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The UK has become the first European country to join the Indo-Pacific free-trade corridor.
The trade bloc – known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – comprises 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Accession to the bloc, which will be formally ratified by Parliament later this year, will facilitate tariff-free access for 99% of British-made goods to economies that are growing faster than European ones and grow trade in an area that already matches the combined GDP of the EU.
It is the government’s largest trade deal since Brexit, and is the culmination of 21 months’ of negotiations.
Commenting on the deal, a government representative said the CPTPP will “help exporters diversify their supply chains and create new export opportunities.”
They added that the deal will boost the UK economy as well as cut tariffs on exports for UK industries including food, drink and cars.
Atul Bhakta, CEO of logistics firm, One World Express, said he welcomed the announcement, but added firms still need to be “realistic” about the significance of the announcement.
He said: “We have to be realistic about how significant this particular deal will be. The government itself predicts a boost to the economy by £1.8bn. In other words, increase its size by less than 0.1%.
“That said, by opening up a market of 500m people, with many goods free from tariffs, this trade deal should not be derided. The UK is the first European nation to join the CPTPP. It will undoubtedly open up new opportunities for British businesses to export globally, and anything that reduces red tape and helps the export market should be celebrated.”
He added: “It might not be a landmark deal for the UK, but it is one that should be welcomed all the same. It is an important step in the creation of the UK as a post-Brexit trading powerhouse.”
Confederation of British Industry interim director-general Matthew Fell said the CPTTP “reinforces the UK’s commitment to building partnerships in an increasingly fragmented world.”
HSBC chief executive of global commercial banking Barry O’Byrne added: “With the UK joining CPTPP, it will provide meaningful new trade and investment opportunities between East and West, and across some of the world’s fastest growing markets. This is good news for businesses, suppliers and consumers both in the UK, and across a group of countries representing 15% of the global economy.”
The news comes as research by the Federation of Small Businesses (FSB) finds small firms are being “held back” from international trade by mounting supply chain issues.
Its Customs Clearance report revealed that one in 10 small firms (9%) who used to trade internationally have now stopped doing so since 2018. The top-ranked reason why was the volume of paperwork (56%), followed by overall costs (49%) and supply chain or logistical issues (29%).
Small firms that have continued to trade internationally said they still have to battle against stiff headwinds, with six in 10 (61%) identifying high shipping costs as the top challenge, followed by losses and delays in transit (56%) and a lack of guidance on customs procedures (45%).
FSB policy chair, Tina McKenzie, said: “Small businesses are eager to grow their businesses overseas. But our findings show there are undeniable tariff and non-tariff barriers that prevent these firms from reaching their full potential and deter potential high-growth exporters.”
She added: “Our members consistently tell us the costs, time and administrative burden of trade are the reasons why they give up overseas markets. Complex customs procedures and high costs also put foreign consumers out of reach and create an uneven playing field for small firms.”
However, she noted that “with the right structures in place” and enough support navigating customs procedures, “small businesses will thrive and flourish in the global market.”
She said: “The UK’s new status as an independent trading nation gives policymakers a unique opportunity to build an effective and streamlined trade infrastructure from the ground up, with the need to place small business’ interests at its heart.”
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