Anyone who has lingering doubts about the benefits of cutting the EU’s protectionist apron strings and embracing Global Britain should consider the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
More than just another acronym, the CPTPP – to which the UK has begun the accession process – is a free trade partnership with 11 signatories from Asia and the Americas (including Japan, Australia and Canada). It is home to half a billion people and amasses a total of $13.5 billion in GDP; that’s 13.4% of global GDP.
The deal eliminates or reduces 95% of import tariffs. Countries are free to have their own standards and regulations, allowing the nations to trade freely without sacrificing quality or sovereignty. Members are also free to strike separate trade deals with non-member nations without permission from the bloc, an arrangement that is far superior to the protectionism of the European Union.
There are many tangible benefits to the CPTPP for the UK. We would become more secure as a nation through diversifying our supply chains, rendering us more robust in unprecedented situations such as the pandemic. It would also likely boost foreign direct investment into the UK, as it would mean treating investment from member nations’ companies the same way as investment from domestic firms. And finally, we would see an increase in trade of nearly £3bn, according to the Government’s conservative estimate.
The UK is interested in joining for the immediate post-Brexit boost to trade, but more importantly for the potential future benefits. When Trade Secretary Liz Truss stated that, “this part of the world is where Britain’s greatest opportunities lie. We left the EU with the promise of deepening links with old allies and fast-growing consumer markets beyond Europe,” she was correct. Asia will be home to two-thirds of the world’s middle class by 2030 and the CPTPP would give the UK a much needed foothold in the continent. On top of this, the UK’s exports to CPTPP countries are set to increase 65% by 2030; that’s £37 billion! Increased access to these countries’ financial and digital services market will allow the UK to advance two of its most important industries.
The benefits will also increase as other nations join. The partnership is alluring to developing countries in the region which have confidence in their industries’ ability to compete on a level playing field. Interestingly though, China is unlikely to consider membership as the CPTPP has rules against nations favouring state-owned corporations – but, as the bloc grows things may change.
Other members of the CPTPP are keen for the UK to join, with Japan – the largest economy in the bloc – expressing particular interest in building on the Japan-UK Comprehensive Economic Partnership Agreement.
So, as talks on the CPTPP get going, we must remember that while the immediate economic benefit may be smaller than some would have hoped, the potential profits will be far greater than many could imagine. As Truss says, “It is a glittering post-Brexit prize that I want us to seize.”
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