The UK is joining Asia-Pacific trade bloc CPTPP

In July 2023, the UK formally agreed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an Asia-Pacific trade bloc made up of 11 other countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. This formal signature followed an announcement in March 2023 that the UK would join the bloc.

Other countries (including China) have applied to join or expressed an interest in doing so. The UK will be the first new member since the bloc was established in 2018 and the first European member.

Why does the Government want to join?

The Government argues that CPTPP membership will bring a range of benefits, including lower trade barriers to a dynamic region expected to become increasingly significant in the global economy. CPTPP accession also forms part of the Government’s “Indo-Pacific tilt” set out in the Integrated Review. The Government has published a summary of the agreement.

The UK already has bilateral trade agreements with nine CPTPP members. The UK does not have agreements with Brunei Darussalam or Malaysia. In 2022, the UK exported £61.3 billion of goods and services to the CPTPP countries (7.5% of the UK total) and imported £52.1 billion (5.8%).

Limited economic impact

The economic benefits appear to be small. The Government’s impact assessment indicated the long-run increase in GDP would be £2 billion (or 0.06%) but could be higher if other countries, such as South Korea, join the bloc.

Business groups support UK joining the CPTPP

Business organisations were generally in favour of joining the CPTPP. British Chambers of Commerce said “accession will be good news for UK businesses to enter or upscale their trade in these markets”. The Institute of Directors (IoD) also welcomed the news describing it as a “win for the UK”. The IoD cautioned, however, that the economic gains were likely to be limited and that trade agreements “generally do not shift the dial”. TechUK, the digital technology trade association, noted the CPTPP’s provisions on services and digital trade. It said CPTPP’s benefits would be “more strategic than material” and that CPTPP membership put the UK “in the club of middle power nations with a tradition of pushing the boundaries of what is possible in digital trade policy.”

The NFU said that joining the CPTPP could “could provide some good opportunities to get more fantastic British food on plates overseas”, particularly dairy exports to the Americas, poultry to Vietnam and sheep meat to Malaysia. It said the CPTPP outcome was “far more considered and balanced” than the UK’s bilateral agreements with Australia and New Zealand.

Environmental, animal welfare and investment concerns

Various organisations have expressed concerns about the implications of the CPTPP for food safety, farming and environmental standards. The NFU and WWF note the UK has not developed core minimum standards for food imports. The Government has emphasised that food imports will continue to comply with UK import standards.

In particular, concerns have been raised over palm oil. Tariffs on palm oil will be reduced to from up to 12% to zero, potentially leading to more imports. Environmental groups argue that palm oil production is linked to deforestation and damages orangutan habitats. The Government has said that the UK and Malaysia have published a joint statement on sustainable agricultural commodity trade and cooperation to conserve forests (PDF).

The Government’s Impact Assessment estimates a small increase in greenhouse gas emissions as a result of the agreement. Concerns have also been raised over pesticides and animal welfare.

Some groups have raised concerns over Investor-State Dispute Settlement (ISDS) provisions. These are highly controversial with some arguing that they allow foreign investors to challenge legitimate government policies in areas such as the environment, workers’ rights and health. The Government has said its right to regulate in the public interest will be preserved.

In March 2023, nine civil society groups wrote to the Business and Trade Secretary calling for a halt to the UK’s accession, arguing that the agreement brings minimal economic benefits, involves environmental risks and will not be scrutinised sufficiently.

Next steps

The agreement will be laid before Parliament under the Constitutional Reform and Governance Act 2010. This will not happen before mid-October at the earliest to allow time for select committees to scrutinise the agreement. The House of Lords International Agreements Committee has announced an inquiry on CPTPP. While there is no guaranteed debate or vote, the Government has said it will seek to ensure a debate if requested by a select committee.

The Trade and Agriculture Commission will also provide advice to the Government on whether the CPTPP provisions on agricultural trade are consistent with maintaining UK levels of statutory protection relating to animal or plant life or health, animal welfare and environmental protections. The Government is also seeking advice from the Food Standards Agency and Food Standards Scotland on whether the agreement is consistent with maintaining statutory protections relating to human health. Both sets of advice are to be provided by 30 November 2023.

Legislation will be required before the agreement can be implemented. Primary legislation will be needed in three areas: Technical Barriers to Trade, Government Procurement and Intellectual Property. Changes to secondary legislation and the immigration Rules will also be needed. The Government has said it expects the agreement to come into force in the second half of 2024 once the UK and the other CPTPP members have completed the necessary legislative processes.

Related posts