The UK on Sunday signed an agreement to join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) in Auckland, New Zealand, formalizing its accession as the first new member to the 11-nation trading bloc, although analysts see little economic impact from the deal, Report informs via Nikkei Asia.
The main obvious beneficiary is Malaysia, which stands to gain tariff-free palm oil exports into the UK, from up to 12% now, once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership enters into force.
The agreement is expected to give the UK economy a marginal boost of 1.8 billion pounds ($2.36 billion), or 0.08%, over 15 years, based on London’s own assessment in April 2021.
“The impact appears mainly cosmetic, for the UK to show it made a trade deal after Brexit,” said Chris Devonshire-Ellis, chairman of Dezan Shira & Associates, an advisory firm that works with investors across Asia. “No one in Asia is taking the pact very seriously.”
The British government, though, is keen to promote the pact, noting that the Asia-Pacific bloc represents half a billion people and accounts for 12% of the global economy. However, the UK already has free trade agreements with nine of the 11 member states, many of which were rolled over from when the UK was a member of the European Union.
Since the UK voted to leave the EU in June 2016, the Conservative government has sought to sign deals with other countries and regions to try to make good the leavers’ campaign promise of “Brexit benefits,” even though no partnership could realistically make up for the loss of frictionless trade with its nearest neighbor and the world’s largest trading bloc.
“We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country,” according to a statement released by the UK Department for Business and Trade, citing Trade Secretary Kemi Badenoch, who backed the UK to leave the EU.
Trade with CPTPP members represents around 6.8% of total UK trade, with British exports to CPTPP countries worth 60.5 billion pounds in the year to September 2022. Joining the pact is expected to boost trade with CPTPP members by 3.3 billion pounds.
The government news release says CPTPP membership is “expected to turbocharge investment in the UK even further,” although it gave no numbers to back this up. Investment from CPTPP countries to the UK was worth 182 billion pounds in 2021.
An impact assessment and detailed market access schedule are expected to be published in the coming days.
For Britain, the CPTPP will allow tariff-free whisky exports to Malaysia, whose population is majority Muslim, within 10 years from the current 80%. Within seven years, the 30% export tariff for British cars will be eliminated.
