Home MOREBUSINESS & ECONOMY UK: Rishi Sunak announces biggest trade deal since Brexit to join major free trade bloc in Indo-Pacific

UK: Rishi Sunak announces biggest trade deal since Brexit to join major free trade bloc in Indo-Pacific

Prime Minister announces deal to join CPTPP – a huge trade bloc in the Indo-Pacific which will now have a total GDP of £11 trillion.

by gary cartwright
0 comment
  • Prime Minister Rishi Sunk announces deal to join CPTPP – a huge trade bloc in the Indo-Pacific which will now have a total GDP of £11 trillion
  • Joining the dynamic Trans-Pacific partnership will cut tariffs on exports for UK industries including food, drink and cars and offer new advantages for business
  • After 21 months of negotiations, this is the UK’s biggest trade deal since Brexit and becomes first European country to join CPTPP

The UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a vast free trade area of 11 countries spanning the Indo-Pacific, the Prime Minister has announced.

The historic agreement follows two years of intense negotiations by the Department for Business and Trade and puts the UK at the heart of a dynamic group of economies, as the first European member and first new member since CPTPP was created. We would not have been able to join as a member of the EU, demonstrating how the UK is seizing the opportunities of our new post-Brexit trade freedoms to drive jobs and growth across the country.

The bloc is home to more 500 million people and will be worth 15% of global GDP once the UK joins. It is estimated that joining will boost the UK economy by £1.8 billion in the long run, with wages also forecast to rise by £800 million compared to 2019 levels.

Being part of CPTPP will support jobs and economic growth across the country, with every nation and region expected to benefit. More than 99 percent of UK goods exports to CPTPP countries will now be eligible for zero tariffs, including key UK exports such as cheese, cars, chocolate, machinery, gin and whisky.

Total UK exports to CPTPP countries were already worth £60.5 billion in the 12 months to the end of September 2022 and are set to grow under CPTPP. Our leading services industry will also benefit from reduced red tape and greater access to growing Pacific markets with an appetite for high-quality UK products and services.

Prime Minister Rishi Sunak said:

We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms. As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.

Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join. British businesses will now enjoy unparalleled access to markets from Europe to the south Pacific.

Negotiations to join the CPTPP, which began in June 2021, concluded after an intensive round of talks in Vietnam earlier this month, with representatives from all member countries agreeing to the UK’s accession.

The agreement protects the UK’s vital industries and entities, including agriculture and the National Health Service, and upholds our high animal welfare and food safety standards. Dairy farmers will benefit from lower tariffs on exports of products like cheese and butter to Canada, Chile, Japan and Mexico, building on the £23.9 million of dairy products we exported to these countries in 2022.

Business and Trade Secretary Kemi Badenoch said:

This is an important moment for the UK. Our accession to CPTPP sends a powerful signal that the UK is open for business and using our post-Brexit freedoms to reach out to new markets around the world and grow our economy.

Joining CPTPP will support jobs and create opportunities for companies of all sizes and in all parts of the UK. It is about giving British businesses improved access to the countries that will be gateway to the wider Indo-Pacific region which is projected to make up the majority of global growth in the future.

Membership is a gateway to the wider Indo-Pacific region, which has 60% of the world’s population and is set to account for the majority (54%) of global economic growth and around half of the world’s billion middle-class consumers in the decades ahead.

CPTPP was created to grow and as a member, the UK will help shape its development and fight unfair and coercive trading practices. As more economies join the bloc, UK businesses will benefit from access to new markets.

Additional benefits of UK accession to CPTPP include:

  • Boosting services: The UK is the world’s second largest services provider and services accounted for 43% of trade with CPTPP members last year. Joining the bloc will slash red tape – UK firms will not be required to establish a local office or be resident to supply a service and will be able to operate on a par with local firms.
  • Increased flexibility: Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely across the bloc. For example, UK car manufacturers could sell car engines tariff-free to a car maker in the bloc who could then sell those cars tariff-free to any member country. This is currently not possible under all the bilateral trade agreements the UK has in place with CPTPP members and will help exporters diversify their supply chains and create new export opportunities.
  • Pro-investment: Investment between the UK and CPTPP countries is expected to increase as the agreement contains provisions to limit barriers and encourage more inward investment. Inward investment stocks to the UK from CPTPP countries were worth £182 billion in 2021.
  • Cutting-edge: Remotely delivered services from the UK to CPTPP were worth £20.5 billion in 2020. CPTPP sets modern rules for digital trade across all sectors of the economy and will support UK businesses of all sizes to seek new opportunities inCPTPP markets.
  • New markets: Joining means the UK will have a Free Trade Agreement with Malaysia for the first time, giving businesses far more access to an economy worth £271 billion in GDP in 2021.  Tariffs of around 80% will be eliminated on UK exports of whiskyand 30% on UK exports of cars, helping the UK get a larger share of the market.

The UK and CPTPP members will now take the final legal and administrative steps required for the UK to formally sign in 2023.

You may also like

Leave a Comment

2131

EU Today brings you the latest news and commentary from across the EU and beyond. 

Editors' Picks

Latest Posts