Credit: Original article can be found here
On 1 February 2021, the UK Government announced that it had submitted a notification of intent letter (the “Letter”) to the Minister of Trade in New Zealand, signifying its intention to commence the process of accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”).
The CPTPP is a free-trade agreement which came into force in December 2018. Its current membership consists of 11 “Pacific Rim” nations, including Australia, Canada and Japan. Together, its member states are responsible for an estimated 13% of global GDP, with a combined population of circa. 500 million people. The Letter, which comes just a month after the end of the Brexit transition period that saw the UK lose its status as a member of the single market, describes gaining access to the trading bloc as “…a key part of our [the UK Government’s] trade negotiations programme as a newly independent trading nation.”
In a policy paper published in June last year, the Government outlined several potential benefits of accession to the CPTPP. Amongst other things, these included securing trading and investment opportunities to assist with the recovery of the economy post-pandemic, and diversifying trading links and supply chains to mitigate the risks posed by “uncertainty and disruption” around the globe. For the construction industry, the deal could be especially lucrative for British companies looking to expand their influence in the Asia-Pacific region. This includes businesses with an active interest in exploring opportunities in what the Government describes as “fast-growing markets and major economies” such as Malaysia and Vietnam, and in regions where Governments have traditionally been ‘wary’ of foreign bidders.
However, despite the Government’s apparent optimism surrounding the deal, some analysts have questioned the true value that accession to the CPTPP will provide. For example, many point towards the fact that the UK already has existing agreements with over half of the CPTPP’s current members, and it is expected to conclude a further two bilateral agreements with member states (Australia and New Zealand) prior to its planned accession. Therefore, as leading government think tank the “Institute for Government” suggests, in reality, the economic benefits of membership could be relatively limited – at least in the immediate future.
Yet, despite these concerns, in the long-term, accession to the free-trade agreement could prove to be a shrewd move. Under President Obama, the US was heavily involved in discussions surrounding the predecessor to CPTPP, the TPP. But, despite the US becoming a signatory to the TPP in 2016, the deal collapsed in early 2017, when then-President Donald Trump withdrew the US from the agreement, citing, amongst other things, concerns over the potential impact that the TPP could have for American workers. However, early signs from the Biden administration point towards a second U-turn in the Oval Office’s appetite for partnership in the region. If the US were to revive its interest in joining the agreement, then it would make membership significantly more lucrative, with the potential to transform the CPTPP into one of the world’s largest trading blocs overnight. This would provide member states with genuine influence in the battle for control over international economic policy.
For now, the UK faces an anxious wait as its application is debated by the CPTPP Commission, the body responsible for determining whether to begin the accession process. In the meantime, as the government continues its efforts to ‘re-position’ and ‘re-invent’ itself as a newly independent nation, we expect that announcements regarding the pursuit of similar trade deals elsewhere in the world will be announced over the coming months.