As the UK’s economy shifts away from Europe, Britain is set to join the Indo-Pacific Trade Pact.
The UK is expected become the first non-founding Member of the Comprehensive Agreement for Trans-Pacific Partnership (CPTPP). This will allow businesses to have easier access to tens to millions of middle-class consumers, and a $10 trillion global market.
A source claimed that the accession would be announced by Friday. Trade ministers are expected to meet Thursday night to sign off on it.
The deal will not only boost the British economy but also signal Britain’s willingness to play a part on the international stage.
Stephanie Rickard, professor of politics at the London School of Economics said that “the UK is leading the way.” This is changing the accord from a regional agreement into a global one.
Shanker Singham, an ex-trade adviser to the Government, stated that CPTPP and Britain would have the same economic weight as the European Union combined. However, the structure of the partnership makes it impossible to join the EU due to clashing regulations.
He stated that “Accession would have been a great triumph for UK negotiators and the Secretary of State for Business and International Trade, in particular.” It would be the tipping point where Brexit cannot be reversed.”
Gerard Lyons is a former advisor to Boris Johnson and is now an economist at Netwealth Investment Services. He said that “this is something that wouldn’t have been possible if the EU was here.” The UK can reposition itself within the evolving global economy by leaving the customs union.
“It makes sense for the UK that it is in what is likely be the most dynamic portion of the global economic – not only in terms the countries currently there, but also in terms the potential for others in this trading bloc in future.”
CPTPP was established in 2018 and currently covers 11 countries – Australia, Brunei (Canada), Chile, Japan Malaysia, Mexico, New Zealand Peru, Singapore, and Vietnam.
Members account accounts for 13pc per cent of the world’s economic output and 15pc global trade.
William Bain, the head of trade policy for the British Chambers of Commerce, stated that joining the bloc could provide special opportunities for digital commerce, e-commerce, and electronic services.
He stated that the Indo-Pacific will see 90pc growth in the global middle classes over the next seven year, giving Britain an advantage over European competitors seeking to tap new mass affluent customers.
Mr Bain stated that “as prosperity rises in that region there will obviously be more market for goods or services which UK traders can sell and for stronger bilateral investments.”
CPTPP is expected to grow further, especially as Britain will set a precedent for other members to join. Mr Lyons says the US is the most likely candidate.
America was a member of Trans-Pacific Partnership in an earlier version of the agreement. However, it was withdrawn by Donald Trump in 2017.
Ms Rickard stated that Britain is moving away from Europe and towards the Indo-Pacific. The agreement will be a result of post-Brexit trade deals with Australia, New Zealand, and Singapore as well as the trilateral AUKUS Security pact.
The UK is also succeeding in places where China, a much larger economy that applied to join CPTPP 2021, is not.
According to a report from the Centre for Policy Studies, this move will be crucial for British efforts in diversifying supply chains and export markets that have become too concentrated in China.
Paul Baker, the chief executive officer of International Economics, a consulting firm, stated that “CPTPP counterweights China’s efforts to this area.”
Martin Beck, chief economist advisor to the EY Item Club said that this would help to reorient our trade towards countries which are more rapidly growing in terms of both population growth and economic growth. This is a positive indicator that the UK’s trade focus will shift away from Europe.
Although the UK already has trade agreements with most of the CPTPP members, the agreement will allow for new relations with Brunei and Malaysia, as well future opportunities, as the bloc expands.
Trade with CPTPP members currently accounts for 8pc British exports, but it is expected to increase rapidly following a deal.
A spokesperson for the Prime Minister stated that an update would be made as soon as possible. Meanwhile, a spokesperson for the Department for Business and Trade celebrated “great progress” in the UK’s accession process.
According to the PM’s spokesperson, negotiations have been moving well with CPTPP. Ministers will be meeting their counterparts later in the week.
Sources from the Trade Department stated that negotiations are still ongoing.
They stated that any agreement to allow the UK to join CPTPP would be handled by CPTPP, specifically the Japanese. Nothing is confirmed until the CPTPP confirms it.