The Business Secretary of the UK, Kemi Badenoch, has emphasised the need for the UK to actively use the newly signed trade deal with 11 Asia and Pacific nations in order to fully benefit from it. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) covers a trade area with approximately 500 million people. While the agreement is expected to bring only marginal gains to the UK economy, Badenoch believes that the key lies in how businesses "utilise the agreement."
The CPTPP and Its Benefits
Established in 2018, the CPTPP includes countries such as Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Membership in the CPTPP reduces trade restrictions among member nations and lowers tariffs on goods. By joining the group, the UK hopes to boost its exports by reducing tariffs on products such as dairy and meat, cars, gin, and whisky.
With the 11 member countries accounting for approximately 13% of global income, the UK has become the first European country to join the CPTPP. However, government estimates suggest that being part of the bloc will only contribute 0.08% to the UK's economy over a 10-year period.
The Importance of Utilisation
Despite the relatively modest projected economic impact, Kemi Badenoch argues that the government's estimate does not account for future growth or how effectively the agreement is used. She stresses that if the trade deal is not actively utilised, any underperformance would be a self-fulfilling prophecy. The Business Secretary highlights the vast potential of the Asia-Pacific region, which is expected to contribute at least 50% of global growth between now and 2035.
Benefits and Concerns
The UK government has stated that CPTPP member businesses employ around 400,000 people in the UK, generating 6.1% of total turnover despite constituting only 0.3% of all UK businesses. The deal is seen as good news for UK businesses, particularly for small- and medium-sized enterprises that can benefit from reduced costs for importing components from member countries.
However, concerns have been raised regarding the impact on workers' rights, environmental standards, and animal welfare. The TUC trade union body, represented by Paul Nowak, criticises the pact as "bad for workers at home and abroad" due to alleged disregard for human rights and workers' rights abuses in pursuit of trade deals. The chair of the John Lewis Partnership, Dame Sharon White, expresses a desire for assurance that British farmers and high animal welfare standards will not be undercut.
The Future and US Trade Agreement
The CPTPP agreement will undergo scrutiny and ratification by member nations, which could take at least a year. Regarding a potential free trade agreement (FTA) with the US, Badenoch explains that the change in US administration has impacted the process. She highlights that it is not possible to force a country to engage in a trade agreement when its administration changes.
China's potential membership in the CPTPP has also been a topic of discussion. Badenoch indicates that this matter is being considered but suggests that it is not appropriate for the UK to dictate membership decisions for other countries when joining a club.
Conclusion
While the newly signed CPTPP trade deal with Asia and Pacific nations is predicted to bring marginal gains to the UK economy, Business Secretary Kemi Badenoch emphasises the importance of actively utilising the agreement to maximise its benefits. Despite doubts and concerns raised by trade unions and industry leaders regarding workers' rights, environmental standards, and animal welfare, the UK government sees potential advantages for UK businesses, particularly in reduced import costs. The agreement's future implementation and its impact on various sectors will be closely monitored, while discussions continue regarding the UK's trade relationship with the US and the potential membership of China in the CPTPP.
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