Pacific Alliance CPTPP: London announces joining Free Trade Pact

Status: 03/31/2023 10:11 am

The CPTPP is the largest trade deal Britain has attempted to join since Brexit. Accession is expected to be confirmed before the end of this year. What is the economic benefit?

Great Britain wants to join the Trans-Pacific free trade alliance “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)” and says it has already reached an agreement with the eleven member countries. “Joining the CPTPP trade pact puts the UK at the center of a dynamic and growing group of Pacific economies,” Prime Minister Rishi Sunak said on Friday night. The inclusion in the trade pact of the Pacific Rim countries should therefore take place before the end of this year.

The proposed accession is the largest trade deal Britain plans to join since Brexit, it said. “British companies will now have unprecedented access to markets from Europe to the South Pacific,” said the British Prime Minister. According to Sunak’s office, once Britain joins the trade group will number more than 500 million people and 15 percent of the world’s economic output.

Trade pact to boost economy

For more than 99 percent of the goods manufactured in Great Britain are now no longer due when exported to the CPTPP member countries – including cars, chocolate, machines and whisky. This could boost the UK economy by £1.8 billion a year in the long term.

By joining, the UK government wants to fulfill part of the promise made by supporters of the country’s exit from the EU. In recent years, they have repeatedly stated that London could easily join free trade agreements with faster-growing countries outside the EU. The deal shows the true economic benefits of “our post-Brexit freedoms,” Sunak said.

The CPTPP Free Trade Zone currently comprises eleven member states, including Australia, Canada, Chile, Mexico, Japan, Brunei, Malaysia, New Zealand, Peru, Singapore and Vietnam. The CPTPP agreement was launched after the United States withdrew from the Trans-Pacific Free Trade Agreement (TPP) under then-President Donald Trump. The eleven remaining members then renegotiated the agreement and finally signed a reduced version called CPTPP in 2018. Britain had applied to join in February 2021.

How big is the economic benefit?

However, Great Britain has already concluded bilateral free trade agreements with most of the participating countries. From the point of view of critics, the resulting economic advantages can hardly compensate for the economic disadvantages caused by Brexit.

“This is a really big win for Britain from a political point of view, but on the other hand they also have to pay a price,” said trade expert Minako Morita-Jaeger from the University of Sussex to the dpa news agency. The conservative newspaper “Telegraph” celebrated an “important post-Brexit gain”. But Morita-Jaeger warned that membership would not stand up to comparison with the EU.

Bilateral trade with the EU has plummeted since Britain was no longer a member of the EU’s internal market and customs union. The reason for this is new bureaucratic regulations and customs duties in some sectors.

Free trade agreement with USA a long way off

“The economic benefit seems very small. It’s not the level that Britain lost because of the exit from the EU, especially as imports from the EU have fallen sharply.” Rather, London would probably have to make concessions, as was the case with the free trade agreements with Australia and New Zealand, said the expert. These contracts were sharply criticized by British farmers because, for example, the import of lamb was made much easier.

The United States is not one of the signatory states. The United States was once the driving force behind what was then known as the TPP under ex-President Barack Obama, which was intended to counterbalance China’s economic power. However, Obama’s successor, Trump, was not interested and ended the talks.

Current US President Joe Biden has not shown any interest in joining the agreement. Should the USA decide otherwise, the free trade zone would gain considerably in importance.

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