Credit: Original article can be found here
A recent report, published by the AHDB, provides an insightful evidence-based appraisal on opportunities and risks of the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). An agreement for the UK to join the CPTPP was reached in March 2023.
What is the CPTPP? It is a Free Trade Agreement (FTA) between 11 countries in the Pacific Rim: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The UK will be the first new member since the bloc was established in 2018, and the first European member.
What does the trade agreement cover? The CPTPP agreement covers many aspects of trade and investment. It features ambitious market-access commitments, with dedicated chapters on:
- Technical barriers to trade
- Sanitary and phytosanitary measures
- Protection of the environment and labour rights
Lower trade barriers are a key pledge in the deal, to eliminate or reduce 95% of tariffs. The remaining 5% of tariffs are retained to protect sensitive domestic markets, such as the Canadian dairy industry and Japan’s rice farming.
It is important to note, the UK already has bilateral trade agreements with nine CPTPP members, although those with Australia and New Zealand are not yet in force. The UK does not have agreements with Brunei Darussalam, or Malaysia.
For more information about the CPTPP, follow this link. Plus, charts and infographics showing overall trade between the UK and CPTPP countries, can be found here on the AHDB website.
So how does this impact UK farming sectors?
For livestock sectors, trade modelling work completed in conjunction with Harper Adams University highlights population growth, economic development, and the expansion of middle-class consumers as the drivers for long-term opportunities for red meat and dairy products from joining the CPTPP. While initial opportunities are limited, there are potentially future benefits in the Asian and South American markets, driven by increased demand for red meat and dairy products.
Further opportunities for UK red meat and dairy may also be presented if other countries, such as China, Taiwan, Ecuador, Costa Rica, and Uruguay, join the CPTPP. Joining the CPTPP means offering preferential terms and either lowering or removing tariffs over time to other members. More can be read on this on the AHDB website.
Opportunities of strengthening demand for products from the UK livestock sectors could also lend support to the longer-term UK animal feed demand outlook too. As such, demand for cereal and oilseed usage.
Looking to cereals and oilseeds, considering nine out of the eleven members in this trading bloc already have an existing trade deal with the UK, apart from Malaysia and Brunei, it is unlikely we will see a large change in trade patterns. Palm oil has been a key focus in recent months, though as my colleague Anthony concluded in his previous article, removal of the tariff will not have much impact on imports/consumption of palm oil. More Malaysian origin palm oil may be imported if price competitive, overall total demand for palm oil is not price driven. To read more about this, follow this link.