Home News What joining the CPTPP means for the UK and China

What joining the CPTPP means for the UK and China

The UK government estimates that the CPTPP could add £1.8 billion to UK GDP over the next few decades – but could it put the country at odds with China?

by Robynne Tindall
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On 31 March 2023, the UK joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), having formally applied in February 2021. The deal will have economic benefits but could create friction with China, which has also applied for membership

By joining the CPTPP, the UK becomes part of a club of 11 countries in the Indo-Pacific (Japan, Malaysia, Vietnam, Australia, Singapore, Brunei, New Zealand, Canada, Mexico, Peru and Chile) that generates nearly 14% of the world’s GDP.

The UK is the first European country to join the agreement, and the largest economy after Japan – or it will be, until China’s application is successful.

The key focus of the CPTPP is increasing access to each other’s markets, reducing or eliminating up to 98% of tariffs, but the CPTPP’s policies include gold standard provisions regulating the extent to which member states can support state-owned enterprises (SOEs), the most detailed provisions for IP protection to be found in any FTA, and Rules of Origin and mobility provisions that could see the Asia-Pacific rim become one of the busiest areas in the world in terms of the movement of goods and people.

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What are the benefits of the UK joining the CPTPP?

The UK government estimates that the CPTPP could add £1.8 billion to UK GDP over the next few decades, helping to offset some (but not much) of the negative effects of Brexit.

The UK already has trade agreements with nine out of the 11 CPTPP members, with exports totalling £60.5 billion in 2022. The removal of tariffs with the remaining two members – Malaysia and Brunei – will benefit industries such as whisky, with tariffs on whisky exported from the UK to Malaysia cut from 80% to 0%.

It will also benefit the sale of services by UK providers, slashing red tape and ensuring that UK investors get the same treatment as domestic companies when they put money into projects in CPTPP member states. This will also be supported by modern rules for digital trade.

Business and Trade Secretary Kemi Badenoch said: “Joining CPTPP will support jobs and create opportunities for companies of all sizes and in all parts of the UK. It is about giving British businesses improved access to the countries that will be a gateway to the wider Indo-Pacific region which is projected to make up the majority of global growth in the future.”

However, it is the future expansion of the CPTPP that could really benefit the UK – not just China’s potential accession but also Ecuador, Costa Rica and Uruguay, all of which have submitted formal applications. South Korea and Thailand have also expressed an interest.

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What opposition is there to the UK joining the CPTPP?

Some of the most vocal opposition to the deal to date has come from environmental groups.

Environmental charities were outraged by the news that the UK’s deal to join the CPTPP includes a relaxation of tariffs on palm oil from Malaysia, the production of which has been blamed for widespread deforestation. Groups such as Friends of the Earth warned that the deal could go against the UK’s commitment to reducing deforestation and wildlife habitat loss throughout its supply chains.

Some groups also fear that meat, dairy and eggs produced to lower welfare standards than allowed in the EU, for example, could make their way to the UK, as the CPTPP does not include specific provisions for animal welfare standards.

Despite these environmental concerns, the government has previously said that joining the CPTPP will only increase the UK’s domestic greenhouse gas emissions by 0.025% over projected levels in 2035. The CPTPP also includes an environment chapter design to ensure that businesses do not gain an unfair trade advantage from failure to implement, uphold or enforce environmental standards.

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What is the status of China’s application to the CPTPP?

Beijing’s application to join the CPTPP in September 2021 caught analysts by surprise: The bloc finds its origins in having been conceptualised by the Obama Administration leadership as a way of countering China’s increasing economic might in the Asia-Pacific region. However, membership of the CPTPP has become so attractive that China cannot avoid throwing its hat into the ring.

Analysts have mostly put Beijing’s motivation for wanting to join the bloc down to the fact that its accession requirements could provide fresh impetus for economic reform at home, rather than its desire to control the bloc’s apparent anti-China or anti-state capitalism sentiment from the inside.

Nevertheless, tensions with countries such as Australia and Japan could be a barrier to China joining the CPTPP. And while the US is no longer a member, it could exercise its influence under the United States-Mexico-Canada Agreement to prevent Canada and Mexico from voting in favour of China. Former Prime Minister Liz Truss has also spoken out about China joining the CPTPP, telling Politico that it is “essential” that the UK blocks China’s accession.

The CBBC View

The UK’s post-Brexit experiences in trade negotiation to date suggest the country has the potential to push the CPTPP and Asia-Pacific regional trade in a direction that might create headaches for China. Of course, this would depend on the UK delivering on its pivot to Asia to its fullest extent. A UK ambition to become a leading force in the setting of trade provisions and confronting China’s trade practices is also becoming apparent.

As a result, the UK joining the CPTPP should be viewed alongside recent policy documents such as the Integrated Review Refresh 2023 and as part of an emerging strategy of growing trade with countries that surround China, rather than directly with the world’s second-largest economy.

Entering China is a key decision for businesses of all sizes. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can provide you with the platform to unlock your potential.

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