This week, the UK formally applied to become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Our Head of Trade Tiffany Burrows considers why the UK is pursuing membership and suggests the answer is optics, opportunity and outlook.
The UK officially requested to join the CPTPP on 1 February after International Trade Secretary Liz Truss spoke with ministers in Japan and New Zealand (the former being the current president of the CPTPP and the latter being the nation presiding over membership applications to the Partnership). In her formal letter, Truss reiterated that joining is a priority for the UK Government, calling it “one of the most important free trade areas in the world”.
What happens next?
The UK has already spent the past couple of years engaging with the 11 signatories to the Partnership – Canada, Mexico, Vietnam, Japan, Australia, Brunei, Malaysia, Chile, Singapore, New Zealand and Peru – to lay the groundwork for accession negotiations. Now the UK has submitted its official application to join, a timetable must be agreed to negotiate the UK’s accession. The UK Government will publish its outline approach, scoping analysis and response to the CPTPP joining consultation in advance of these negotiations, which could begin as early as Easter.
At first glance, the decision to join a regional agreement of which the UK is not geographically close to seems odd. This is a view taken by Labour, who have criticised the Government’s approach to CPTPP, with Shadow International Trade Secretary Emily Thornberry saying that “people will rightly ask why we have been through five years of debate in Britain over leaving a trade bloc with our closest neighbours only to rush into joining another one on the other side of the world”.
The other area of confusion towards the UK’s eagerness stems from the view that joining the CPTPP won’t particularly impact UK trade . In our recent podcast, trade and customs expert Dr Anna Jerzewska expressed her reservations about the impact of the UK joining the CPTPP. She questioned what additional benefits the UK will gain from joining, emphasising that because the UK already has bilateral agreements (which traditionally go further than regional agreements in terms of market access and removing tariffs) with many of the signatories, it’s not obvious what these benefits are. She concedes that there is scope for increasing trade but says that trade agreements work best when the trade volumes between signatories are quite high.
So why is the UK so set on joining?
Firstly, there are optics. It is no coincidence that the UK’s decision to apply came on the anniversary of the UK’s departure from the EU (31 January 2021). The Prime Minister didn’t miss the opportunity to point this out and highlighted that the UK is “forging new partnerships that will bring enormous economic benefits for the people of Britain”. He also capitalised on first-mover status, claiming that the UK’s application to be the first new country to join the CPTPP “demonstrates our ambition to do business on the best terms with our friends and partners all over the world and be an enthusiastic champion of global free trade”.
The second is opportunity. UK trade with the CPTPP totalled £111 billion in 2019, growing by eight percent since 2016, demonstrating that there is scope for growth. In particular, the UK has its eye on digital trade and services, as the CPTPP includes fairly advanced provisions, particularly compared to more dated, goods-focussed free trade agreements. The UK Government sees the CPTPP as symbolic of a modern trade network and one in which signatories share the UK’s commitment to high standards, respect for the rules-based system, and free trade.
Whilst it’s true that the UK does have bilateral agreements with many of the CPTPP members, these existing bilaterals should help secure the UK’s assession. Joining the group could also help incentivise further bilateral negotiations with countries in the CPTPP to be sewn up, as joining does not necessarily eliminate the need for these bilateral deals. In a similar vein, the UK could use CPTPP membership as a springboard for negotiations with the US.
With a new president at the helm stateside, the UK could use its historic relationship with the US to persuade them to reconsider membership of the CPTPP, something that was effectively abandoned under President Trump. President Biden previously said of the CPTPP in its original form (the Trans-Pacific Partnership) that it “wasn’t perfect but the idea is a good one” and UK negotiators will certainly be hoping that UK membership will give weight to any potential membership discussions had with the US. The UK Government will also be keen to demonstrate to the new US administration that the decision to leave the EU (of which President Biden was not a fan) is not about isolationism and looking inwards, but instead about expanding the UK’s horizons, particularly on trade.
Which leads me to the final reason, outlook. This is a strategic decision which makes the notion of Global Britain real, as not just a PR drive but as a demonstrable manifestation of the UK’s foreign and trade policy objectives. This is not only backed up by the role CPTPP membership could give the UK in its negotiations with the US. UK accession would see the UK becoming an integral part of this Asia-Pacific grouping, growing trade with markets on the doorstep of China (for more information about the UK’s approach to trade with China, see our blog here). Given that President Biden has said that “when it comes to trade, either we’re going to write the rules of the road for the world, or China is – and not in a way that advances our values”, this sentiment certainly seems to be borne out in the UK Government’s thinking.
If the UK joins the CPTPP, the grouping would comprise 16 percent of global GDP, making it one of the largest global trade blocs (the CPTPP currently makes up just over 13% of global GDP, or £10 trillion). Perhaps most significantly for the UK Government, though, it would put down a significant geopolitical marker as it works to define the role it sees for post-Brexit Britain in the world.