Britain inks treaty to formally join trans-Pacific free trade pact
[LONDON] Two years after negotiations first began, the UK has officially become the first new member of the Pacific Rim free trade pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
On Sunday (Jul 16) in Auckland, British Secretary of State for Business and Trade Kemi Badenoch formally signed the treaty at a meeting hosted by New Zealand and attended by the trade ministers from the original group of 11 CPTPP economies.
With the UK now on board as the 12th member, the CPTPP now accounts for about 15 per cent of global gross domestic product, or about £12 trillion (S$20.8 trillion).
Apart from New Zealand, the other members of the accord are Japan, Australia, Canada, Singapore, Malaysia, Vietnam, Brunei, Mexico, Peru and Chile. The UK will begin the necessary steps needed to bring the agreement into force, which is expected to be some time in 2024.
A new report released by the UK government revealed that one in every 100 UK workers was employed by a business headquartered in a CPTPP member nation in 2019, equating to over 400,000 jobs across the country.
The UK’s membership is likely to spark greater investment into the UK by CPTPP countries, which was already worth £182 billion in 2021, by guaranteeing protections for investors.
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In a statement, Badenoch expressed confidence that companies in CPTPP nations will boost direct investment into startups, factories, plants and equipment in the coming years and deliver billions of pounds in additional trade.
“UK businesses will have unparalleled access to a market of over 500 million people,” she said. “(The CPTPP) is a modern and ambitious agreement and our membership in this exciting, brilliant and forward-looking bloc is proof that the UK’s doors are open for business.”
The UK’s trade commissioner for the Asia-Pacific Natalie Black added that the accession gives CPTPP economies greater access to the world’s sixth-largest economy of 68 million consumers.
According to figures by the UK’s Department of International Trade (DIT), investment by CPTPP companies accounted for over £240 billion of turnover in London, £35 billion in the South-east and £18 billion in the East of England. Three quarters of all employees in CPTPP-owned businesses are based outside London and the companies created 26,000 jobs in 2021 and 2022.
CPTPP companies account for only 0.3 per cent of all businesses in the UK, but they generate 6.1 per cent of the UK’s total turnover.
Being part of CPTPP will mean that more than 99 per cent of current UK goods exports to CPTPP countries, including whisky and cars, will be eligible for zero tariffs. Dairy farmers, for instance, will benefit from reduced tariffs on cheese and butter exports to Canada, Chile, Japan and Mexico.
Reduced tariffs on imported goods could also lead to cheaper prices for British consumers on products such as fruit juices from Chile and Peru, and honey and chocolate from Mexico.
According to a report by online publication Politico, it was Japan that led the UK’s accession process to the CPTPP.
“Over the past 10 months, as negotiations intensified, Tokyo’s diplomats and politicians crisscrossed the globe to pull every string available to get Britain’s application across the line,” said the report.
In a separate statement, New Zealand’s Trade and Export Growth Minister Damien O’Connoer said: “The UK has come through the robust accession process and the overall quality of its commitments has set a good precedent for future economies that wish to join.”
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