Britain is set to join an 11-member Asia-Pacific trade bloc, with accession talks expected to be wrapped up by the end of this week.
British officials said talks to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership were reaching the “end game” stage, while one told the Financial Times: “The deal is done.”
Britain’s accession to the group will bolster claims by Prime Minister Rishi Sunak that Brexit has allowed the UK to pursue a new trade strategy, while also enhancing his foreign policy “Asia-Pacific tilt”.
However, the economic gains for Britain are minimal, according to the government’s own projections, and will do little to offset the European trade losses incurred as a result of Brexit.
The government estimates that the deal will increase UK GDP in the long term by just 0.08 per cent, although it said that could increase if Thailand and South Korea later joined the group.
The current membership of the CPTPP, a free trade agreement signed in 2018, is: Australia, Canada, Japan, Mexico, New Zealand, Singapore, Brunei, Chile, Malaysia, Peru and Vietnam.
The deal could also be controversial. The FT reported this month that as part of the agreement, Britain would eliminate import tariffs on palm oil from Malaysia, a product blamed for widespread deforestation.
British officials declined to comment on the terms of the deal before it was finalised. Diplomats in one CPTPP member state said the agreement, first reported by Politico, would be wrapped up by the end of the week.
Japan has been one of the leading supporters for Britain joining the group. In 2018, former prime minister Shinzo Abe told the FT that Japan would welcome the UK “with open arms”.
UK government data showed that in 2020 the 11 CPTPP countries were the destination of 8.4 per cent of UK exports of goods and services and the source of 6.8 per cent of imports.
Although trade deals have been touted as one of the big “benefits of Brexit”, they have done little to compensate for the barriers to trade erected by Britain’s departure from the EU.
Official forecasts suggest that Brexit will lead to Britain’s GDP being 4 per cent lower in the medium term, a loss that dwarfs the economic benefits of doing a deal with countries on the other side of the world.
However, Sunak views the agreement as economically and strategically important, giving Britain a new role in a region dominated by China.
This month the prime minister signed a submarine deal with Australia and the US as part of the Aukus deal.
The closure of the CPTPP deal was assisted by the recent resolution of the row between the UK and EU over customs arrangements for Northern Ireland, British officials confirmed.
In particular, CPTPP members had raised fears that Britain’s threat to rip up the Northern Ireland protocol — now dropped by Sunak — could have set a precedent for future applicant countries to the bloc, notably China.
Downing Street confirmed that talks to join CPTPP were “progressing well” and that a further meeting would take place by the end of the week.
Source: Economy - ft.com
