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The United Kingdom on Sunday formally signed a treaty to join a major Indo-Pacific bloc – what it said was the biggest trade deal since the country left the European Union at the start of 2020.
Business Minister Kemi Badenoch has signed the Protocol of Accession to the Comprehensive and Advanced Trans-Pacific Partnership (CPTPP) in Auckland, New Zealand. “This is a modern and ambitious agreement, and our membership of this exciting, exciting and forward-looking bloc is evidence that the UK’s doors are open for business,” Badenock said.
She later told Sky News that the agreement meant Britain had “a seat at the table in the fastest-growing region” and other countries were lining up to join the agreement.
The broadcaster cited a government analysis that said the agreement would boost UK exports by £1.7 billion (€1.9 billion, $2.23 billion), imports into the UK by £1.6 billion and GDP by £1.8 billion in the long term. condition. The agreement is expected to enter into force in the second half of 2024.
What is CPTPP?
The CPTPP is a landmark pact agreed in 2018 that lowers trade barriers between 11 countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The agreement requires countries to eliminate or significantly reduce tariffs and make strong commitments to opening up services and investment markets.
It also has rules dealing with competition, intellectual property rights and protection 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 United Kingdom and Australia, are pressuring to expel China, while Beijing is trying to prevent Taiwan from joining.
Why is CPTTP so important to the UK?
The UK government says CPTTP will reduce tariffs on UK exports to Asia-Pacific countries and with UK membership the trade bloc would have a combined GDP of £12 trillion and account for 15% of world trade.
Britain is keen to deepen trade relations in the Pacific after Brexit in 2020.
London has been pushing a “global Britain” strategy since it renounced membership in the European Union 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 sought other trade deals with countries and trading blocs around the world, which the government says have faster-growing economies than the EU. But London is likely to struggle to secure free trade deals with big powers like China in the near term and even its closest ally the United States has said further trade liberalization with Britain is currently off the table.
Critics say CPTTP and other deals will struggle to make up for the economic damage done by leaving the 27-member European Union – the world’s largest trading bloc and collective economy.
Long-term productivity in the UK is expected to decline by 4% as a result of Brexit, according to the government’s spending watchdog, the Office for Budget Responsibility.
The UK already has trade deals with 10 of the 11 other CPTPP members and the eventual economic boost is likely to increase GDP by just 0.08% annually.
In 2022, Britain will export £340 billion of goods and services to the European Union, 42% of all UK exports. Badenoch told Sky News that half of global growth is expected to come from the Indo-Pacific around the mid-2030s and the growth will continue into the middle of the century.
What else was announced at the CPTTP meeting?
Members of the Trans-Pacific Trade Agreement said they were gathering intelligence on those countries interested in joining the pact to see if they could meet the bloc’s “high standards.”
“Member states are currently in the process of gathering information on whether the aspiring economies are able to meet the high standards of the CPTPP, taking into account their experience in their trade commitments,” the members said in a joint statement.
The statement added that a decision on who will join and when will be taken collectively.
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