Dhe United Kingdom is the first European country to become a member of the transpacific free trade alliance CPTPP, which includes Japan, Canada, Australia and Mexico. The eleven member countries and the government in London have agreed on this. The UK has made commercially significant market access offers for goods, services, investment and financial services, according to a statement released Friday after an online meeting of relevant ministers and negotiators.
In Asia, the United Kingdom’s accession to the free trade alliance is largely attributed symbolic significance as a signal against Chinese trade pressure and for a rules-based international order. Measured in terms of economic size, the United Kingdom is number two in the trade alliance. However, the relatively low volume of trade between the British and the Asia-Pacific partners means that only limited positive economic effects can be expected. Great Britain expects a long-term positive effect of 1.8 billion pounds (around 2 billion euros).
The attractiveness of the trade alliance grows
Japan’s Economic Revitalization Minister Shigeyuki Goto said Britain’s accession was important because it would strengthen values such as free trade and open, competitive markets within and beyond the Pacific region.
British Prime Minister Rishi Sunak said that by joining, the UK will be at the center of a dynamic and growing cluster of Pacific economies. British companies would now enjoy unparalleled access from Europe to the South Pacific. For the UK, accession is the biggest trade deal since Brexit.
The Trans-Pacific Free Trade Pact, which came into effect in 2018, has appeal beyond the British. From Asia, China and Taiwan have already knocked on the door to join the trade alliance, as well as Uruguay, Ecuador and Costa Rica. South Korea and Thailand are also interested in joining.
The CPTPP alliance is an attempt to establish high standards for open markets in the area of public procurement and with a view to state-owned companies, in addition to a far-reaching opening for free trade. It is an Asia counter-proposal to the RCEP trade pact, which is heavily influenced by China, with a number of countries belonging to both alliances. The eleven member states of the CPTPP so far generate around 12 percent of global economic output.
The unwieldy English abbreviation CPTPP stands for “Comprehensive and Progressive Transpacific Partnership” and is due to Canadian Prime Minister Justin Trudeau, who saw no chance of enforcing the free trade alliance in Canada without the “progressive and comprehensive” rating. Sorted by economic size, the free trade alliance includes Japan, Canada, Australia, Mexico, Malaysia, Singapore, Vietnam, Chile, New Zealand, Peru and Brunei Darussalam. The United Kingdom will rank second. However, trade relations with the Pacific states are few.
hopes for US accession
It is the first admission of a new member for the free trade alliance. In Japan, this is linked to faint hopes that the trade alliance could become attractive again for the United States. Under President Barack Obama, America had pushed ahead with negotiations to set an economic counterweight against China in the Pacific region.
Obama’s successor, Donald Trump, had allowed America to leave before the treaty was ratified. Current President Joe Biden also shows no interest in CPTPP. He launched his own initiative to strengthen the economic ties between Asia Pacific and America. But this is not about more free trade.
The UK’s inclusion in the CPTPP is to be formally decided at a ministerial meeting in July. After that, ratification in the member states is pending.