UK signs off membership to major Indo-Pacific trade bloc
Kemi Badenoch has signed off UK membership to a major Indo-Pacific trade bloc, bringing British businesses a step closer to being able to sell to a market of 500 million people with fewer barriers.
The Business and Trade Secretary signed the accession protocol to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand on Sunday.
Britain is the first new member and first European nation to join the bloc – comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – since its formation in 2018.
It represents Britain’s biggest trade deal since leaving the EU, cutting tariffs for UK exporters to a group of nations which – with UK accession – will have a combined gross domestic product (GDP) of £12 trillion, accounting for 15% of global GDP, according to officials.
The signing is the formal confirmation of the agreement for the UK’s membership, which was reached in March after two years of negotiations.
Britain and the other 11 CPTPP members now begin work to ratify the deal, which in the UK will involve parliamentary scrutiny and legislation to bring it into force.
Officials estimate it will come into force in the second half of 2024, at which point the UK becomes a voting member of the bloc and businesses can benefit from it.
Before putting pen to paper in Auckland alongside ministers from CPTPP nations, Ms Badenoch said: “I’m delighted to be here in New Zealand to sign a deal that will be a big boost for British businesses and deliver billions of pounds in additional trade, as well as open up huge opportunities and unparalleled access to a market of over 500 million people.
“We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country.”
While most of the details were agreed earlier this year, the terms and conditions of the UK’s membership will be published on Sunday.
That includes the commitments the UK is making to other nations on market access.
To coincide with the signing, the Government released figures showing that CPTPP-headquartered businesses employed one in every 100 UK workers in 2019, amounting to more than 400,000 jobs across the country.
Membership of the trade group is expected to bolster that investment relationship.
While Britain already has trade agreements with the CPTPP members apart from Malaysia and Brunei, officials said it will deepen existing arrangements, with 99% of current UK goods exports to the bloc eligible for zero tariffs.
Dairy producers will gain export opportunities to Canada, Chile, Japan and Mexico, while beef, pork and poultry producers will get better access to Mexico’s market, according to officials.
But critics say the impact will be limited, with official estimates suggesting it will add just £1.8 billion a year to the economy after 10 years, representing less than 1% of UK GDP.
The deal represents a continuation of the post-Brexit policy “tilt” towards the Indo-Pacific, which is expected to be home to around half the world’s middle-class consumers by 2035.
With the Conservatives trailing Labour in the polls ahead of an expected general election next year, it is unclear whether the next government will focus as much on the Indo-Pacific as it does on mending Brexit-battered ties with the European Union.
Shadow foreign secretary David Lammy last month said the Tories were being “dishonest” by claiming CPTPP membership would make up for lost trade in Europe.
Officials herald the CPTPP as an alternative to the beleaguered World Trade Organisation in an increasingly fragmented international trading system.
HSBC chief executive Ian Stuart said: “The UK’s formal accession to CPTPP marks a significant milestone for UK trade, enabling ambitious British businesses to connect with the world’s most exciting growth markets for start-ups, innovation and technology.”
Some of the everyday items from CPTPP nations that will become cheaper for UK consumers thanks to the deal include Australian Ugg boots, kiwis from New Zealand, blueberries from Chile and Canadian maple syrup, according to the Institute of Export and International Trade.
Its director general Marco Forgione said: “From whiskey to confectionary to cars to jewellery and clothing, the removal of tariffs will make our finest British products more readily available to consumers in the Indo-Pacific bloc.
“This agreement has the additional benefit of strengthening the value chains and supply chains within the bloc.
“Since the UK announced its intention to join CPTPP, many other countries are now looking to join. Which means the potential market access and benefits will continue to significantly increase in the coming years.”
After the UK’s accession, attention may shift to other potential new members, with applications by China and Taiwan likely to cause tensions.
Conservation campaigners and trade unions said the deal would enable trade in environments that damage the environment and poses risks for workers.
Angela Francis, director of policy solutions at conservation group WWF-UK, said the Government was “knowingly enabling trade in products that are wreaking havoc on our natural world.”
Paul Nowak, general secretary of the TUC, said the agreement could lead to profits for multinational corporations being prioritised over policies like an increase in the minimum wage and bringing energy into public ownership.
“This Pacific trade pact is bad for workers at home and abroad. Once again, Conservative ministers have turned a blind eye to egregious human and workers’ rights abuses in their pursuit of trade deals,” he said.
But the move was welcomed by the British Chambers of Commerce, which said accession would be “good news for UK businesses”.
William Bain, head of trade policy at the BCC, said: “The forthcoming addition of the UK to this trading bloc takes it to 12 countries which accounts for 15% of global economic output.
“It will open up new opportunities for our businesses in both inward and external investment with the other 11 countries from the second half of next year.”