The deal, which was struck following months of negotiations, puts the UK amongst a dynamic group of economies, as its first European member and first new member since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was created in 2018.
Prime Minister Rishi Sunak said: “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms. As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation."
British businesses are now set to benefit from access to markets from Europe to the south Pacific. Total UK exports to CPTPP countries were worth £60.5 billion in the 12 months to the end of September 2022 and this is expected to grow under CPTPP.
Under the agreement the services industry will benefit from reduced red tape and greater access to growing Pacific markets with an appetite for high-quality UK products and services.
More than 99% of UK goods exports to CPTPP countries will now be eligible for zero tariffs, including key UK exports such as cheese, cars, chocolate, machinery, gin and whisky.
Business and Trade Secretary Kemi Badenoch said: “This is an important moment for the UK. Our accession to CPTPP sends a powerful signal that the UK is open for business and using our post-Brexit freedoms to reach out to new markets around the world and grow our economy.
“Joining CPTPP will support jobs and create opportunities for companies of all sizes and in all parts of the UK. It is about giving British businesses improved access to the countries that will be gateway to the wider Indo-Pacific region which is projected to make up the majority of global growth in the future.”
Membership is a gateway to the wider Indo-Pacific region, which has 60% of the world’s population and is set to account for the majority (54%) of global economic growth and around half of the world’s billion middle-class consumers in the decades ahead.
Additional benefits include:
Boosting services: The UK is the world’s second largest services provider and services accounted for 43% of trade with CPTPP members last year. Joining the bloc will slash red tape – UK firms will not be required to establish a local office or be resident to supply a service and will be able to operate on a par with local firms.
Increased flexibility: Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely across the bloc. For example, UK car manufacturers could sell car engines tariff-free to a car maker in the bloc who could then sell those cars tariff-free to any member country. This is currently not possible under all the bilateral trade agreements the UK has in place with CPTPP members and will help exporters diversify their supply chains and create new export opportunities.
Pro-investment: Investment between the UK and CPTPP countries is expected to increase as the agreement contains provisions to limit barriers and encourage more inward investment. Inward investment stocks to the UK from CPTPP countries were worth £182 billion in 2021.
Cutting-edge: Remotely delivered services from the UK to CPTPP were worth £20.5 billion in 2020. CPTPP sets modern rules for digital trade across all sectors of the economy and will support UK businesses of all sizes to seek new opportunities in CPTPP markets.
New markets: Joining means the UK will have a Free Trade Agreement with Malaysia for the first time, giving businesses far more access to an economy worth £271 billion in GDP in 2021. Tariffs of around 80% will be eliminated on UK exports of whisky and 30% on UK exports of cars, helping the UK get a larger share of the market.
Kate Jennings, Logistics UK’s Director of Policy said: “The UK’s accession to the CPTPP may only yield small benefits to the nation’s business in the short term, but the access to innovation and increased productivity which the deal will deliver longer term will be of benefit to the overall health of the UK economy.
“As a nation with longstanding and excellent trading links worldwide, UK PLC stands ready to benefit from the opportunities the new agreement will provide thanks to the country’s interconnected supply chain. The success of the agreement will stand on improved access to high growth markets including simplification of customs processes and future opportunities to digitise the movement of goods to speed connections between the UK and the 11 nations involved.”
Director General of the Institute of Export & International Trade, Marco Forgione said: “We welcome the news of the UK’s imminent accession to CPTTP. This agreement not only reduces trade tariffs for goods, but also sets new rules in areas such as services, investment, intellectual property, digital trade and advanced manufacturing.
"This is all good news for UK businesses, giving them greater access to one of the fastest growing regions in the world, accounting for around 13% of global GDP. It will also enhance our ties with countries we already have trading partnerships with, building more resilient supply chains between nations.
"There are pioneering provisions to support growth of trade in services, particularly with regards to digital and mobility unlocking vast new potential for cross-border trade and investment. Advanced manufacturing opportunities will present a huge source of innovative development.
"The addition of the UK into the CPTPP signals to the world that the core values of liberalised rules-based trade as a vehicle for good will continue to underpin international trade in the future.
"We look forward to supporting both our members and the wider trading community in the CPTPP bloc to maximise the opportunities that this partnership will undoubtedly present."
Commenting, BIFA Director General Steve Parker said:“If imminent membership of the CPTPP delivers the boost for economic growth and geopolitical relations that the Government anticipates, it will be welcome news for BIFA members that are responsible for the freight forwarding and logistics services that underpin much of Britain's visible import and export trade.
"BIFA looks forward to supporting its members as they seek to benefit from any opportunities the new agreement may bring, which will depend on how the improved access to the 11 high growth nations that are involved is achieved.”
The UK and CPTPP members will now take the final legal and administrative steps required for the UK to formally sign in 2023.