- The government said on Friday it would join the 11-member comprehensive and progressive agreement for the Trans-Pacific Partnership, opening access to a region with a gross domestic product of 11 trillion pounds ($13.6 trillion).
- The UK said this was the country’s largest post-Brexit trade deal and makes it the first European country to join the CPTPP.
- Prime Minister Rishi Sunak said the agreement places the UK at the center of a dynamic and growing group of Pacific economies.
The Union Jack flag flies near the Elizabeth Tower, commonly referred to as Big Ben, in the Houses of Parliament in central London, UK, on March 29, 2017.
Justin Tallis | AFP | Getty Images
Britain has sealed a historic trade agreement to join a large-scale Indo-Pacific trade bloc after nearly two years of intense negotiations.
On Friday, the government said it would join in 11 p.member is a comprehensive and progressive agreement for the Trans-Pacific Partnershipopening access to a region with a GDP of 11 trillion pounds ($ 13.6 trillion).
The UK said this was the country’s largest post-Brexit trade deal and makes it the first European country to join the CPTPP, since it came into effect in 2018.
Prime Minister Rishi Sunak hailed the deal and said it puts the UK at the center of a dynamic and growing group of Pacific economies.
“We are at heart an open, free-trade nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms,” he said in a statement. “British companies will now enjoy unparalleled access to markets from Europe to the South Pacific.”
The trade bloc spans Canada, Mexico, Japan, Australia, Vietnam, Singapore and Malaysia, among others. The agreement is expected to be formally signed by the end of the year, after final approval by Parliament and the 11 member states.
The trade agreement evolved from the now-defunct Trans-Pacific Partnership, or TPP, which originated in the US but collapsed after former President Donald Trump overturned US intervention.
Britain said the agreement would reduce tariffs on exports of food, drink and cars, and provide access to a market of about 500 million people that would be worth 15% of global GDP once the UK joined the trade bloc.
The UK estimates that joining the CPTPP will boost its economy by £1.8 billion in the long term and raise wages by £800 million compared to 2019 levels.
Trade Minister Kemi Badnoch said the deal sent a “strong signal” that Britain was using its “post-Brexit freedoms to access new markets around the world and grow our economy”.
Natalie Black, UK Trade Commissioner for Asia and the Pacific, called it a “progressive bargain” for Britain.
“This deal, yes, is about economic performance today. But it’s very, very much about economic performance in the future,” she said in an interview on CNBC’s Squawk Box Asia on Friday.
“This is the part of the world that is going to drive economic growth, and also move the rules of the way for trade forward. We want to be part of those discussions.”
However, it remains to be seen how much the deal will actually benefit Britain’s growth prospects. Based on the government’s own estimates, the deal will lift domestically in the long term GDP by only 0.08%, Which will have little effect to offset European trade losses as a result of Brexit.
These trade numbers are very difficult to calculate, especially based on current trade flows, said Deborah Elms, executive director of the Asian Trade Centre.
“If you are a UK company, you probably have limited current trade flows to many of the CPTPP countries like Australia, New Zealand, Japan and Singapore,” she told CNBC’s “Capital Connection.” “Simply because the distance is far and because you have been so deeply involved with the European Union.”
She added that trade flows are always “under what you’re likely to actually see in reality as companies realize the benefits and start using a trade agreement like CPTPP.”
However, negotiations to end the trade deal were not always easy. Impasse between Britain and Canada Access to agricultural markets had to be facilitated to remove the final hurdle in concluding the agreement.
“It was a complicated deal to negotiate,” Black admitted. “We’ve been negotiating across multiple time zones across a range of complex issues. And it’s not always straightforward. But, in the end, all parties agreed that the UK is a great new member of the CPTPP.”
China also applied to join A trading bloc but it has not made as much progress as the UK
Black said there are many “aspirational economies” that have either “announced they want to formally join or we know they are interested in joining”.
While the trade commissioner said it “would not be appropriate” to comment on individual economies, she noted that the barriers to joining the trade bloc are very high.
“It’s really up to those who came behind us to make sure they meet members’ expectations of having quality apps.”