Credit: Original article can be found here
Even the most ardent Brexiteers would likely admit that the UK has been slow to embrace one of the biggest benefits of leaving the European Union: the quick and nimble pursuit of trade deals. There are understandable reasons for the delay. It made sense for trade secretaries to start with the bi-lateral deals which could be copy-pasted from the arrangements we had in the EU. The first bespoke deal with Australia took time (albeit perhaps didn’t need so many concessions) as it was intended to be a framework that could be used to strike future deals with new countries.
But the UK’s biggest trade win to date may be just around the corner. It is expected that the UK’s accession into the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will be formally announced tomorrow. We don’t know the details of what has been negotiated yet, so it’s impossible to say just now the extent to which the UK’s new membership will move the trade dial. But in its short, five-year run, CPTPP has developed a strong reputation for being one of the more liberal, flexible trade blocs. Even without knowing all the details of what the UK has secured, the basic framework of CPTPP suggests there is a lot to benefit from, especially in the sectors where Britain holds an advantage.
The Indo-Pacific trade bloc was founded in 2018 with eleven members, including Australia, New Zealand, Japan, Canada and Mexico. The countries together make up a $10 trillion market, of which the UK is expected to become the first non-founding country to gain admittance. The bloc was created with small and medium-size businesses in mind, in a bid to expand their export markets. This means its benefits include what government officials describe as ‘old school’ trade perks: the removal of tariffs and quotas, making it cheaper and easier to export goods. Whatever the UK has negotiated, British businesses can be fairly certain they’re about to get better access to markets on the other side of the world, while British customers will benefit from lower prices when they import products from just over a dozen countries.
But it is in the digital sectors, including financial services and e-commerce, where Britain may really thrive. In a paper published late last year, looking at the benefits and challenges to the UK joining CPTPP, Professor David Collins from City Law School details the more flexible nature of the CPTPP when it comes to financial services.
Not only is CPTPP compatible with UK cross-border trade as it currently exists now, it is also less restrictive, allowing for member states to adopt discretionary measures to ‘maintain the integrity and stability’ of their systems. The report estimates that the long-term benefits for the UK’s financial services sector having better access to these eleven countries will exceed £3 billion. The report also highlights how CPTPP compliments the UK’s thriving e-commerce industry: unlike the EU’s rigid and unrelenting commitment to GDPR, CPTPP takes a more liberal approach, by keeping more data-sharing decisions within the remit of individual member states.
There have been setbacks in negotiating this new partnership: right before the Budget earlier this month it was reported that the deal was delayed due to disputes over access to the UK’s agricultural market, particularly concerning meat exports. Tomorrow we’re set to discover how these disputes have been settled. This was always cited as one of the drawbacks of Britain joining CPTPP: to sign up after the framework has been created means far less room to negotiate. But even without these details, the framework established by the founding members creates a lot of opportunities across the sectors Britain cares about most.
These economic opportunities don’t exist in a vacuum. The hope is that their knock-on effect will aid Britain’s longer-term economic strategy. Ministers are resigned to the fact that, right now, it is politically impossible to secure a bi-lateral trade deal with the United States, given the uproar (however misplaced) that results over food standards and healthcare provisions. But if the US were to reconsider joining CPTPP (the country was set to do so under President Obama, then President Trump pulled out of the deal), the UK and US could liberalise their trading relationship through a third-party bloc.
But perhaps most importantly it isn’t who is brought into the trade bloc, but who is kept out. Both China and the UK applied for CPTPP membership within three months of each other back in 2021. China’s membership was heavily debated and delayed, but the bloc’s unanimous decision to admit the UK presumably gives us a veto on any new member joining – de facto power to keep China out of the bloc.
As the West becomes increasingly worried about its dependence on authoritarian regimes – and more focused on ‘decoupling’ from China’s economic power and Russia’s energy – this veto power could turn out to be the most important aspect of Britain’s soon-to-be-announced membership of CPTPP.