Britain Becomes First European Member of Trans-Pacific Trade Bloc
The United Kingdom became the first new member—and the first in Europe—to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) since it entered into force in December 2018, unlocking access to a region with total GDP of USD 13.6 trillion.
The CPTPP is a free trade agreement signed by 11 Asia-Pacific countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) representing 13% of global GDP. The accord lowers barriers to trade in goods and services among member countries, which have pledged to scrap almost all tariffs and import charges on each other’s products. They have also accepted common obligations on food regulations, environmental protections, the digital economy, investment, labour, and financial services, among others.
The bloc will be worth more than 15% of the world’s GDP once the United Kingdom joins, according to British Prime Minister Rishi Sunak. “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms,” he said in a statement. “British businesses will now enjoy unparalleled access to markets from Europe to the south Pacific.”
While the British government called the agreement its “biggest trade deal since Brexit,” its own estimates show that the deal will raise long-term domestic GDP by just 0.08% over the long term—or about 15 years. That means it will have little impact to offset Europe trade losses as a result of Brexit.
Britain’s accession means the country has met the high standards of the CPTPP’s market access requirements and that it will align with the bloc’s sanitary and phytosanitary standards as well as provisions such as investor–state dispute settlement. The resolution of a spat between the United Kingdom and Canada over agricultural market access last month smoothed the way to joining up.
Will the CPTPP Replace the WTO?
China has also applied to join the CPTPP, but its progress has been slow. Taiwan also is seeking to join the bloc.
Trade pundits, including former New Zealand trade minister Tim Groser, say the CPTPP’s expansion as a global trade agreement rather than a regional one could supplant the World Trade Organization (WTO). He told the South China Morning Post that the CPTPP has manifested the “spaghetti bowl” concept—where countries make direct trade deals with each other, sidestepping the WTO.
Britain’s membership in the bloc transforms the CPTPP “from a regional to an alternative global system,” he said.
“The spaghetti is all being put together in this sort of large multilateral or multilateral/plurilateral deal . . . and of course, now we have this interest of China, the No. 2 economy in the world, plus the customs territory of Taiwan,” Groser said. “If the WTO continues to go round and round in circles doing very, very little, which is the case of the last 25 years, and this agreement loses its Asia-Pacific specific regional character and starts to acquire other members, I think there’s every reason to think it could become an alternative system of multilateral rules.”
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