The Times - end of March
The deal struck by Kemi Badenoch in the early hours of Friday, opening the way for Britain to join the CPTPP, a huge Indo-Pacific trade bloc, is a significant achievement for the government and welcome boost to the country’s post-Brexit fortunes. It means that Britain will become the first country from outside the region to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership since it was established in 2018 to increase trade links between its 11 members. Once Britain joins, the CPTPP will be home to 500 million people and be worth 15 per cent of global GDP, which is more than the 27 members of the European Union. Those figures are sure to rise given that other countries are queueing up to join.
True, the immediate economic benefits are likely to be limited. That’s partly because Britain’s trade with the bloc is relatively limited. Exports to CPTPP countries in 2021-22 were worth about £60 billion. That compares with exports of £161 billion to America and £330 billion to the EU. It’s also because the CPTPP is not a single market like the EU but a free trade area, whose primary focus is on lowering tariffs. Since Britain already has free trade agreements with all but two of the members, Malaysia and Brunei, there are few additional gains from new tariff deals on accession. A government analysis suggests the economic boost could be as little as 0.08 per cent of GDP.
Nonetheless, Ms Badenoch is right to insist that the way to view this deal is akin to investing in a start-up. CPTPP rules of origin, which require all goods produced in member countries to be treated as domestic for the purposes of trade within the bloc, will make it easier for British firms to participate in regional manufacturing supply chains. And while the CPTPP does little to improve market access in services, which account for 43 per cent of Britain’s exports, it does remove the requirement for British firms to open offices in member countries before they can start to trade, thereby removing cost and bureaucracy.
The real advantage of membership comes from the influence it gives Britain over how the block might develop in the future. At a time when the global rules-based trading system is fragmenting and a growing number of countries are reverting to outright protectionism, including America itself, as it did under Donald Trump and now under Joe Biden, Britain has secured a seat at the table among what are forecast to be some of the world’s fastest growing economies over the coming decades. That will give Britain a powerful platform both to push for further liberalisation of the trade among members of the bloc but also to champion efforts to reform the rules-based trading system in ways that ensure its important benefits to global prosperity are not lost.
Indeed, CPTPP membership brings broader diplomatic benefits too. Britain will have a veto over future entrants. Already some are calling for the government to rule out allowing China to join. More broadly, it will give Britain a stronger voice in the region, in line with the tilt to the Indo-Pacific announced in the Integrated Review. Of course, that is not and cannot be a substitute for a close partnership with Britain’s allies and neighbours in the EU. Instead, strong global relations reinforce each other. Following the King’s highly successful tour of Germany this week, this deal is another sign that Britain, after the turmoil of recent years, is recovering its poise.
