On 15 December 2024, the UK formally joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the trade pact with several countries in Asia and the Pacific.
This marks an advance in the UK’s trade partnerships and a strengthening in the UK’s economic security, with the new membership providing businesses in the UK with increased access to the member nations’ international markets, comprising more than 500 million individuals.
Trade agreements with the member nations - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – are not novel for the UK. With the exception of Brunei and Malaysia, many of these nations are part of existing trade deals with the UK via the UK’s previous EU membership and other previously ratified trade deals.
So, what new benefits can businesses and consumers expect to see following the ratification of the UK’s accession into CPTPP?
New opportunities for Growth
The CPTPP has been described as a “Gateway to Growth” for the UK. With new and growing access to the Indo-Pacific region, the UK can stand to strengthen its ties with some of the fastest-expanding economies in the world.
With the UK’s recent onboarding, CPTPP’s membership sits at 12 sovereign nations and growing, with applications for membership formally submitted by countries such as Costa Rica and Uruguay and others such as Thailand and South Korea expressing interest in joining. The long-term benefits could see businesses in the UK having increased access to sell goods and services into markets with a combined GDP of £14 trillion.
Reduction in Tariffs
Entry into the CPTPP will also bring with it a principal gain for UK exporters – a reduction in tariffs on goods.
With 99% of goods exported to CPTPP nations set to be eligible for zero-rated tariffs, UK businesses can expect to see a reduction in costs to export to these nations, allowing for improved market access and more opportunities for investment in key infrastructure and growth locally.
A New Trade Relationship
The trade deal presents a pivotal point in the UK’s trade history – for the first time, the UK will have active membership in a trade deal with Malaysia and its £320 billion economy, enticing benefits for UK businesses, in particular those within the whisky industry, with reductions in up to 80% on export tariffs.
The UK’s main exports to Malaysia also include machinery, cars and electrical equipment, with a combined value of just shy of £780 million in 2023. UK-based producers and exporters in these industries will benefit from preferable tariffs and increased access to these markets, strengthening economic ties between the two nations.
Benefits from the Kitchen Table
Trade Agreements also carry benefits for individual consumers, offering greater availability of high-quality but affordable goods, such as fruit juices, honey, chocolate and household goods.
With the increase in cost of the weekly shop over the last few years post-Brexit harbouring concern amongst consumers across the UK, the opportunities to reduce the shopping bill without compromising on quality will be a welcome change for the UK public.
At what cost?
Public scrutiny of the UK’s entry into the CPTPP has voiced, with good reason, concerns regarding what the trade-off has been for entry, and whether the membership will pose more significant risks rather than benefits to priorities such as climate change.
In particular, there are concerns over how the UK can ensure environmental, food safety and animal welfare standards can be met and maintained in conjunction with the new trade relationships.
Concerns raised regarding the import of palm oil from Malaysia have also stirred environmental groups, with worries that the reduction in tariffs on palm oil will further issues arising from deforestation and destruction of wildlife habitats.
It was stressed by the Conservative Government, in power at the time, that food imports will continue to comply with UK standards, and the CPTPP allows all member nations to set their own levels of protection, resulting in no compromise on quality.
A joint statement on the plans to ensure sustainable agricultural commodity trade and cooperation to conserve forests has also been published by the UK and Malaysia to settle fears and reaffirm the commitment to the sustainable production of palm oil.
The Future with CPTPP
The UK’s accession to the CPTPP is still to be fully ratified, with Canada and Mexico yet to do so – for now, trade with those countries will not be possible under the CPTPP.
However, the biggest rewards are yet to be seen. It may be that the UK’s recent accession is strategic to place them fully in the mix when larger nations join the deal.
Nations such as China and Taiwan, both vying for a spot at the table, may bring with them even greater opportunities (or challenges) for trade with the UK.
For now, the ratification represents a win for the UK’s post-Brexit trade sphere.
If you would like further information regarding how the UK’s accession into the CPTPP will affect your business, please get in touch with our leading Trade and Commerce Team, or your usual Shepherd and Wedderburn contact.
This article was co-written by Madeleine Gill, Trainee in Media and Technology.