The UK’s New Trade Frontier: Joining the CPTPP Post-Brexit

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The United Kingdom’s decision to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) marks a significant milestone in its post-Brexit trade strategy. By deepening ties with the Asia-Pacific region and diversifying its trading partners, the UK aims to expand its global trade links and boost its economy. This article explores the opportunities, challenges, and potential long-term impacts of the UK’s entry into the CPTPP, as well as its implications for the global economy.

CPTPP: A New Chapter in the UK’s Post-Brexit Trade

The CPTPP is a trade agreement among 11 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam[1]. In the 12 months leading up to September 2022, UK exports to these countries were worth £60.5 billion ($75 billion). The CPTPP aims to cut tariffs on food, drink, and cars, and is projected to boost the UK economy by £1.8 billion ($2.25 billion) each year in the long term[1].

Opportunities and Challenges of the UK’s CPTPP Membership

Joining the CPTPP presents the UK with various opportunities, such as:

  1. Diversification of trade relationships: Access to new markets and trading partners reduces the UK’s reliance on the EU and increases its global reach.
  2. Economic growth: Reduced tariffs and increased market access could lead to greater investment and growth in the UK’s export sector, potentially contributing to job creation and increased GDP.
  3. Attraction of foreign investment: The UK’s membership in the CPTPP may make it a more attractive destination for foreign investment, as companies look to capitalize on new trade opportunities.
  4. Increased collaboration and innovation: The CPTPP could foster increased cooperation between the UK and its new trading partners in areas such as research and development, technology, and innovation.

However, the UK also faces challenges, including:

  1. Maintaining high standards: As the UK aligns its trade policies with CPTPP members, it may face pressure to lower standards in areas such as food safety and environmental protection.
  2. Environmental concerns: The UK’s decision to liberalize tariffs on Malaysian palm oil has been criticized due to the product’s association with deforestation, highlighting the challenge of balancing trade and environmental concerns.
  3. Impact on domestic industries: Some domestic industries may face increased competition from CPTPP countries, potentially leading to job losses or industry decline in certain sectors.
  4. Post-Brexit trading relationship with the EU: The UK’s entry into the CPTPP may not fully offset the impact of leaving the EU, with the Office for Budget Responsibility estimating a 4% reduction in long-run productivity relative to remaining in the EU[1].

Addressing Environmental and Regulatory Concerns in UK Trade

To ensure that the UK’s entry into the CPTPP delivers the desired benefits, it is essential to address the challenges and concerns raised by critics:

  1. Maintaining high standards: The UK government must work to maintain high standards in food safety, environmental protection, and other areas, even as it seeks to align with the standards of its new trading partners in the CPTPP.
  2. Balancing trade and environmental concerns: The UK should carefully consider the environmental impact of its trade decisions, such as the liberalization of tariffs on palm oil, and implement policies that promote both trade and sustainability.
  3. Supporting domestic industries: The UK must identify and support domestic industries that may face increased competition from CPTPP countries, providing resources and assistance to help them adapt and thrive in the new trade landscape.

The Impact of CPTPP Membership on the UK-EU Trading Relationship

Despite the UK’s entry into the CPTPP, maintaining strong trade relationships with the EU remains vital for the country’s economic well-being. The UK should continue to work on improving its post-Brexit trading relationship with the EU to minimize potential productivity losses. This includes addressing non-tariff barriers, streamlining customs procedures, and engaging in ongoing dialogue to facilitate trade and cooperation.

The Global Implications of the UK’s Entry into the CPTPP

The UK’s membership in the CPTPP not only affects its own economy but also has implications for the global trade landscape:

  1. Strengthening of the CPTPP: The UK’s entry into the pact strengthens the CPTPP’s overall position in global trade, bringing in additional resources, expertise, and influence.
  2. Creation of new trade opportunities: The UK’s participation in the CPTPP may encourage other countries to explore joining the agreement, leading to further expansion and the creation of new trade opportunities for member countries.
  3. Influence on other trade agreements: The UK’s involvement in the CPTPP could potentially serve as a model for other countries seeking to diversify their trade relationships and adapt to the changing global economy.

Conclusion

The UK’s decision to join the CPTPP presents both opportunities and challenges for the country’s post-Brexit trade strategy. By addressing concerns about standards, environmental impact, and the potential decline in goods exports, the UK can maximize the benefits of its membership in the CPTPP while minimizing potential drawbacks. In the long run, the UK’s ability to maintain strong trade relationships with both its new partners in the CPTPP and its existing partners in the EU will be crucial to its economic success.

References

[1] UK strikes its biggest trade deal since Brexit by joining trans-Pacific pact. (2023). Retrieved from https://www.weforum.org/agenda/

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