Business and Trade Secretary formally signed the treaty confirming UK’s accession to CPTPP
– the Indo-Pacific trade bloc is now worth £12 trillion in GDP
The ink is now dry on the signature of Business and Trade Secretary Kemi Badenoch, who formally signed the treaty to accede to the CPTPP trade group in Auckland in the early hours of Sunday morning, UK time.
Membership of the trade group is expected to spark further investment in the UK by CPTPP countries, already worth £182 billion in 2021, by guaranteeing protections for investors.
The signing with CPTPP — what does it mean?
- The United Kingdom is the first non-founder member to be allowed to join
- No free movement, no CPTPP laws imposed on the UK, no political union
- Unlike the EU this is a trading bloc
- 99% of UK goods exports to CPTPP to be eligible for zero tariffs
- UK businesses are given unparalleled access to the market of over 515 million people
- None of this would have been possible without Brexit
The signing comes as a new government report reveals one in every 100 UK workers was employed by a business headquartered in a CPTPP member nation in 2019, equating to over 400,000 jobs across the country.
Speaking just ahead of the signing, the Rt Hon Kemi Badenoch MP said:
“I’m delighted to be here in New Zealand to sign a deal that will be a big boost for British businesses and deliver billions of pounds in additional trade, as well as open up huge opportunities and unparalleled access to a market of over 500 million people.
“We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country.”
- Business and Trade Secretary, Sun 16 Jul 2023
Don’t let the negative BBC diminish this great achievement today
The report found CPTPP investment accounted for:
- A market of over 515 million consumers — far more than the EU
- Over £240 billion in turnover in London, £35 billion in the South East and £18 billion in the East of England
- The creation of 26,000 jobs in 2021 and 2022
- 75% of all employment in CPTPP-owned businesses was outside of London
- One in 50 jobs in the North East
- One in every 25 jobs in the manufacturing sector
[Sources: GDP and population data refers to data from 2022 and is taken from IMF World Economic Outlook Database, April 2023 edition.]
The report also found that CPTPP companies punch above their weight economically. While they account for 0.3% of all businesses in the UK, they generate 6.1% of the UK’s total turnover — 20 times higher than the proportion of businesses they represent.
An impossible deal without Brexit enabling it
The UK will be the first European member and first new member since CPTPP was created, which would have been impossible had we remained in the EU. With the UK as a member, CPTPP will have a combined GDP of £12 trillion and account for 15% of global GDP.
Being part of CPTPP will mean that more than 99 per cent of current UK goods exports to CPTPP countries will be eligible for zero tariffs. Dairy farmers, for example, will benefit from reduced tariffs on cheese and butter exports to Canada, Chile, Japan and Mexico. This builds on the £23.9 million worth of dairy products we exported to these countries in 2022.
Importantly, the agreement is a gateway to the wider Indo-Pacific which is set to account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come, bringing new opportunities for British businesses and supporting jobs.
This deal liberates services — the UK’s speciality
When it comes to trade deals, the BBC and the government agencies such as the Office for Budget Responsibility and HM Treasury seem not to understand that international agreements such as CPTPP are not solely about trade in goods.
Yes, tariff-free access to international markets for UK manufacturers is valuable but the UK’s economy is 80% based on services. One of the benefits of the new CPTPP deal is the liberalisation of the restraints on the UK’s services sector in being able to sell into one of the fastest-growing markets in the world. Here is what №10 said
“Boosting services: The UK is the world’s second-largest services provider and services accounted for 43% of our trade with CPTPP members last year. Joining the bloc will slash red tape — UK firms will not be required to establish a local office or be residents to supply a service and will be able to operate on a par with local firms.
“Increased flexibility: Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely across the bloc. For example, UK car manufacturers could sell car engines tariff-free to a car maker in the bloc who could then sell those cars tariff-free to any member country. This is currently not possible under all the bilateral trade agreements the UK has in place with CPTPP members and will help exporters diversify their supply chains and create new export opportunities.
“Pro-investment: Investment between the UK and CPTPP countries is expected to increase as the agreement contains provisions to limit barriers and encourage more inward investment. Inward investment stocks to the UK from CPTPP countries were worth £182 billion in 2021.
“Cutting-edge: Remotely delivered services from the UK to CPTPP were worth £20.5 billion in 2020. CPTPP sets modern rules for digital trade across all sectors of the economy and will support UK businesses of all sizes to seek new opportunities in CPTPP markets.”
№10 statement, 31 Mar 2023
Liz Truss also deserves credit for starting this deal, over two years ago
During her tenure as International Trade Secretary the Rt Hon Liz Truss MP crisscrossed the globe, promoting British business and initiating trade discussions. Many times I Reported positively on her work and it was clear that her enthusiasm for the promotion of post-Brexit Britain was well-received internationally.
What great news for a Sunday morning. I have no doubt the BBC will pour cold water on this today but the simple fact is that this deal, now signed, significantly increases the influence of the United Kingdom in the Indo-Pacific and globally.
The UK may have left the EU empire but it still trades with it. Something that Rejoiners forget. Now in addition the UK has now signed a deal with a trading bloc of over 582 million consumers with the UK — making it over 135 million more than that of the EU once the UK formally acceeds.
The next country that will be invited to join will be India with a population of nearly 1.5 billion. They will be invited to join to combat the growing influence of China.
Then there is the US which is already putting feelers out to join. When Trump was President he dramatically pulled away from joining. When Biden leaves office which he will when he loses the next election the US will join.
Whichever way Rejoiners choose to spin and belittle this, the CPTPP deal represents another major Brexit benefit.
Sources: HMG | UK Dept for Business and Trade | NZ Ministry of Foreign Affairs and Trade (MFAT) | UN | Eurostat
