The UK is set to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – known as CPTPP – in what the government says is its biggest trade deal since Brexit.
The CPTPP is a free trade agreement between 11 countries across the Indo-Pacific – namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The partnership sees the countries open up their markets to one another, reducing trade barriers and tariffs, with the hope of bolstering the economies of its members.
When it joins, the UK will become the first European country to enter the agreement, and the government claims it will lead to a £1.8bn boost to the economy “in the long run”.
The deal has been praised by a number of business groups, including the CBI, Standard Chartered and Pernod Ricard.
But other trade experts have warned it will not make up for the economic hit caused by leaving the trade bloc of the European Union.
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The UK began negotiations to join the bloc in September 2021 when Boris Johnson was in Downing Street.
The signatory countries of the CPTPP are home to 500 million people and the government claims after the UK joins, it will be worth 15% of global GDP.
And it said the services industry would benefit too, with “reduced red tape and greater access to growing Pacific markets”.
Commenting on the announcement, Prime Minister Rishi Sunak said the agreement “puts the UK at the centre of a dynamic and growing group of Pacific economies”.
He added: “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms.
“As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.”
The final administrative and legal steps will now take place, before the UK formally signs up in 2023.
‘EU should be priority’
The announcement was welcomed by the interim director general of business group the CBI, Matthew Fell, who called it “a real milestone for the UK and for British industry”.
He added: “Not only does the agreement provide greater access to a group of fast growth economies representing 14% of global GDP and over 500 million consumers, but membership reinforces the UK’s commitment to building partnerships in an increasingly fragmented world.
“CPTPP countries and business need to work together to future-proof the rules-based trading system and stimulate growth with a focus on digital, services and resilient supply chains.”
However, while the Institute of Directors it was “vital the UK signs trade deals to restore our international reputation since Brexit”, it said “complete reorientation” to the Indo-Pacific would not solve “the very real problem that businesses currently face – namely that they have many more trade related challenges than they did six years ago”.
They added: “From our surveys, directors have told us that the EU-UK relationship is a priority issue the government needs to address in order to support business.
“UK companies still rely on the long established links they have with EU markets, which are directly on our doorstep and with whom they have closer historical ties.
“The Indo-Pacific strategy will open up important opportunities for UK businesses, but the government must not forfeit the significance of our relationship with the EU in order to do so.”