The UK has reached an agreement in principle to join the CPTPP. It is a landmark move reaffirming the UK’s commitment to the Asia-Pacific region which is seen as a key economic and security priority for the UK.
CPTTP is a trade bloc comprising 11 sovereign countries with a combined GDP of £11trillion once the UK joins. Current members are Japan, Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Costa Rica, Ecuador and Uruguay have formally applied to join. Thailand, The Philippines and South Korea have also expressed interest in joining.
CPTPP economies account for 15% of global trade and 13% of global GDP.
The Corporation of London says, accession will help the UK to become a leader in digital trade with modern rules on data and freer access to each other’s services sectors, while ensuring that UK data and intellectual property are safe.
The Asia-Pacific region is predicted to account for 2/3rd of the global middle class by 2030 and more than half of the global economy by 2040. Joining the CPTPP means that UK business can sell nearly all their goods without tariffs to 500m customers.
CPTPP opens up the potential for easier imports and exports to and from CPTPP markets and the manufacturing of higher quality goods like the automotive industry capitalising on closer trading relations with major car export destinations.
There are specific benefits for higher taxed industries such as financial services or spirits e.g. tax on Scotch whiskey in Malaysia could drop from 165% to 0%. However, there are possible downsides if sectors like agriculture are unable to compete with the large economies of scale achieved in Australia and New Zealand.
There are also possible benefits to services organisations (legal, financial, professional and technology) as the easing of regulatory barriers will enable them to expand on £30bn of services currently exported to the region.
There is a benefit in the resource sector from, for example Chile and Vietnam, as countries which have access to rare earth minerals essential in high tech products.
The CPTPP recognises the challenges SMEs face in establishing export markets and includes outcomes to help make the task easier.
We continue to offer our services to assist you in an early breakthrough into this valuable region as a new market for your products and services.
Winter 2021