When the UK voted to leave the EU, bullish brexiteers framed the move as an opportunity rather than an economic tragedy. No longer would Britain’s fate be tied to the “bloated bureaucracy” of Brussels, they proclaimed. Instead, “Global Britain” would take its place on the world stage, taking advantage of its post-Brexit flexibility and agility to build new economic ties with economies around the world — particularly those of rapidly growing Asia.
And the UK has taken its first step in this new direction. On June 2, the 11 member states of the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) agreed to begin Britain’s accession process to the regional trade pact. They noted positively the UK’s experience with high-standard trade and investment rules, clear commitment to promote transparency, as well as predictability and confidence in the rules-based trading system.
“We note that the United Kingdom’s potential membership would support the mutual interests, common values and commitment to upholding the rules-based trading system shared by the members of the CPTPP. It would also promote marketoriented principles and help to counter protectionism and the use of unjustified trade restrictive measures,” said a Joint Ministerial Statement on June 2 regarding the British accession request.
On June 22, negotiations began formally. Joining the CPTPP is a “glittering post-Brexit” prize and where Britain’s greatest opportunities lie, says UK International Trade Secretary Liz Truss. “Membership would help our farmers, makers and innovators sell to some of the biggest economies of the present and future.” In a snide reference to the EU, she sneers that joining CPTPP would allow the UK to enjoy a high-standards free trade area without ceding control of its borders, money or laws.
Political calculations
At first glance, it seems strange that the UK would wish to join the CPTPP. With the deal designed as a free-trade area for Asia Pacific nations, the UK sticks out like a sore thumb since only two out of its top 10 trading partners — China and the US — are considered Pacific nations. With the rest of the pack made up of European countries, one might question the synergies that Atlantic Britain would have with fellow CPTPP members.
“For the UK, the potential economic gains from joining CPTPP seem to be slim, taking into account the current trade and investment relations with CPTPP members and what has already been achieved through bilateral trade deals with CPTPP members,” says Minako Morita-Jaeger, international trade policy consultant and fellow of the UK Trade Policy Observatory, University of Sussex.
London’s true objective, Morita-Jaeger argues, is political rather than economic. Seeking to pivot away from Europe towards the Indo-Pacific, she argues that the UK hopes to use its economic heft — it would be the second largest economy in the pact — to strengthen its regional influence via economic diplomacy. Its membership, Morita-Jaeger argues, could turn the CPTPP from a regional economic pact into a wider “middle power club” promoting liberal economic norms.
Elly Darkin, associate at strategic advisory firm Global Counsel, in a commentary for the Royal United Services Institute, says that economic diplomacy would solidify UK geo-strategic alliances in the region, which has increasingly involved taking a harder stance against China. She also sees UK accession helping to encourage “better trade practices on intellectual property discipline, digital trade and trade in services” — key pillars of its trade policy.
But Darkin notes that there are domestic political calculations afoot too. “It is no secret that the UK government is operating on a new landscape with something to prove about the UK’s position in the world outside the EU,” she argues. With an Anglo-American trade deal looking unlikely to be concluded before 2023, the government wishes to use joining CPTPP as a tangible symbol of the UK’s newfound trade policy autonomy to justify “Brexit”.
Existing members will also benefit politically as well — Economist Intelligence Unit (EIU) global trade lead Nick Marro notes that British accession would help in their goal of enlarging the pact. By having a major power like the UK joining up, fence-sitters like Malaysia, Chile, Brunei and Peru may be persuaded that the CPTPP is a useful institution and not joining would mean being left behind economically. India, Marro hopes, may even be convinced to come back to the negotiating table for the Regional Comprehensive Economic Partnership (RCEP) in a bid to maintain relevance even if it does not join the CPTPP.
But the UK will nonetheless not be left empty-handed – there are at least some tangible trade benefits to joining CPTPP. Besides improving on existing bilateral trade pacts, Hiroshi Matsuura, former visiting fellow at British think tank Chatham House, sees British industries being able to demonstrate strengths in services and digital trade while building efficient supply chain networks across the CPTPP’s diverse member economies.
Existing members, says the chief negotiator in the UK-Japan Comprehensive Economic Partnership Agreement, will be able to draw on innovative British industries to accelerate modernisation efforts at home. Matsuura also sees greater opportunities for their goods and services in the UK market, with success stories instantly communicated to other markets through the influence of the British media. “They... know that the UK is an excellent testing ground for global markets,” he writes in a Chatham House commentary.
Arcese of Foord also notes that the UK will benefit from tapping into the rapid growth of the Asia Pacific region through the CPTPP — a bloc approximately the size of the EU. “But I do think that opening up new economic avenues of growth would benefit both sides,” he says, noting that it is sensible for the UK to want to pivot towards the Pacific given that the region’s growth will likely outpace Europe’s. He hopes that CPTPP will reduce bureaucratic “red tape” that UK-headquartered firms have to undergo when doing business abroad.
The long road to membership
Still, declaring one’s intention to join the CPTPP is but merely a prelude to the long process of actually signing up to the pact. Deborah Elms, executive director of the Asian Trade Centre (ATC), notes that existing members will have to form working parties to guide new members through the crafting of their trade commitments. These commitments could range from the timing of tariff cuts to government procurement regulations, and must be approved by existing members.
New members — even one as influential as the UK – will not be able to demand any revision to the existing terms of the CPTPP. Existing members are not obliged to amend earlier commitments to accommodate the UK. In this sense, writes Elms in ATC’s Talking Trade Blog, the process bears greater resemblance to accession to an international institution like the World Trade Organization than a bilateral trade negotiation.
The UK will therefore not enjoy the same ability to demand exemptions and concessions that it did as an EU member (for example, opting out of the Eurozone). Morita-Jaeger notes that CPTPP members are eager to ensure that the UK fully accepts all CPTPP rules without exception. As the CPTPP’s first accessing member, any political exceptions could set a bad precedent for future accessions, diluting the quality of the deal.
Elms is optimistic, however, that the accession process will be relatively quick for the UK. “Joining the deal has political engagement at the highest levels in London, discussions have been underway for some time, and many of the most challenging topics have already been flagged,” she writes. Moreover, as a highly developed open economy, there is apparently little disagreement between London and the rest of the CPTPP members regarding free trade.
Considering the relative cost and effort of conducting such accession negotiations, however, Elms believes that the CPTPP would wish for other would-be members to participate in the accession process alongside the UK. She sees Brunei, Chile, Malaysia and Peru as top candidates, followed by South Korea and Thailand. US or Chinese accession to CPTPP, however, remains unlikely due to political complications for both economies.
UK's total trade with CPTPP countries, 2019
