The UK government last week formally applied to join the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trading bloc, ushering in a new post-Brexit era.
International trade secretary Liz Truss told the BBC yesterday that a potential entry into the bloc would secure “future growth” as the UK would move closer to developing, high-growth economies.
But first thing’s first, what actually is the CPTPP and why does it matter?
What is the CPTPP?
The CPTPP is a trading partnership of 11 countries, which includes fellow Commonwealth nations Australia, New Zealand and Canada.
It was formed in 2018 and ensures tariff-free trade between all members, while also providing important data sharing agreements between countries.
The countries involved make up about 13.4 per cent of global GDP, about £10 trillion, which makes it one of the largest trading blocs in the world.
Which countries are members?
There are currently 11 countries that are signed up to the CPTPP.
- New Zealand
The US was going to join, however Donald Trump withdrew the country from being a co-founding member.
Is it like the EU?
Crucially, the CPTPP allows members to sign trade deals with non-members – something that is not allowed for EU members.
The CPTPP is also not a political project like the EU and does not mean things like freedom of movement between countries or aligned regulatory regimes.
The downside is that the combined economic size of the CPTPP’s member states is smaller than the EU.
The UK also trades in far greater volumes with EU countries, 43 per cent of its total trade, than with CPTPP countries, which is about 8 per cent.
Why is the UK joining it?
The UK is hoping it can align with the CPTPP countries now to cash in on future growth in some of the emerging nations that are in the partnership.
It also provides a way for the UK to bulk up its trading regime post-Brexit and provide a pivot away from the EU.
Boris Johnson said that “one year after our departure from the EU we are forging new partnerships”.
“Applying to be the first new country to join the CPTPP demonstrates our ambition to do business on the best terms with our friends and partners all over the world and be an enthusiastic champion of global free trade,” he said.
Truss added: “They are fast growing countries. Countries like Mexico and Malaysia are shooting up the global [economic] league tables – there is more demand for fantastic British goods like Scotch whisky or cars.”
The UK already has trade agreements with most of the 11 CPTPP nations, however the international trade secretary said the partnership would provide benefits that are not involved in individual these agreements.
“We don’t have some of the advanced data and digital chapters, we don’t have the advanced services chapters,” she said.
“We are the second biggest services exporter in the world so this deal will go further and faster where the UK has huge strengths.”