Isabel Reynolds and Wei Zhou
Sun, July 16, 2023
(Bloomberg) -- The UK signed a treaty to join a Pacific trade deal on Sunday, becoming the first new member since the framework came into force and shifting attention to a list of other applicants led by China.
Business and Trade Secretary Kemi Badenoch defended the deal as meaningful for the UK even though it already had trade agreements with most of the countries involved, and internal projections show a minimal economic impact.
“It will make a significant amount of difference,” she said on Sky News from Auckland. “We have a seat at the table in the fastest growing region.”
Badenoch also said that the chances the UK can ink a trade deal with the US are “very low.” The ability to ink such agreements, particularly with the world’s largest economy, was a major part of the UK’s Brexit campaign.
“The US is not carrying out any free trade agreements with any country,” Badenoch said on Sky. “Lots of countries have been looking to have free trade agreements with the US, including us, but for now they said that’s not something they want to do, and we need to respect that.”
Badenoch signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in New Zealand, the government said in a statement. New Zealand is chairing a meeting attended by 11 trade ministers and delegations from CPTPP economies.
Formerly known as the TPP, the agreement at one time included the US and was seen as a way of containing China’s growing influence in the Asia Pacific. Former President Donald Trump pulled the US out of the pact in 2017 and China made its application to join in 2021.
CPTPP-owned businesses employ 1% of UK workers, and membership is expected to “turbocharge investment” further, according to the UK government. British whiskey and cars are among 99% of current UK goods exports to CPTPP that’s set to be eligible for zero tariffs, it added.
“The UK’s formal accession to CPTPP marks a significant milestone for UK trade, enabling ambitious British businesses to connect with the world’s most exciting growth markets for start-ups, innovation and technology,” Ian Stuart, chief executive officer at HSBC UK, said in the statement.
China Next
Beijing is next in sequential order to enter negotiations as the CPTPP seeks to expand, followed by Taiwan, Ecuador, Costa Rica, Uruguay and Ukraine. But China’s accession would be divisive given tensions with existing members including Japan, Australia and next year’s chair, Canada.
“There was no specific discussion on any of the individual aspirants,” New Zealand Trade and Export Growth Minister Damien O’Connor said in Auckland at a press conference on Sunday.
The 12 CPTPP members are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the UK and Vietnam. The bloc, which is home to 500 million people, would account for 15% of global GDP with the inclusion of the UK joins, according to the International Monetary Fund.
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While the US last year established a rival pact known as the Indo-Pacific Economic Framework for Prosperity, it doesn’t include provisions for market access. China is not among the 14 members negotiating that agreement.
--With assistance from Chris Kay.
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