- The United Kingdom has formally signed the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a significant Indo-Pacific trade agreement.
- Joining the group is seen as the UK’s most significant trade agreement since leaving the European Union.
What exactly is the CPTPP?
- The CPTPP, signed in 2018, lowers trade obstacles between 11 nations, including Australia, Canada, Japan, Mexico, and Vietnam.
Objectives of CPRPP include-
- Tariff Reduction and Market Opening: The pact mandates countries to remove or significantly cut tariffs, as well as commit to opening up services and investment markets.
- Addressing Competition and Intellectual Property: The CPTPP includes competition laws, intellectual property rights, and foreign company protections.
- While the CPTPP aspires to undermine China’s regional dominance, China, as well as Taiwan, Ukraine, Costa Rica, Uruguay, and Ecuador, have applied to participate.
The Importance of CPTPP for the United Kingdom
- Tariff Reduction and Trade Expansion: The UK government forecasts lower tariffs on UK exports to Asia Pacific countries. Joining the CPTPP increases trade opportunities because the group accounts for 15% of global commerce and has a combined GDP of £12 trillion.
- Post-Brexit commercial policy: Following its leave from the EU, the United Kingdom intends to strengthen commercial connections with the Pacific area under its “Global Britain” policy.
- Seeking Faster-Growing Economies: Given the difficulties in reaching agreements with big powers such as China and the United States, the United Kingdom seeks to develop trade agreements with nations and blocs that have faster-growing economies than the EU.
Criticisms and challenges
- Economic Impact of Brexit: Critics argue that trade agreements such as the CPTPP will fail to compensate for the economic harm caused by the UK’s exit from the EU, which remains the UK’s largest trading bloc.
- Long-Term Productivity Forecast: According to the Office for Budget Responsibility, Brexit is expected to diminish the UK’s long-term productivity by 4%.
- Existing Trade Agreements and Economic Benefits: The UK already has trade agreements with the majority of CPTPP countries, and the expected economic benefit from entering the pact is rather low at 0.08% per year.
Recent Happenings
- Process of Information Gathering: As part of the decision-making process for potential membership, CPTPP members are analysing aspiring economies’ ability to meet the bloc’s high standards.
- Collective choice-Making: Existing CPTPP participants will make the choice on new members and the schedule for their inclusion collaboratively.
Source: https://www.gov.uk/government/news/uk-signs-treaty-to-join-vast-indo-pacific-trade-group-as-new-data-shows-major-economic-benefits#:~:text=500%20million%20people-,Business%20and%20Trade%20Secretary%20Kemi%20Badenoch%20has%20formally%20signed%20the,the%20Pacific%2C%20and%20now%20Europe.