UK eyes deal with trans-Pacific bloc
TRADE MINISTER TRUSS SAYS LOWER TARIFFS WILL BENEFIT CAR MAKERS AND WHISKY PRODUCERS
BRITAIN made a formal request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Monday (1), seeking membership of the 11-country deal to open new avenues for post-Brexit trade and influence.
Announcing the move, trade minister Liz Truss said it would create jobs, help rebuild the global trading system and position Britain “at the heart of some of the world’s fastestgrowing economies”.
It comes at a moment of significant economic upheaval for Britain whose 2016 decision to exit the European Union became a reality at the start of the year, and has made trading with its nearest neighbour more expensive and complicated.
Britain argues that the principal economic benefit of leaving the EU is the freedom to strike trade deals around the world, and is trying to position itself as the leading advocate of free global trade after a period of increased nationalism.
“It is important that we take a stand to support multilateralism and the global trading system, there has been too much undermining of the rules-based order,” Truss said during a call with her Japanese and New Zealand counterparts.
The CPTPP removes 95 per cent of tariffs between its members: Japan, Canada, Australia, Vietnam, New Zealand, Singapore, Mexico, Peru, Brunei, Chile and Malaysia.
Unlike the EU it does not impose laws on its members, it does not aim to create a single market or a customs union, and it does not seek wider political integration.
Britain’s application was welcomed by members, including current chair, Japan.
Negotiations between the UK and the partnership are expected to start this year, the trade department said.
But Labour’s shadow international trade secretary Emily Thornberry questioned the lack of transparency surrounding the pact.
After five years of debate over Brexit trade agreements, she said people would question the British government’s decision “to rush into joining another one on the other side of the world without any meaningful public consultation at all.”
“At present, Liz Truss cannot even guarantee whether we would have the right to veto China’s proposed accession if we join the bloc first,” she said.
Truss said the deal will mean lower tariffs for car manufacturers and whisky producers, and would also deliver “quality jobs and greater prosperity for people here at home”.
Speaking to Sky News last Sunday (31), Truss praised the arrangements of the CPTPP in comparison to the EU, where Britain was subject to bodies like the European Court of Justice. “There aren’t the strings attached so we wouldn’t have a court making judgments, we wouldn’t have any control over our borders lost, we wouldn’t be paying any money in,” she said.
Karan Bilimoria, president of Confederation of British Industry (CBI), said the move marked a “new chapter for our independent trade policy”.
“Membership of the bloc has the potential to deliver new opportunities for UK business across different sectors,” he said.
Few, however, see the agreement as generating a surge in trade: access is expected to take more than a year to negotiate and Britain already has, or is close to reaching, trade agreements with its largest members.
“I wouldn’t expect it to be transformative for the UK economy,” said James Kane, associate at the Institute for Government.
Britain’s trade with the entire CPTPP amounted to £111 billion in 2019, slightly less than its trade with Germany over the same period, and just over a 10th of trade with the entire EU. Britain still trades on tarifffree terms with the EU, albeit with additional administrative barriers.
The CPTPP agreement would lock in market access for trade in services – an area for competitive advantage for Britain – but do little to further liberalise those markets. Nevertheless, the decision to join CPTPP is seen as one that has few downsides: trade could increase, supply chains involving member countries would be simpler, and it could give Britain greater influence.
Post Brexit, Britain is tilting its foreign and economic policy towards the fast growing Asia-Pacific economies, and the CPTPP could provide London with some counterbalance to China’s influence in the region.
Truss has accused China of damaging the global trading system by heavily subsiding state enterprises and some see the CPTPP, which has rules against such practices, as a way to further that free trade agenda – albeit one which has had little impact on Beijing.
“It’s a signal of intent they want to be invoved in that region politically, economically, militarily,” said Kane.