Britain forges biggest trading deal since Brexit, set to join trans-Pacific pact

Prime Minister Rishi Sunak’s government sees membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes Australia, Japan and Canada, as a driving force behind economic growth and geopolitical relations. treat. The UK is expected to grow 1.8 billion pounds ($2.23 billion) a year over the long term, a figure that could increase if other countries join the bloc.

The UK also believes that membership will play a role in setting regional trade rules for the coming decades. That could mean the UK and other members barring China from joining the bloc in the future to ensure high trade standards. In a statement, the UK said it did not compromise on food and environmental standards to join the bloc.

Britain has concluded two years of negotiations with a formal agreement to become the 12th member of the CPTPP, the British government announced on Friday. Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are the remaining eight members.

The bloc, home to 500 million people, will be worth 15% of global GDP once the UK joins, according to the International Monetary Fund.

“Participation in the CPTPP trade bloc puts the UK at the center of a dynamic and growing group of Pacific economies, as the first new country and the first European participate,” Sunak said in a statement. This represents the “real economic benefits of our post-Brexit freedoms,” he said.

Membership will eventually ensure tariff-free trade in a wide range of import and export sectors, with greater UK access to Mexico, Canada and Japan for dairy exports, copper promoted the British automobile and liquor industries, especially through the export of spirits to Malaysia.

Tariffs will also be reduced on bananas imported from Peru, rice from Vietnam, crab sticks from Singapore and palm oil from Malaysia. The latter is potentially controversial due to its association with deforestation.

Limited profit

However, joining the CPTPP is not comparable to Britain’s previous membership of the European Union. Unlike the EU, the CPTPP has no courts or budget and operates more like a multinational trade agreement.

There is a long way to go to reverse the economic impact of the severe decline in trade with the EU, Britain’s largest partner, since leaving the EU three years ago. The head of the UK’s independent budget watchdog recently estimated that Brexit has the potential to reduce economic output by 4%.

“This is not an agreement about tomorrow, it is an agreement about the future. We joined early and we will have a say in shaping the bloc,” UK Trade Secretary Kemi Badenoch told Times Radio. British economy.”

Each country will now need to ratify the deal, British High Commissioner to Singapore Kara Owen told Bloomberg Television’s Haslinda Amin on Friday. “It’s going to take some time, but we’re really looking forward to getting over the hurdles and doing a great deal of education with our companies in the meantime,” she said.

The economic benefits to Britain were also limited. The UK’s own projections, published in 2021, suggest that joining the CPTPP will only boost its economy by 0.08%, due in part to bilateral trade deals. existing with more than half of the 11 member countries. That could increase if membership expands to other countries, like Thailand and South Korea.

Since Brexit, the UK has sought to tilt its foreign policy towards the Indo-Pacific region. Sunak struck several defense deals with Australia and Japan earlier this year, part of an effort to counter China. Membership in the CPTPP will bring the UK closer to the region, and joining will also give the UK a more direct say in regional issues.

Trade expert Sam Lowe, partner at consulting firm Flint Global, wrote on his blog: “China has applied to join and they can convince/coerce quite a few CPTPP members to agree. just say no to China. This provides cover for other members and allows them to effectively hide behind the welcome stubbornness of the UK.”

David Henig, director of the UK Trade Policy Project at the European Center for International Political Economy, has described it as a “shallow” trade deal largely focused on lower tariffs. “the same way that our existing free trade agreements with 9 out of 11 members DO.”

“There could also be future benefits from new entrants, and the CPTPP will also bring us closer to important allies to maintain open global markets like Japan,” he said. and Singapore”.