UK to Join Indo-Pacific Trade Bloc in Biggest Trade Deal Since Brexit

Read More

Britain will join a vast free trade area of 11 countries spanning the Indo-Pacific region, Prime Minister Rishi Sunak has announced.

The UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was formally confirmed in a call between Trade Secretary Kemi Badenoch and her counterparts from the group in the early hours of Friday.

Britain is the first new member, and the first European nation, to join the bloc—comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—since its formation in 2018.

It follows nearly two years of negotiations, culminating in intensive talks in Vietnam earlier this month when representatives of the 11 existing members agreed to the UK joining.

It represents Britain’s biggest trade deal since leaving the EU, cutting tariffs for UK exporters to a group of nations which—with Britain’s membership—will have a total gross domestic product (GDP) of £11 trillion, accounting for 15 percent of global GDP, according to UK officials.

Sunak said the deal “will help us unlock the benefits of Brexit” and put Britain in a “prime position” in the global economy.

But critics say the deal will bring about very limited benefit, as the UK already has free trade deals with all CPTPP members except Brunei and Malaysia—and some of the trade deals were rolled over from Britain’s previous EU membership.

In an impact assessment of the deal when negotiations started in 2021, Britain said the agreement is estimated to deliver an increase of just 0.08 percent to GDP over the long term.

It is thus far from making up for the losses caused by Brexit, which the Office for Budget Responsibility (OBR) predicted will cut UK GDP by 4 percent.

‘Post-Brexit Freedoms’

Despite its modest economic impact, Sunak hailed the deal as a Brexit success.

He 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.

“Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join. British businesses will now enjoy unparalleled access to markets from Europe to the South Pacific.”

In a video posted to social media to promote the pact, Sunak said: “That’s an amazing opportunity for British businesses to trade with new markets on the international stage and a huge boost for growth in our economy back home, creating lots and lots of jobs.”

While Britain already has trade agreements with most of the CPTPP members, UK government officials said it would deepen existing arrangements, with 99 percent of UK goods exported to the bloc now eligible for zero tariffs.

Key UK exports to the region, including cheese, cars, chocolate, machinery, gin, and whisky, will be among those to benefit, while officials said the services industry would also enjoy reduced red tape and increased market access.

At the same time, they said vital UK sectors, including agriculture and the National Health Service (NHS), will be protected, while existing animal welfare and food safety standards will be maintained.

The deal represents a continuation of the post-Brexit policy “tilt” towards the Indo-Pacific region under former Prime Minister Boris Johnson.

Former Prime Minister Liz Truss, who led the UK’s application to join CPTPP two years ago, said she is “delighted” by the news.

“Global Britain in action and an important counterweight to those who seek to undermine our values,” she wrote on Twitter.

‘The Yield Is Very Small’

The Confederation of British Industry (CBI) welcomed the agreement as a “milestone” for British industry, reinforcing the UK’s commitment “to building partnerships in an increasingly fragmented world.”

CBI interim director-general Matthew Fell said: “CPTPP countries and business need to work together to future proof the rules-based trading system and stimulate growth with a focus on digital, services, and resilient supply chains.”

Labour leader Sir Keir Starmer welcomed the UK’s accession to the bloc but cautioned the net contribution to the economy would be small as he called for a closer relationship with the EU.

Starmer told broadcasters during a visit to Plymouth: “I do think it’s an important trade deal, but the yield is very small. Hopefully, that will grow over time.

“But the rule in trade is that you’re more likely to trade with your nearer neighbours more and more often, so we do need that improved, that better trading relationship with the EU alongside any other trade deals that we sign.”

Liberal Democrat trade spokeswoman Sarah Green said: “This Conservative Government is responsible for some shocking trade deals that fail to add economic benefit to the UK.

“The Conservatives have trashed the British economy with GDP stagnant and this announcement will not even repair a fraction of their damage.”

PA Media and Reuters contributed to this report.