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| With the addition of the UK, the total GDP of CPTPP member countries accounts for 15% of global GDP. (Source: popsci.com) |
UK Business and Trade Secretary Kemi Badenoch has officially signed an agreement to join the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP), making the UK the 12th member of the world's leading dynamic trade bloc.
In 2021, the UK registered to become a member of the CPTPP, shortly after leaving the EU (Brexit). Negotiations to join the CPTPP began in June 2021. After nearly two years, the UK reached an agreement in principle to join the bloc on March 31 and officially signed the accession agreement on July 16 in Auckland (New Zealand).
The UK government said it would promptly take the necessary steps to ratify the Agreement, including the Parliamentary scrutiny process, while other CPTPP member states complete their domestic legislation processes.
Message from the UK
“We are a free, open trade nation and this agreement delivers the real economic benefits of our post-Brexit freedoms,” Prime Minister Sunak stressed.
More specifically, Minister Kemi Badenoch said that the UK is using its position as an independent trading nation to join a dynamic, growing and forward-looking trading bloc. Joining the CPTPP will be a huge boost for UK businesses and add billions of pounds to trade, while opening up huge opportunities and unprecedented access to a market of more than 500 million people.
However, there are still mixed views among British officials and analysts. Some people assert that this is the most important trade agreement that London has signed in the post-Brexit period, with the potential to increase the importance of this country in the context of the continuing rise of Asia-Pacific economies.
Some others believe that CPTPP is just an additional agreement next to the free trade agreements that the UK has with most member countries, so the breakthrough is not much. However, joining CPTPP has sent a strong message about the UK's efforts to open the door to new markets around the world. The UK government assesses that CPTPP will create long-term benefits for both the UK and member countries, with the total trade value of CPTPP expected to increase to 12,000 billion USD.
For the UK, the CPTPP offers the prospect of boosting economic growth, innovation and job creation. UK businesses will also have greater choice of future trade and investment opportunities. Businesses operating in the legal, financial and services sectors will have the opportunity to expand their business in the fast-growing markets of member countries.
As HSBC CEO Ian Stuart said, “The UK’s formal accession to the CPTPP marks a significant milestone for UK trade, enabling ambitious UK businesses to connect with the world’s most exciting start-up, innovation and technology markets.”
In fact, more than 99% of UK exports to CPTPP countries will enjoy 0% tax. This agreement will help them reduce import taxes on cars, wine and dairy products... The UK Institute for Export and International Trade pointed out that thanks to the agreement, some products from CPTPP member countries become cheaper for British consumers, such as fruits from New Zealand, Chile...
In contrast, CPTPP membership would give the UK access to the Indo-Pacific region, which accounts for 60% of the world’s population. Tariff elimination would make Britain’s best products, such as whisky, confectionery, cars, jewellery and clothing, more accessible to consumers in this vast market.
The UK government estimates that its GDP will increase by £1.8 billion ($2.2 billion) per year in the long term, and this figure could increase as the CPTPP continues to expand.
In addition, if we ignore the forecasts of economic benefits or controversial issues such as reducing palm oil tariffs from Malaysia, or allowing Canadian beef to access the UK market... CPTPP is highly appreciated by the British government in terms of strategy. This is also an opportunity for the UK to increase its economic presence in the Asia-Pacific rim, continuing its security presence through the AUKUS agreement signed with the US and Australia.
The decision to become part of the CPTPP is expected to strengthen the UK’s economic presence in the Indo-Pacific – a region seen as central to London’s “global Britain” strategy, and which is witnessing the rise of China – a country that has applied to join the agreement.
British Prime Minister Rishi Sunak once emphasized that by 2050, the Indo-Pacific region is expected to contribute more than half of global economic growth. The UK wants to deepen relations with this important region on the world geopolitical map. In addition to practical economic benefits, joining CPTPP is considered a political victory for London.
A new wind for global trade
The CPTPP is a free trade agreement that eliminates tariffs among member countries and sets rules on issues such as cross-border investment, e-commerce, intellectual property, state-owned enterprises and labor.
The UK becoming the first non-founding member to join the CPTPP since the agreement was signed in 2018 creates a “new wind” for global free trade.
As New Zealand Prime Minister Chris Hipkins noted, bringing the UK into the CPTPP was a long and sometimes challenging road, but adding major economies to the CPTPP would help connect the Atlantic and Indo-Pacific in a way that strengthens the region’s rules-based trading system.
The world's sixth largest economy is believed to not only help expand economic space, but also increase economic cohesion of the entire bloc. In fact, since London announced its intention to join the CPTPP, many other countries have expressed their desire and applied to join, thereby continuing to promote the trend of multilateralization and global trade liberalization. This also means that the ability to access potential markets and the benefits of members will continue to increase significantly in the coming time.
The International Monetary Fund (IMF) estimates that with the addition of the UK, the total GDP of CPTPP member countries will account for 15% of global GDP, up from the current 12%.
In fact, although London has bilateral trade agreements with many CPTPP member countries, the UK's membership in CPTPP is not only a symbolic move, it has great strategic and economic significance, contributing to strengthening the value chain and supply chain in the bloc; at the same time promoting the process of trade liberalization in the region.
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