The United Kingdom agreed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership () during a virtual ministerial meeting with Indo-Pacific partners on March 31, 2023. This marks the first expansion of the CPTPP since its implementation in 2018 and will make the United Kingdom the 12th member of the regional trade bloc.
The CPTPP is already one of the world’s largest free trade agreements, with its member states’ combined GDP totalling $13.5 trillion. The United Kingdom’s accession is expected to be confirmed at the CPTPP ministerial meeting in Auckland in July, which will be a significant achievement for both the post-Brexit UK leadership and the CPTPP itself.
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However, the addition of the United Kingdom to the CPTPP also presents challenges for the bloc’s members as they must now consider the applications of five other economies, including China and Taiwan. These decisions will require careful consideration, given the geopolitical implications of these economies’ inclusion in the CPTPP.
UK’s accession signals growth potential
UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a significant achievement for the country and the Indo-Pacific trade bloc. The move has been long supported by the Tories in the British government as a way to bolster “Global Britain” post-Brexit. Since the UK’s withdrawal from the European single market, British leaders have viewed acceptance into the CPTPP’s trade area as a way to mitigate Brexit losses and secure future economic growth. However, some critics do not see UK entry into the CPTPP as equivalent to re-joining the European single market.
The UK Department for Business and Trade states that joining the CPTPP would provide UK businesses with tariff-free access to over 99% of goods exported to a market of more than 500 million customers. Additionally, CPTPP membership would give the UK access to significant economic growth potential through financial services and digital trade with other CPTPP members.
However, over a 15-year period, it is estimated that UK accession to the CPTPP would only increase British GDP by 0.08%, a relatively small figure given that the UK already has trade agreements with most CPTPP members. Nevertheless, joining the CPTPP is likely to enhance the political legitimacy of the Sunak government and lend momentum to Britain’s “Indo-Pacific tilt” in conjunction with AUKUS.
UK accession to the CPTPP also invigorates the trade bloc as it approaches its fifth year in effect. The agreement was designed to grow, as evidenced by the inclusion of an accession process, and UK membership proves that the agreement remains dynamic and attractive to global economies. With the addition of its first European member, this trans-Pacific agreement has essentially become trans-Atlantic, indicating the potential for further expansion beyond the geographic confines of the Pacific Rim.
However, the addition of a new member to the CPTPP raises the stakes for parties to improve the implementation of CPTPP enforcement mechanisms, as detailed in a report by the CSIS Scholl Chair in International Business in October 2022. These enforcement shortcomings could ultimately weaken the benefits and appeal of the trade agreement. With a new and engaged member, momentum may also grow among CPTPP parties for upgrading the agreement to better address emerging issues in digital trade, sustainability, and inclusivity, which are all priorities of New Zealand’s 2023 chairmanship.
Interest from other potential members
The acceptance of the UK into the CPTPP marks a significant milestone in the trade bloc’s expansion, with five other applicants now in line for potential membership. Taiwan and China are the next two applicants, but their respective political relationships with each other create uncertainty around their potential accession. Ecuador, Costa Rica, and Uruguay face lengthy accession processes but are expected to face fewer political obstacles to entry.
Despite the expansion of the trade bloc, the absence of the United States, its largest founding member, remains a notable factor. The creation of the CPTPP was prompted by the US’s withdrawal from the TPP negotiations in 2017, and its Indo-Pacific Economic Framework for Prosperity is viewed by some members as a second-best option to US membership in the CPTPP.
While the UK’s inclusion in the trade area is unlikely to change the US’s reluctance to join in the short term, it may increase the attractiveness of the agreement in the long term. As the trade bloc approaches its fifth year of existence, the addition of a new member provides momentum for the upgrade of the agreement to address emerging issues in digital trade, sustainability, and inclusivity.
Rigorous two-year negotiation process
The United Kingdom, despite being a large, advanced economy with strong trading relationships in the Indo-Pacific, had to meet the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’s (CPTPP) rigorous standards to gain entry. This included satisfying the market access requirements, sanitary and phytosanitary standards, and binding investor-state dispute settlement (ISDS) provisions. The accession process was chaired by Japan and required the United Kingdom to negotiate agreements with all 11 CPTPP members, which include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam.
One year after leaving the European Union, the United Kingdom’s then-International Trade Secretary, Liz Truss, applied to join the CPTPP on February 1, 2021. However, negotiations on Britain’s entry took over two years, with the CPTPP members not willing to grant many derogations or exceptions to the agreement’s binding commitments and high standards. As the first non-founding country to apply to join the CPTPP, Japan was insistent that the United Kingdom accept virtually all existing CPTPP rules for entry.
The CPTPP members also sought a resolution to the UK-EU dispute over the Northern Ireland Protocol as a condition for Britain’s CPTPP entry. This concern was addressed with the finalisation of the Windsor Framework in early March 2023, before a recent CPTPP negotiating round in Phu Quoc, Vietnam.
The final obstacle to the United Kingdom’s accession to the CPTPP was a disagreement between the UK and Canada over agricultural market access. With the UK no longer a party to the EU-Canada Trade Agreement (CETA) after Brexit, a dispute over Canadian access to the British beef market arose as a significant bilateral trade tension during on-going negotiations for a UK-Canada Free Trade Agreement (FTA). Canada objected to Britain’s CPTPP accession due to this issue.
It was not until mid-March 2023 that Canadian officials partially relented at the request of Tokyo, reaching an agreement with their counterparts in London to address these market access concerns through bilateral negotiations instead of multilateral ones, thereby clearing the way for UK accession to the CPTPP.
