UK signs ‘biggest trade deal’ since Brexit

Britain formally signed a treaty on Sunday to join a large Indo-Pacific bloc – what it said was the biggest trade deal since the country left the European Union in early 2020.

Business Minister Kemi Badenoch signed the Protocol of Accession to the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP) in Auckland, New Zealand.

“This is a modern and ambitious deal and our joining this exciting, bright and forward-looking bloc is proof that the UK’s doors are open for business,” said Badenoch.

She later told Sky News that the pact meant Britain had “a seat at the table in the fastest growing region” and that other countries were lining up to join the pact.

The broadcaster cited a government analysis which said the pact would increase UK exports by 1.7 billion pounds (1.9 billion euros, $2.23 billion), imports into the UK by 1. 6 billion pounds and gross domestic product (GDP) at 1.8 billion pounds in the long run. term.

The pact is expected to enter into force in the second half of 2024.

What is CPTPP?

The CPTPP is a historic pact signed in 2018 that cuts trade barriers between 11 countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The pact requires countries to eliminate or significantly reduce tariffs and make strong commitments to open services and investment markets.

It also has rules dealing with competition, intellectual property rights and protections for foreign companies.

The CPTPP is seen as a bulwark against China’s dominance in the region, although Beijing has applied to join, along with Taiwan, Ukraine, Costa Rica, Uruguay and Ecuador.

Politicians in several countries, including the UK and Australia, are lobbying to keep China out, while Beijing is trying to stop Taiwan from joining.

Why is CPTTP so important for the UK?

The UK government says the CPTTP will lower tariffs on UK exports to Asia-Pacific countries and with UK accession the trading bloc will have a combined GDP of £12 trillion and will represent 15% of global trade.

Britain wants to deepen trade ties in the Pacific after Brexit in 2020.

London has been promoting a “Global Britain” strategy since it pulled out of EU membership after nearly 50 years, leaving the bloc’s single market and customs union.

Instead, former British Prime Minister Boris Johnson negotiated a trade deal called the EU-UK Trade and Cooperation Agreement.

Since Brexit, the UK has pursued other trade deals with countries and trade blocs around the world that the government says have faster-growing economies than the EU.

But London will likely struggle to reach free trade deals with major powers like China in the short term and even its closest ally the United States has said further trade liberalization with Britain is out of the question.

Critics say the CPTTP and other agreements will struggle to offset the economic damage suffered by the EU’s now 27-member EU – the world’s largest trading bloc and collective economy.

The UK’s long-term productivity is forecast to be reduced by 4% as a result of Brexit, according to the government’s spending regulator, the Office of Budgetary Responsibility.

The UK already has trade agreements with 10 of the 11 other CPTPP members and the eventual economic boost is likely to increase GDP by just 0.08% a year.

In 2022, Britain exported £340 billion worth of goods and services to the EU, 42% of total UK exports.

Badenoch told Sky News that half of global growth is predicted to come from the Indo-Pacific around the mid-2030s and growth will continue through mid-century.

What else was announced at the CPTTP meeting?

Members of the trans-Pacific trade pact said they were gathering information on countries interested in joining the deal to see if they were able to meet the bloc’s “high standards”.

“Members are currently undertaking an information gathering process on whether aspiring economies can meet the high standards of the CPTPP, taking into account their experience in their trade engagements,” the members said in a joint statement.

A decision on who will join and when will be taken collectively, the statement added.

mm/sms (AFP, Reuters)