UK Signs CPTPP Agreement for Trade with Pacific Region

20 July 2023

Our trade agreements and origin specialist Sam Paley shares his take on Britain’s latest trade deal

On 16 July, government representatives formalised the UK’s accession to the eleven-nation Pacific trade agreement known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, strengthening ties with some of the world’s most dynamic economies.  The agreement will most likely come into effect later this year, once all the legislative processes have been completed.

Britain already has bilateral free trade agreements (FTAs) with nine of the member countries; CPTPP replaces these, and effectively adds Malaysia and Brunei to the UK’s collection of FTAs for the first time.  Costa Rica, Ecuador, Uruguay, China and Taiwan have also applied to join the bloc in the last couple of years; the first three of these applications are likely to be approved soon, but the other two pose some political challenges for the bloc.  Thailand, the Philippines and South Korea have also expressed an interest in joining.

The UK will only see the full benefit of a new trade deal with eleven Asia and Pacific nations if we use it, the Business Secretary told the BBC in an interview on the day of the announcement.  Though this might appear to be a statement of the obvious, there is an important point being made: UK businesses have a ready market in the Pacific Rim nations, one that they may not be fully aware of; CPTPP puts the region back into the spotlight for the UK, and effectively says to businesses “the opportunity is there for you”.

Origin – an opportunity to gain competitive edge

One of the key benefits of joining CPTPP relates to the origin of goods.  Rather than having to deal with 11 different set of origin rules, UK exporters will only have to relate to a single set for the whole of the CPTPP, which currently includes Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam, Peru, Chile, Malaysia and Brunei.    

It will also allow for cumulation between the UK and the other countries – for instance, because of this trade agreement, a UK business can take an input from Japan, process it in the UK, and send the finished product to Singapore tariff-free. This opens up new options for UK exporters to diversify their supply chains, and gain a competitive edge in the region.  It will also give business in other CPTPP extra reason to source components and ingredients from the UK, rather than non-CPTPP countries.

The strategic dimension

Some commentators are suggesting that the political and strategic impacts of the UK joining CPTPP are more those relating to international trade.  Japan is particularly pleased with this development: as the current chair, Japan has championed Britain’s application; Britain is the second-largest economy in CPTPP after Japan, adding further credibility and weight, and making it more likely that others will want to join.  Non-UK analysts have also suggested that Japan and the other members may be hoping that Britain will be able to play something of a “gatekeeper” role in the group, using its veto in relation to issues that cause difficult tensions within the region.

Contact us for advice and practical assistance exporting to new global markets, and getting ready to advantage of CPTPP membership.