obama.
The UK has become the first non-Pacific nation to join the CPTPP. The UK Government has since listed the top ten benefits of membership, which can be summarised as follows. The UK now has a “gateway” to the Indo-Pacific region, which is predicted to be the global economic powerhouse over the coming decades. In doing so, it has secured a new market for UK financial service providers, which includes business, insurance, legal, and transportation services. Freeing up cross-border data flows will enable digital trade with the UK’s new partners. Exports of UK-produced goods will be boosted by zero or reduced tariffs, and removal of non-tariff barriers, on British cars, machinery, and “naughty but nice” products such as chocolate, dairy products (cheese), and alcoholic beverages-gin, Scotch whisky, and even Conker Coffee Liqueur. UK exporters will benefit from diversified supply chains, far removed from Europe. A new trade deal with Malaysia, with which the UK does not have an existing free-trade agreement, will help quench that country’s thirst for whisky. “High-quality consumer goods” will find their way to the UK, including fruit juices, honey, and chocolate from Chile and Peru, along with vacuum cleaners from Malaysia. A major win is the new-found ability to increase trade and strengthen economic security, without compromising all-important national sovereignty. Finally, the UK will hopefully benefit from inward investment from CPTPP countries.
This seemingly good news has not been received equally favourably in all quarters. While the government, backed by the the right-wing media and think-tanks, are unstinting in their support for CPTPP membership and the Labour Party has supported the deal, the response from trade unions, the liberal media, and left-leaning think-tanks is less enthusiastic. There are many reasons for the latter’s scepticism. To begin with, the UK already has bilateral free-trade agreements with nine of the eleven CPTPP members. Existing tariff schedules may, however, be reduced under CPTPP. CPTPP membership is projected to add around 0.08 per cent to annual GDP (£1.8 billion) over the next ten years. These modest gains do not offset the Office for Budget Responsibility’s estimates of a 4 per reduction in post-Brexit long-term GDP growth. But these predictions may be inaccurate, as a report in The Spectator claims they are “based on ‘gravity’ trade deals weighted heavily towards geographic proximity.”
The lack of harmonisation of regulations and standards under CPTPP has raised concerns over the maintenance of food safety standards, workers’ rights, animal welfare, environmental protection and net zero commitments, data protection, and intellectual property rights. The investor-state dispute settlement (ISDS) provision allows multinational corporations to sue governments in secret through international arbitration panels. Then there is the often-quoted example of relaxation of tariffs on palm oil imports from Malaysia, which favours a product responsible for widespread deforestation in Southeast Asia. On the flip side, and at least for the moment, imports of hormone-treated beef from Canada stay banned.
Economic predictions often fall short of the mark. Supporters of CPTPP membership claim that the modest short-term economic benefits must be weighed up against the potential for long-term economic growth-as reflected in increased trade, creation of new jobs, and the scope for innovation- and in advancing the UK’s strategic geopolitical interests in the Pacific region. For the moment, there are convincing arguments either way. Depending on your proclivities, you can choose the right politician, view the right TV channel, listen to the talk radio station, or read the right newspaper, and you will be encouraged in your beliefs, one way or another. Ten years is a very long time in politics for accurate predictions-what happens in 2033 is anybody’s guess, educated or otherwise.
Ashis Banerjee