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What is the CPTPP and why is the UK trying to join it?
On the 1st February the UK will apply to join the CPTPP, but what is it?
CPTPP stands for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and is a trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. All these nations have been members since the CPTPP’s founding in 2018, meaning the UK would be the first non-founding member. If the application is successful the Uk would be its second biggest economy, just behind Japan.
What are the benefits for the UK?
At the moment it seems that joining the CPTPP is partially symbolic. International Trade Secretary Liz Truss said that membership would be a “powerful signal”. It appears that this move could be to provide the UK economic stability to counter harsh trade deals with the EU. There is also a pledge to eliminate or reduce 95% of import charger or tariffs.
Is the US planning to join?
Joe Biden seems to have hinted at the possibility of America joining the CPTPP. This would be beneficial to the UK as the US buys double the amount of UK exports than all current CPTPP nations combined. Originally the US was supposed to have joined as a founding member, however former President Donald Trump decided against this.
How would it affect us locally?
While it could be highly important in the future, especially with the possibility of the US joining, it’s unlikely that there will be any sudden change for local businesses and households as the CPTPP nations account for less than 10% of UK exports. The group set to benefit most currently seems to be manufacturers who source components from multiple countries due to the fact that as long as 70% of the components come from CPTPP countries the product passes the rules of origin, giving them preferential treatment.