Stephen Booth: A post-Brexit triumph, a post-Brexit disaster? Neither … – ConservativeHome

Credit: Original article can be found here

Stephen Booth is an Associate Fellow in Political Economy at the Council on Geostrategy.

The UK’s successful accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has inevitably prompted commentators to parse this event through the polarising lens of our post-Brexit political debate. For detractors, the CPTPP is an economically insignificant dalliance with far-flung countries that pales in comparison to EU membership. At the other end of the spectrum, CPTPP is a game-changing trade deal that illustrates post-Brexit Britain’s free trading pedigree.

But overselling or criticising the short-term economic impact misses the wood for the trees. The UK’s accession – once the legal formalities are concluded – will be strategically significant, and the consequences and opportunities arising from it warrant more sober analysis and consideration.

The CPTPP’s 11 member countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam – jointly have a GDP of around £9 trillion, rising to £11 trillion when the UK joins. Nevertheless, the initial impact on growth will be small, with the Government’s estimates suggesting a 0.08 per cent boost to UK GDP. So, hardly economically transformative – but few trade deals are.

The impact is limited primarily because the UK already has trade agreements with nine of the current eleven members, and CPTPP accession therefore only offers significant new goods market access to Malaysia and Brunei, with whom the UK does not already have trade deals. In consolidating the UK’s various bilateral trade agreements in the region, the CPTPP will offer benefits to companies seeking to diversify supply chains in the region because they can operate under one set of rules rather than eleven. But the economic benefits would increase significantly were other economies, such as Thailand and South Korea, to join.

The CPTPP is also a modern free trade agreement with high standards in areas such as intellectual property, foreign investment, investor protection, e-commerce, and it contains advanced provisions to facilitate digital trade. In a world in which protectionism is on the rise, CPTPP membership will enable the UK to help influence the development of the global trade architecture in these increasingly significant disciplines.

Strategically, therefore, the long-term value of CPTPP membership to the UK is a seat at an increasingly important table, both in terms of global growth and influence. It is a key plank in extending and deepening the UK’s global network, complementing its relationships with the United States and the European Union. And we know that the global centre of geopolitical gravity is shifting to the Asia-Pacific region.

For instance, notwithstanding Japan’s ageing population, the CPTPP11’s existing population of around 500 million is expected to continue growing throughout the century, and that is before considering any future expansion to other countries. By way of comparison, the EU’s population is expected to fall below 400 million in the second half of the century as Europe’s demographic challenges take their toll. The Pacific rim is where the majority of global economic dynamism is going to come from, and the CPTPP gives the UK skin in the game.

The strategic benefits of UK membership are far from a one-way street. It has been notable how certain members of the CPTPP, Japan and Australia in particular, have welcomed the UK’s membership bid. As the first and only member from outside the Pacific region, and the second largest economy behind Japan, the UK’s membership helps turn the CPTPP from a regional into a global grouping.

Any hope of US re-engagement with the CPTPP (it was integral to the CPTPP’s forerunner the Trans-Pacific Partnership prior to President Trump) appears to be fading as Washington’s bipartisan retreat from trade liberalisation continues. However, if the US is to be persuaded to reconsider its position on multilateral trade agreements, then it is surely better for the UK to be already in the tent.

Although it is certainly a minority view, there are even some within the EU, such as former Trade Commissioner Cecilia Malmstrom, who argue Brussels should consider the merits of joining or, at the very least, increasing cooperation. While this prospect is some way off, it illustrates that deepening trade relations with both the EU and the CPTPP is not a zero-sum game.

China is the elephant in the room. Beijing has applied to join the bloc and while each existing member has a veto over Chinese membership – including the UK when it joins – this is obviously a political hot potato, particularly since China’s expression of support for Russia’s war against Ukraine.

Some existing members, such as Malaysia and Singapore, were previously either ambivalent or supportive towards Chinese membership, but UK accession will bolster the position of those opposed, such as Australia, Canada, and Japan. In addition, the UK’s rigorous accession process, in demonstrating its adherence to the CPTPP’s high standards on intellectual property and state-owned enterprises, poses another practical hurdle to a Chinese application. Whatever happens on this front, CPTPP membership will certainly put the UK in closer proximity – for good and bad – to the geopolitics of the China question, which will need to be handled delicately.

In this new era of great power competition, where trade, foreign policy and security are increasingly intertwined, the CPTPP also should not be viewed in isolation. The 2021 Integrated Review introduced the concept of the “Indo-Pacific tilt”, but the 2023 “refresh” puts this in the broader context of boosting “Atlantic-Pacific” ties. The CPTPP is therefore an important economic complement to the UK’s wider foreign and security policy initiatives aimed at achieving this. The recent AUKUS security and technology partnership with the US and Australia is the most conspicuous example. But the UK is also developing its next generation fighter jet programme with Japan and Italy, with the basic design expected in 2024.

In the post-War period the UK has been a mid-Atlantic power, and at times caught between two stools. The CPTPP gives the UK another string to its bow. In a world coalescing into economic blocs, the CPTPP will amplify the UK’s voice and give it a foot in many camps. Rather than focussing on the narrow economic implications of CPTPP, we should be considering how the UK can best leverage its growing network to the benefit of our own long-term strategic interests and those of our allies.