Britain heads to the Pacific

Britain today became the first European country to join the Trans-Pacific Partnership, a regional free-trading bloc in one of the fastest-growing parts of the world.

Rishi Sunak, the Prime Minister, hailed the UK’s accession to the CPTPP – its full title is the Comprehensive and Progressive Trans-Pacific Partnership – as demonstrating the real “economic benefits of our post-Brexit freedoms.” 

Unusually, Conservatives of all persuasions and the wider business community – from small to big – agree with him. Even Remainers can rejoice: joining the TPP does not mean the UK can never join the EU’s customs union or single market again, as some are claiming. There are withdrawal provisions, just as with the EU. 

All credit to a long list of business secretaries and their negotiators for wrapping up such a complex deal which has been five years in the making. And kudos to Kemi Badenoch, the trade secretary, for pulling together the strings to finally sign off today’s deal.  

The sheer scale of the bloc which includes 500 million people in 11 countries including Australia, Japan, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Brunei is what makes the TPP so special. Together with the UK, the region represents about 15 per cent of the global economy. 

Total GDP of the region is £9 trillion, rising to £11 trillion with the UK. If the numbers are correct, the UK’s GDP will be boosted by £1.8 billion over 10 years. 

More pertinently, it’s a bloc where the wealth of the middle-classes is growing rapidly and their demand for high-quality exports is soaring. Top of the list of exporters to benefit the most are the food, drink and car industries.

Nearly all of UK goods exports to TPP member states will now be eligible for zero tariffs, including products such as cars, machinery, cheese, chocolate, whisky and gin. Tariffs on some imports – such as rice from Vietnam – will be cut while Scotland’s whisky industry is hoping for big sales in Malaysia which currently levies a 165 per cent tariff on imports. 

Yet there are fears too, although the full details of the deal are yet to be published and may allay some of the concerns. For example, farmers have warned they could be hit hard if Canadian food producers are allowed into the UK too fast. Consumer groups have been assured that the ban on imports of hormone-injected beef will stay while officials claim that all UK existing standards, such as rules on pesticides, will not be weakened. 

This is a big moment for the TPP too. The UK is the first new member to join since the bloc was set up in 2018. Costa Rica and Uruguay are next in the queue. All eyes now are on whether the US will reconsider the decision by former President Trump to pull out of talks because he feared US trade would be damaged and whether China – which applied for membership two years ago – will dare have another go. 

If the US were to join, the bloc would represent around half of the world’s economy. That would be a challenge to the World Trade Organisation, potentially becoming an alternative or forcing it to reform. Trade expert, Shanker Singham, reckons the UK joining the TPP is a seismic geo-economic event, one that could open up a new era of more competitive trade rather than regulatory harmonisation. Let’s hope so. We need a boost.

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