Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a free trade agreement between 11 countries – allows the UK to strengthen economic ties with Asia, which is expected to contribute to more than 40 per cent of global GDP in 2050. But the economic benefit of joining is minimal and does not compensate for the cost of leaving the European Union (EU).
According to the UK government’s own projections, the estimated long-run increase in its GDP from joining CPTPP is 0.08 per cent. Moreover, the UK already has bilateral free trade agreements (FTAs) with nine of the eleven current CPTPP members, which limits potential economic effects.
However, in many instances CPTPP provisions go further than existing agreements. And the economic benefits of joining could increase with an expanded membership – particularly if the US joined but this does appear unlikely.
Expanding CPTPP membership to South Korea or Thailand could increase the potential for economic gains but would not really move the needle much. Therefore, in touting the benefits of CPTPP, the UK government should focus on why joining is significant strategically, rather than economically.
CPTPP raises the UK’s international influence and role
In the recent Integrated Review Refresh, the UK government declared its tilt to the Indo-Pacific as being complete, pointing to the CPTPP accession negotiations as one example of how it has delivered on the ambitions of the 2021 Integrated Review.
Accession may be a concrete step towards achieving the vision of ‘Global Britain’, but putting flesh on the bones of that concept in part depends on what the UK actually does when it joins.
It needs to use CPTPP membership as a tool for broader foreign policy objectives and deepening relations with key regional partners – giving the UK a chance to promote its vision and credentials as a supporter of international governance.
CPTPP also allows the UK to help shape the global trade architecture and its evolution, while its membership in turn helps cement CPTPP as a grouping of mid-sized powers committed to a free-market approach and rules-based international trade.
This is particularly important as non-market economy policies and protectionism are proliferating. With the UK in the mix as the first European member, CPTPP goes from a primarily regional agreement to a more global one.
Because CPTPP has advanced provisions to facilitate digital trade, it offers a foundation for the UK to influence the global trade rulebook. And CPTPP could be a useful template for progressing the e-commerce negotiations taking place at the World Trade Organization (WTO).
The UK’s accession is a testing ground for potential future members, and gives the UK influence over the bloc’s future development so the geopolitical aspects are increasingly important.
How the UK positions itself on China’s and Taiwan’s accession requests to CPTPP from 2021 requires complex strategic choices. Because countries applying to join must comply with the existing agreement, it is questionable whether China would meet the standards.
Taiwan is more aligned with CPTPP provisions, but its accession request faces political and diplomatic hurdles. The UK has to weigh up supporting Taiwan’s efforts to become a fellow member versus complicating its own relationship with China.
The UK’s successful accession also has implications for both existing and future members of the trade bloc. Japan will be particularly pleased given it has kept the agreement alive after the US pulled out of TPP and Tokyo has championed the UK’s accession to CPTPP. The UK will be the second-largest economy in the bloc after Japan, making CPTPP more attractive to others.
Both winners and losers for the UK economy
Despite significant strategic benefits of joining, the UK accession to CPTPP will not lead to universal cheers domestically. According to the UK government’s analysis from 2021, the largest potential gains are for the beverages, tobacco, and motor vehicles sectors, but the semi-processed food sector would likely be hit hard.
And although the UK government vowed that joining CPTPP will not lead to lower animal welfare and food safety standards, or affect environmental protections and workers’ rights, civil society groups are concerned.
There is also a risk of regulatory divergence between the UK and EU in areas such as food and environmental standards, which could complicate any future efforts by the UK to re-join either the EU or a customs union.