Britain said on Friday it has agreed to join an 11-country trans-Pacific trade pact to boost its global trade links, in one of its biggest moves since leaving the European Union.
The deal will deepen ties with Japan and several of the rising economies in Southeast Asia – Vietnam, Malaysia and Singapore.
Prime Minister Rishi Sunak said Britain would join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
“Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies,” Sunak said in a statement, adding that the deal demonstrated “the real economic benefits of our post-Brexit freedoms.”
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‘Pacific Rim growing faster than Europe’
Britain has been looking to build global trade ties following its departure from the EU in 2020 and has looked to pivot toward geographically distant but fast-growing economies.
It is deepening its ties in the Indo-Pacific as its foreign policy framework casts China as an “epoch defining challenge”.
Other members of CPTPP are Australia – which it signed a free-trade agreement with in late 2021, plus Brunei, Canada, Chile, Mexico, New Zealand and Peru. Britain is the first new member to join the group.
Membership will supplement existing bilateral Free Trade Agreements (FTAs) Britain has with most of the member countries, and gives businesses extra options over the terms they can trade under.
The overall impact of the trade deal is set to be modest. Britain said the deal, which will cut tariffs on cars, spirits and dairy products, would boost the economy by 1.8 billion pounds ($2.2 billion) each year in the long-run – but that figure could rise as more countries join the pact.
“The Pacific Rim is forecast to grow twice as fast as Europe, so UK businesses should be thinking about their regional presence,” Sally Jones, trade policy and strategy partner at EY, said.
“The CPTPP makes that much easier, and the CPTPP will only get bigger as more countries look to join.”
Britain has agreed new post-Brexit trade deals with New Zealand and an FTA with Japan in 2020. It is also in talks with Canada and Mexico over new FTAs, after it rolled over previous EU trade deals at the end of 2020.
Further expansion?
Japan’s economy minister Shigeyuki Goto said Britain’s joining the pact was “a great significance” in further promoting free trade, open and competitive markets as well as economic integration beyond the Pacific Rim.
Japan chaired negotiations on Britain joining the pact.
Regarding other economies that have applied to join, such as China and Taiwan, Goto said Japan would need to take a close look at whether they were “fully prepared to meet the high standards” of the trade pact.
Taiwan’s top trade negotiator John Deng said Taipei will “continue efforts to gain support from CPTPP countries” to join, too.
Ecuador, Costa Rica and Uruguay have also applied for membership.
Japan has asked the US to return to the trans-Pacific trade pact after Washington in 2017 formally withdrew from the Trans-Pacific Partnership trade deal, the predecessor to the CPTPP.
Japan’s chief cabinet secretary Hirokazu Matsuno said it was “desirable” for the US to rejoin the trade pact and Tokyo would persist in pressing Washington to become a member.
- Reuters with additional editing by Jim Pollard
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