Britain on Friday said it had struck a deal to join an 11-country trans-Pacific trade pact which includes Japan and Australia as it looks to deepen ties in the region and build its global trade links after leaving the European Union.
Prime Minister Rishi Sunak said Britain had agreed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in a move his office said was the biggest trade deal since Brexit.
A previous government impact assessment estimated the deal would add just 0.08% to GDP in the long term, but Britain has strategic – not just economic – motives, as it can now influence whether applicants China and Taiwan may join the group.
“Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies,” Sunak said, adding the deal demonstrated “the real economic benefits of our post-Brexit freedoms.”
Britain has been looking to build trade ties following its departure from the EU in 2020, pivoting towards geographically distant but fast-growing economies.
Its Indo-Pacific tilt comes as its foreign policy framework casts China as an “epoch defining challenge”.
Other members of CPTPP are Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Britain is the first new member to join the group.
Britain has existing bilateral free trade agreements (FTAs) with most of the member countries, though CPTPP gives businesses extra options over the terms they can trade under.
Exports to CPTPP countries from Britain were worth 60.5 billion pounds ($75 billion) in the year to the end of last September, but the overall impact of the trade deal is set to be modest.
Britain said the deal, which will cut tariffs on cars, spirits and dairy products, would boost the economy by 1.8 billion pounds each year in the long-run – a figure that could rise as more countries join the pact.
Sally Jones, trade policy and strategy partner at EY, said ratification and implementation could take 12 months.
Britain has agreed new post-Brexit trade deals with Australia and New Zealand, and agreed an FTA with Japan in 2020. It is also in talks with Canada and Mexico over new FTAs, after it rolled over previous EU trade deals at the end of 2020.
FURTHER EXPANSION?
Japan’s economy minister Shigeyuki Goto said Britain’s accession was “a great significance” in further promoting free trade, open and competitive markets as well as economic integration beyond the Pacific Rim.
Japan chaired negotiations on Britain joining the pact.
Regarding other economies that have applied to join, such as China and Taiwan, Goto said Japan would need to examine whether they were “fully prepared to meet the high standards” of CPTPP.
Taiwan’s top trade negotiator John Deng told Reuters Taipei will “continue efforts to gain support from CPTPP countries” to join.
Chinese Foreign Ministry spokesperson Mao Ning reiterated Beijing’s opposition to Taiwan joining “any agreement or organisation of an official nature”, but said China entering the CPTPP would be a good thing.
“China’s accession to CPTPP is not only in line with our own efforts to deepen reform and expand openness, but also conducive to CPTPP member countries’ expansion into China’s market and economic and trade cooperation with China,” she said.
Asked whether China should be allowed to join, British finance minister Jeremy Hunt said it was a decision for all CPTPP members.
“All I would say is that Britain now has a vote in deciding that, and that shows that our influence in this part of the world is becoming more significant,” he said.
Ecuador, Costa Rica and Uruguay have also applied for membership.
Japan’s chief cabinet secretary Hirokazu Matsuno said it was “desirable” for the U.S. to rejoin the trade pact after it withdrew from a predecessor trade deal in 2017, and Tokyo would keep pressing Washington to become a member.
