Trade Secretary Kemi Badenoch anticipates that the UK”s decision to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as the UK-Asia trade agreement, will unlock significant growth prospects for the country”s economy in the long term. This substantial trade bloc, which includes nations like Canada, Australia, Japan, and New Zealand, among others, holds immense economic potential, as highlighted by UK officials. With a combined GDP of £11 trillion, accounting for approximately 15 percent of global GDP, joining the CPTPP presents the UK with a significant opportunity to expand trade relationships and enhance economic prosperity.
While estimates suggest that the deal would boost the UK economy by just 0.08 percent, Badenoch emphasized the potential for growth in the future. It is noteworthy that Brexit is expected to reduce the UK’s potential economic growth by about 4 percent in the long term, as stated in the opening sentence.
Overall, the UK’s decision to join the CPTPP represents its biggest trade deal since leaving the EU and is expected to provide new opportunities for UK exporters by cutting tariffs with a group of nations in the Indo-Pacific region.
Maximizing the potential gains from Brexit
Prime Minister Rishi Sunak stated that the CPTPP trade deal “will help us realize the advantages of Brexit for people across the UK.” However, critics have argued that the impact of the deal would be limited, with official estimates indicating that it would add just £1.8 billion annually to the economy after a decade, which is less than 1 percent of UK GDP.
Trade Secretary Kemi Badenoch responded to these criticisms, pointing out that the estimate was based on 2014 figures and emphasized the future potential of the deal. During an interview with BBC Radio 4’s Today program, she compared the UK’s entry into the CPTPP to purchasing a start-up company, stating that it is not about what the deal is doing today but the potential for growth tomorrow. She further added that the CPTPP countries have a current population of over 500 million, and the UK is starting a trade relationship that will continue for many decades, delivering significant growth to the UK economy.
Economic consequences of exiting the EU
During the interview, the Cabinet minister was asked whether the CPTPP could compensate for the negative impacts of Brexit, given that the Office for Budget Responsibility had estimated a potential 4 percent reduction in the UK’s economic growth in the long term. In response, Ms Badenoch highlighted that the CPTPP is an addition to the UK’s existing free trade agreement with the EU, stating that the country has left the EU, and it is time to focus on growing the UK economy instead of discussing a vote from seven years ago.
The UK is the first European nation and new member to join the bloc, which consists of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam since its formation in 2018. Following nearly two years of negotiations and intensive talks in Vietnam earlier this month, representatives of the 11 existing members agreed to the UK joining.
Strengthening current agreements
Despite already having trade agreements with most members of the CPTPP, excluding Malaysia and Brunei, officials claim that the UK’s accession to the bloc would “strengthen current arrangements,” with 99 percent of the UK’s exports to the group now qualifying for zero tariffs. Ms. Badenoch, who is known for supporting Brexit, emphasized that joining a multilateral trade deal like this would create synergies and give the UK more influence, adding that this is the first time the UK has joined a bloc of this nature in approximately 50 years.
However, Labour Party members expressed concerns that UK consumer safety, food safety, data protection, and environmental protections could be at risk due to the agreement. It is crucial to ensure that these safeguards are not compromised as a result of the deal. Key UK exports such as cheese, cars, chocolate, machinery, gin, and whisky are expected to benefit from the agreement, while the services industry will enjoy increased market access and reduced bureaucracy. Officials also noted that important UK sectors like agriculture and the NHS would be safeguarded, and that food safety and animal welfare standards would be maintained.
UK defends tariff reduction on Malaysian palm oil amid concerns over environmental impact
The reduction of tariffs on Malaysian palm oil, a product associated with widespread deforestation, has raised concerns about environmental destruction. However, Ms. Badenoch argued that reducing the tariff from 2 percent to 0 percent is not the cause of deforestation, and that the UK government’s Department for the Environment sets standards that dictate what products are allowed into the country. She also highlighted that being part of the trade bloc will give the UK more influence on sustainability measures.
The deal aligns with Boris Johnson’s post-Brexit policy “tilt” towards the Indo-Pacific region. Former Prime Minister Liz Truss, who initiated the UK’s application to join the CPTPP two years ago during her tenure as Trade Secretary, tweeted her delight at the completion of negotiations, saying that it would deepen UK access to some of the world’s fastest-growing economies and serve as an important counterweight to those who seek to undermine British values.
UK Welcomes CPTPP Deal, but Labour Demands More Details and Liberal Democrats Criticize Conservatives’ Trade Record
UK Chancellor Rishi Sunak promoted the CPTPP in a social media video, stating that the trade agreement is an excellent opportunity for British businesses to expand internationally and create new jobs in the domestic economy. The CBI welcomed the deal as a “milestone” for British industry, reinforcing the country’s commitment to building partnerships in an increasingly fragmented world. However, Labour expressed cautious optimism and called for more details, urging the Conservative Government to learn from other countries that have secured important safeguards and support for their producers in CPTPP arrangements. Liberal Democrat trade spokeswoman Sarah Green criticized the Conservatives’ track record in striking trade deals and its impact on the British economy, stating that this announcement would only repair a fraction of the damage.
SUMMARY:
Trade Secretary Kemi Badenoch anticipates that the UK”s decision to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as the UK-Asia trade agreement, will unlock significant growth prospects for the country”s economy in the long term. This substantial trade bloc, which includes nations like Canada, Australia, Japan, and New Zealand, among others, holds immense economic potential, as highlighted by UK officials. With a combined GDP of £11 trillion, accounting for approximately 15 percent of global GDP, joining the CPTPP presents the UK with a significant opportunity to expand trade relationships and enhance economic prosperity. Despite estimates suggesting the deal would boost the UK economy by just 0.08%, Badenoch emphasised the potential for growth in the future, representing the biggest trade deal since leaving the EU and providing new opportunities for UK exporters by cutting tariffs with a group of nations in the Indo-Pacific region.
