The UK has been accepted into an Indo-Pacific trade bloc in what the government says is its biggest trade deal since Brexit.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between 11 countries across the Indo-Pacific, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – and now the UK.
The partnership sees the countries open up their markets to one another, reducing trade barriers and tariffs, with the hope of bolstering the economies of its members.
Trade Secretary Kemi Badenoch said the UK’s accession to the CPTPP was formally confirmed in a telephone call between her and counterparts from the group at 1am BST on Friday.
The UK is the first European country to enter the agreement, and the government claims it will lead to a £1.8bn boost to the economy “in the long run”.
Number 10 said as a result of becoming a member, more than 99% of goods exported from the UK to the list of countries would be eligible for zero tariffs, including cheese, cars, chocolate, machinery, gin and whisky.
And it said the services industry would benefit too, with “reduced red tape and greater access to growing Pacific markets”.
The deal has been praised by a number of business groups, including the Confederation of British Industry (CBI), Standard Chartered bank and the world’s second-largest wine and spirits seller Pernod Ricard.
But other trade experts have warned it will not make up for the economic hit caused by leaving the trade bloc of the European Union.
The UK began negotiations to join the bloc in September 2021 when Boris Johnson was in Downing Street and the agreement comes five years after Ms Badenoch’s predecessor Liam Fox launched a consultation to join it.
The signatory countries of the CPTPP are home to 500 million people and the government claims the deal will be worth £11 trillion in GDP, accounting for 15% of global GDP.
However, critics said the impact will be limited, with official estimates suggesting it will add just £1.8bn a year to the UK economy after 10 years, representing less than 1% of UK GDP.
Prime Minister Rishi Sunak said the agreement “puts the UK at the centre of a dynamic and growing group of Pacific economies”.
“We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms,” he added.
“As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.”
‘EU should be priority’
The announcement was welcomed by the interim director general of business group the CBI, Matthew Fell, who called it “a real milestone for the UK and for British industry”.
He added: “Not only does the agreement provide greater access to a group of fast growth economies representing 14% of global GDP and over 500 million consumers, but membership reinforces the UK’s commitment to building partnerships in an increasingly fragmented world.
“CPTPP countries and business need to work together to future-proof the rules-based trading system and stimulate growth with a focus on digital, services and resilient supply chains.”
Labour said the agreement represented “encouraging” progress but it needed to see details.
The party’s shadow trade secretary Nick Thomas-Symonds said: “The Conservative government’s track record in striking good trade deals is desperately poor.
“Other countries joining CPTPP arrangements have secured important safeguards and put in place support for their producers: it is vital that ministers set out if they plan to do the same.”
The Institute of Directors said it was “vital the UK signs trade deals to restore our international reputation since Brexit”.
But it added “complete reorientation” to the Indo-Pacific would not solve “the very real problem that businesses currently face – namely that they have many more trade related challenges than they did six years ago”.
“From our surveys, directors have told us that the EU-UK relationship is a priority issue the government needs to address in order to support business,” they said.
“UK companies still rely on the long-established links they have with EU markets, which are directly on our doorstep and with whom they have closer historical ties.
“The Indo-Pacific strategy will open up important opportunities for UK businesses, but the government must not forfeit the significance of our relationship with the EU in order to do so.”