In an effort to strengthen economic ties after the EU’s divorce, the UK will be joining the Indo-Pacific free-trade bloc of 11 nations.
Prime Minister Rishi Sonak’s government views membership in the Comprehensive and Progressive Agreement to Trans-Pacific Partnership (which includes Australia, Japan, and Canada) as a boost for both economic growth and geopolitical relationships. Over the long-term, the UK anticipates a growth rate of PS1.8 billion (or $223 billion) per year. This figure could increase if other countries join.After Brexit, Britain wants to play a larger global role
The UK believes that membership will allow it to set regional trade rules in the future. This could lead to the UK and other EU members blocking China’s future accession. It would ensure high trade standards. The UK stated that it would not compromise its environmental and food standards in order to join the bloc.
The government announced Friday that Britain had completed two years of negotiations and reached a formal agreement to be the 12th member in the CPTPP. The other eight members are Brunei (Chile, Malaysia, New Zealand Peru, Singapore, Vietnam, Brunei and Malaysia.
According to the International Monetary Fund, the bloc, which has 500 million inhabitants, will account for 15% of the global GDP when the UK joins.A large portion of global trade is controlled by regional trade agreements
Sunak stated in a statement that “joining the CPTPP Trade bloc places the UK at the centre of a dynamic, growing group of Pacific economies as the first European nation to join.” Sunak stated that it would bring “real economic benefits from our post-Brexit freedoms.”
The membership will eventually lead to zero-tariff trade in a variety of import and export areas. This includes greater UK access Mexico, Canada, and Japan for milk exports. It will also boost Britain’s automotive industry and alcohol industry, especially through the export of spirits from Malaysia.
Import tariffs for bananas from Peru, rice and rice from Vietnam, as well as crab sticks and palm oil from Malaysia, will be reduced. This last one is likely to be controversial because of its connection to deforestation.
However, the CPTPP membership is not comparable to Britain’s European Union membership. The CPTPP does not have a court or budget like the EU and functions more like a multilateral trade agreement.
It’s still a long road to reverse the negative economic effects of Britain’s departure from the EU, Britain’s largest partner, three years ago. The UK’s independent budget watchdog recently stated that Brexit could have a significant impact on economic output.
The deal will need to be ratified by each country, Kara Owen, British High Commissioner in Singapore said Friday. Television’s Haslinda amin confirmed that. She said that while it will be slow, she was optimistic about the outcome and said that they are looking forward to educating their companies.
Britain also has limited economic benefits. According to the UK’s projections published in 2021 it shows that joining CPTPP will not boost its economy by more than 0.08%. This is partly because of bilateral trade agreements with more than half of the 11 members. This could rise if the membership is expanded to other countries, such as South Korea and Thailand.
The UK has been trying to shift its foreign policy towards the Indo-Pacific since Brexit. Sunak signed two defense agreements with Australia, Japan and Japan earlier in the year as part of an effort against China. CPTPP membership will strengthen Britain’s ties to the region and give the UK more control over regional affairs.
“China has applied for membership, and it can probably convince/coerce quite some of the CPTPP member countries into saying yes,” trade expert Sam Lowe, partner in consultancy Flint Global, stated. The UK will not say no to China once it is a member. This gives cover to other members and allows them to hide behind UK’s welcome obstinance.
David Henig is the director of the UK Trade Policy Project, European Centre for International Political Economy. He described it as a “shallow trade deal” that focuses mainly on lower tariffs, “in the same manner that our free trade agreements with nine out of eleven members do.”
He stated that there may be future benefits from new members joining. CPTPP will also help us get closer to important allies in order to retain open global markets like Japan and Singapore.