COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS PACIFIC PARTNERSHIP (CPTPP)
1. Context
Britain on Friday agreed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact based around the Pacific rim, as it seeks to build ties around the world after leaving the European Union
2. What is CPTPP
- CPTPP is a free trade agreement (FTA) that was agreed in 2018 between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam
- Britain will become the 12th member, and the first to join since the partnership since its inception
- According to UK "CPTPP countries will have a combined GDP of 11 trillion pounds ($13.6 trillion) once Britain joins, or 15% of global GDP"
- It does not have a single market for goods or services, and so regulatory harmonisation is not required, unlike the European Union, whose trading orbit Britain left at the end of 2020
3. Key Takeaways
- Britain says that exports to CPTPP countries were worth 60.5 billion pounds in the twelve months to end-Sept. 2022
- Membership of the grouping will add another 1.8 billion pounds each year in the long run, and possibly more if other countries join
- In an impact assessment of the deal when negotiations started in 2021, Britain said the agreement is estimated to deliver an increase of just 0.08% to GDP over the long term
- Only Malaysia and Brunei weren’t covered by existing FTAs, and they only account for 0.33% of UK trade
4. Sectoral Impact
- Britain has agreed on a quota on beef imports but did not agree to lower food standards, under which hormone-treated beef is banned
- Tariffs on palm oil from Malaysia will be liberalised, and Britain also agreed on tariff reductions on bananas, rice and crab sticks following requests from Peru, Vietnam and Singapore respectively
- Britain highlighted that 99% of exports to CPTPP would be eligible for zero tariffs, including cheese, cars, chocolate, machinery, gin and whisky
5. Geopolitical factors
- While the long-term benefit for Britain’s economy is set to be modest, Britain has other reasons for joining the bloc
- China has applied to join CPTPP, and Morita-Jaeger cited Britain’s pivot towards the Indo-Pacific, where it has highlight China as an “epoch-defining challenge.”
- The CPTPP could enable the UK to enhance strategic ties with like-minded countries to protect a free and open Indo-Pacific region
Source: indianexpress
