Westminster’s deal with the CPTTP will take effect with Australia on December 24. Photo: stock
The United Kingdom has become the first European country to join a trans-Pacific trade bloc in a move it believes will boost its economy by £2 (3.96) billion a year.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade bloc’s membership comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam with a combined GDP of £12 ($23.78) trillion.
The UK has been looking for new trading partners since it left the EU, and Business and Trade Secretary Jonathan Reynolds says they are “uniquely placed” to take advantage of new markets and strengthen existing relationships.
“Agreements like this boost trade and create opportunities for UK companies abroad,” he says.
“This is a proven way to support jobs, raise wages, and drive investment across the country which is key to this Government’s mission to deliver economic growth.”
Reynolds says a trade strategy to be published next year will outline their long-term plan for international trade.
Reynold’s office believes membership will benefit Scotland by £240m (475m), Wales by £110m ($217m), £70m ($138.7m) for Northern Ireland and all English regions (£450m or $891m for the South-East and £310m or $614.25m for the North-West).
Businesses will face lower tariffs and fewer barriers when selling to member countries with financial services, manufacturing and food and drink sectors expected to benefit in particular.
The UK trade office believes it is closer to securing trade deals with the likes of the Gulf Co-operation Council, India, Switzerland and South Korea even as it seeks to reset its ties with the EU.
CEO of HSBC UK Ian Stuart believes that membership shows the UK is “open for business”.
“Since the announcement of the UK’s accession in July 2023, we have seen an increase in payments between the CPTPP markets and the UK, and we expect this growth to continue,” he says.
“As the world’s leading trade bank, with deep roots across many CPTPP countries, we are well-positioned to connect UK businesses with growth opportunities in markets such as Japan, Singapore, New Zealand, Vietnam, Malaysia, and Australia.”
The UK Trade Office says sectors like automotive, food and drink will benefit through modern “rules of origin” provisions which allow goods to qualify for lower tariffs when built from parts from CPTPP countries then exported to a CPTPP country.
UK services firms could find it easier to export to CPTPP countries and provide services on a level playing field with domestic firms in key sectors.
Through CPTPP, the UK now has free trade deals with Malaysia and Brunei for the first time, economies with a combined GDP of over £330 (653.8) billion last year.
The CPTPP-UK agreement took effect already for Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam.
It takes effect with Australia on December 24 and with Canada and Mexico 60 days after they each ratify the deal.
