In a recent policy paper (published on 17 June 2020) the Department for International Trade (“DIT“) outlined the progress made and the phases ahead in the UK’s plan to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP“). Accession is motivated by the prospects of a domestic industrial revival, stronger trade and supply chains, and the diversification of investment opportunities for UK businesses. As the seventh largest global economy, UK membership of the CPTPP would represent a significant addition to the network of free trade agreements linking the 11 current members situated in the Asia-Pacific region.

Background

The CPTPP is a free trade agreement between 11 states in the Asia-Pacific region, including Australia, Japan, New Zealand, Singapore, Canada and Latin-American signatories.

Concurrent with the Brexit negotiations between the UK and the EU, the UK is seeking to (i) conclude continuity agreements with countries with which it is currently in a free trade agreement (“FTA“) by virtue of its membership of the EU; and (ii) negotiate FTAs with new countries, with which it doesn’t currently have any agreement in place. This includes a potential accession to the CPTPP, with cited motives including strengthening trade relations with the UK’s key allies and diversifying supply chains.

Together, members of the CPTPP account for 13% of global GDP, which would increase to 16% upon UK accession. Since entering into force in December 2018, CPTPP members have reportedly experienced significant growth in trade volumes with other signatory states a result of market access expansion, tariff and customs duty reductions, and diversification of supply chains.

Other countries which have signalled an interest in joining the CPTPP include China, Indonesia, South Korea, Colombia and Thailand.  

DIT’s reasons for considering accession to the CPTPP

The UK’s intention to accede to the CPTPP was outlined in a Government policy paper published by the DIT on 17 June 2020.

The CPTPP is hoped to be the focal point of UK trade activity post-Brexit for various reasons. The DIT hopes that the CPTPP could facilitate a UK industrial revival and secure new investment opportunities for domestic exporters. In support of this claim, the DIT policy paper noted that in 2019, each region and nation of the UK exported at least £1 billion worth of goods to CPTPP member countries, and in 2018, UK companies held close to £98 billion worth of investments in CPTPP countries.

The UK Government also notes that CPTPP would facilitate the diversification of trading links and supply chains, lending further economic security to domestic businesses (something especially important in the wake of the COVID-19 pandemic). The DIT suggests, for instance, accession may simplify and facilitate the access of small to medium enterprises (“SME“) to the global economy. Further, the paper notes that the CPTPP reduces tariffs on 95% of goods between its members and sets modern rules in areas of increasing importance for UK industry and business, including on digital trade, data, financial, professional and business services.

UK International Trade Secretary Liz Truss described CPTPP accession as capable of transforming the UK into the global destination for investment activity. The DIT has stated that ‘accession would help us realise our ambition to have 80% of UK trade covered by free trade agreements in the next three years.’

Negotiations so far and next steps

The CPTPP accession process encourages prospective member countries to engage with all existing member countries. The UK commenced such engagement in July 2018 and its interest was reported by the DIT as favourably received by all 11 member countries. However, dissent has been expressed in the past, particularly by Australian trade minister Simon Birmingham, on the basis that the UK is outside the geographical sphere of the CPTPP.

At present, the UK (through membership of the EU) benefits from existing agreements with several CPTPP countries, namely, Canada, Chile, Mexico, Peru, Singapore and Vietnam. As noted above, the UK is currently negotiating “continuity” provisions with these existing FTAs to allow the UK to continue to benefit after the end of the Brexit transition period, which it deems to be complementary to CPTPP membership. The UK is also beginning the process of negotiating new bilateral FTAs with other CPTPP member countries, including Australia, New Zealand and Japan.

Prior to a formal application to accede to the CPTPP, the DIT would need to release an outline approach detailing negotiation objectives, including an assessment of all benefits, the economic impacts of accession, any potential adverse impacts, and a formal response to concerns raised by respondents to the CPTPP accession public consultation exercise.

The formal application process also requires notifying New Zealand, as the CPTPP depositary country, of a formal request to commence negotiations on acceding to the CPTPP. The members of the CPTPP will then decide whether to commence the accession process, with the decision being made public.

Negotiations would then take place via a working group with discussions on various topics including details of market access offers by the UK, before ultimately a decision will be made by the members as to whether the UK may accede. If successful, accession would take place 60 days later.

Author

Jessica's practice focuses on international trade and anti-bribery work, encompassing customs, export control and sanctions matters. Jessica's trade work includes advising international clients on fast-moving and evolving EU and UN sanctions, notably in respect of Iran and Russia, and on compliance with UK and EU export controls. Her trade experience also includes advising on tariff classification and customs valuations. Jessica's anti-bribery experience includes assisting with investigations, and advising clients on compliance with anti-bribery laws. Jessica has also taken a lead role in monitoring Brexit-related developments; analysing how they will affect the UK's trading position generally, and clients' businesses specifically. She has helped clients begin to conduct risk assessments of how Brexit will impact their businesses, and has assisted them in developing tailored Brexit strategies. Jessica also presents at various seminars, webinars, and conferences on the complexities of Brexit. Jessica advises global clients on complex issues arising from international transactions and works with clients across a number of sectors including pharmaceuticals, defence, finance, aviation, energy, and telecommunications. Jessica has also worked previously in Paris, and is fluent in French.

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