British firms are now one step closer to being able to sell to a market of 500 million people with fewer hurdles thanks to Kemi Badenoch’s approval of UK membership to a significant Indo-Pacific trade bloc.
On Sunday in New Zealand, the Business and Trade Secretary put his signature on the accession protocol to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Since the bloc’s inception in 2018, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam have all been members, however Britain is the first new member and the first European country to do so.
It is the largest trade agreement signed by the UK since it left the EU, reducing tariffs for UK exporters to a group of countries whose combined GDP, after the UK joins, will be £12 trillion, or 15% of the world’s GDP.
The deal for the UK’s membership, which was achieved in March following two years of negotiations, will be formally confirmed by the signing.
It is now time for Britain and the other 11 CPTPP members to start the process of ratifying the agreement, which in the UK will entail parliamentary review and legislation to put it into effect.
It is expected to enter into force in the second half of 2024, at which point the UK joins the Union as a voting member and firms can take advantage of it.
Before putting pen to paper in Auckland alongside ministers from CPTPP nations, Ms Badenoch said: “I’m delighted to be here in New Zealand to sign a deal that will be a big boost for British businesses and deliver billions of pounds in additional trade, as well as open up huge opportunities and unparalleled access to a market of over 500 million people.
“We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country.”
The terms and conditions of the UK’s membership will be released on Sunday, albeit the majority of the specifics were already decided earlier this year.
This includes the market access commitments the UK has made to foreign countries.
The government revealed data to coincide with the signing that revealed one in every 100 UK workers were employed by CPTPP-headquartered companies in 2019, totalling more than 400,000 jobs nationwide.
It is anticipated that joining the trade association will strengthen that business partnership.
With the exception of Malaysia and Brunei, Britain already has trade agreements with the CPTPP countries, but officials claimed it will strengthen current deals and make 99% of UK goods exports to the bloc eligible for zero tariffs.
According to officials, producers of beef, pork, and poultry will have better access to the Mexican market, while dairy producers would have more options to export their products to Canada, Chile, Japan, and Mexico.
However, detractors claim the impact will be minimal because, according to government estimates, it will only boost the economy by £1.8 billion annually after 10 years, or less than 1% of UK GDP.
By 2035, it is anticipated that the Indo-Pacific region would be home to around half of the world’s middle-class consumers, continuing the post-Brexit policy “tilt” in that direction.
It is uncertain if the future government would place as much of an emphasis on the Indo-Pacific as it does on mending Brexit-damaged relations with the European Union given that the Conservatives are trailing Labour in the polls ahead of the anticipated general election next year.
Last month, David Lammy, the shadow foreign secretary, criticised the Tories for being “dishonest” in their claim that joining the CPTPP would make up for lost trade in Europe.
The CPTPP is hailed by officials as a viable alternative to the struggling World Trade Organisation in the increasingly disjointed global trading system.
HSBC chief executive Ian Stuart said: “The UK’s formal accession to CPTPP marks a significant milestone for UK trade, enabling ambitious British businesses to connect with the world’s most exciting growth markets for start-ups, innovation and technology.”
According to the Institute of Export and International Trade, some common goods from CPTPP countries that will become less expensive for UK customers as a result of the agreement include Canadian maple syrup, Australian Ugg boots, Kiwis from New Zealand, Blueberries from Chile, and Australian Ugg boots.
Its director general Marco Forgione said: “From whiskey to confectionary to cars to jewellery and clothing, the removal of tariffs will make our finest British products more readily available to consumers in the Indo-Pacific bloc.
“This agreement has the additional benefit of strengthening the value chains and supply chains within the bloc.
“Since the UK announced its intention to join CPTPP, many other countries are now looking to join. Which means the potential market access and benefits will continue to significantly increase in the coming years.”
Following the UK’s admission, focus may turn to other prospective new members, with China and Taiwan’s applications likely to spark conflict.
Trade in situations that harm the environment and put employees at risk, according to environmental activists and labour unions, would be made possible under the agreement.
According to conservation organisation WWF-UK’s director of policy solutions, Angela Francis, the government is “knowingly enabling trade in products that are wreaking havoc on our natural world.”
The TUC’s general secretary, Paul Nowak, warned that the agreement might put profits for international firms ahead of measures like raising the minimum wage and putting energy under public control.
“This Pacific trade pact is bad for workers at home and abroad. Once again, Conservative ministers have turned a blind eye to egregious human and workers’ rights abuses in their pursuit of trade deals,” he said.
The British Chambers of Commerce, however, applauded the decision and stated that membership would be “good news for UK businesses.”
The BCC’s head of trade policy, William Bain, stated: “With the impending admission of the UK, this trading bloc will consist of 12 nations, representing 15% of the world’s economic output.
“It will open up new opportunities for our businesses in both inward and external investment with the other 11 countries from the second half of next year.”