UK signs Comprehensive and Progressive Agreement for Trans-Pacific Partnership
The new agreement will simplify import and export process between the UK and Chile, improving the business environment between the two countries as members of the bloc.
Being part of CPTPP will mean that more than 99 per cent of current UK goods exports to CPTPP countries will be eligible for zero tariffs.
At 2.30am UK time in New Zealand, on Sunday 16 July, the UK’s Business and Trade Secretary, Kemi Badenoch formally signed the treaty to accede to the CPTPP trade bloc, kickstarting the UK’s membership of a modern and ambitious trade deal spanning 12 economies across Asia, the Pacific, the Americas and now – thanks to the UK’s membership - Europe.
The UK Secretary of State for Trade travelled to Auckland to put pen to paper on this mega deal, alongside New Zealand Trade Minister Damien O’Connor, Chile’s Under-Secretary for International Economic Relations Claudia Sanhueza and the trade ministers of other CPTPP member states.
The signature is the formal confirmation of agreement for the UK to join the group, following substantial conclusion of negotiations earlier this year. The UK Government will now seek to ratify the agreement, which will include parliamentary scrutiny by British Parliament, whilst other CPTPP countries complete their own legislative processes.
The new agreement will reduce red tape for trade between Chile and the UK, simplifying import and export process, and improving the business environment between the two countries as members of the bloc. Over 99% of exports between CPTPP members will have zero tariffs, with reduced tariffs on imported goods in both directions benefitting both Chilean and British consumers through better choice, quality and affordability of products. The agreement will also provide Chile and the UK with a new set of opportunities to deepen the UK and Chile trading relationship even further, in particular in key strategic sectors such as energy and infrastructure.
The signing comes as a new UK government report reveals one in every 100 UK workers was employed by a business headquartered in a CPTPP member nation in 2019, equating to over 400,000 jobs across the country.
Membership of the trade group is expected to spark further investment in the UK by CPTPP countries, already worth £182 billion in 2021, by guaranteeing protections for investors.
Speaking ahead of the signing, Kemi Badenoch said:
I am delighted to be here in New Zealand to sign a deal that will be a big boost for British businesses and deliver billions of pounds in additional trade, as well as open up huge opportunities and unparalleled access to a market of over 500 million people.
We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country.
Louise de Sousa, British Ambassador to Chile, said:
This is very good news for both the UK and Chile. Once the UK has ratified CPTPP, the UK and Chile’s trade links will be substantially upgraded, removing barriers between our economies and improving market access, including in key areas such as the digital economy, financial services and investment.
The UK’s signature comes as we mark 200 years of bilateral consular relations between the UK and Chile and celebrate the long and successful relationship, including our strong economic ties, our two countries enjoy today. The UK’s accession to CPTPP opens up important new opportunities for both our countries and will mean the partnership between the UK and Chile will be even stronger in the future.
The UK government report found CPTPP investment accounted for:
- The creation of 26,000 jobs in 2021 and 2022.
- 75% of all employment in CPTPP-owned businesses was outside of London.
- One in 50 jobs in the North East of England.
- One in every 25 jobs in the manufacturing sector across the UK.
The report also found that CPTPP companies punch above their weight economically. While they account for 0.3% of all businesses in the UK, they generate 6.1% of the UK’s total turnover - 20 times higher than the proportion of businesses they represent.
The UK is the first European member and first new member since CPTPP was created, which would have been impossible had we remained in the EU. With the UK as a member, CPTPP will have a combined GDP of £12 trillion and account for 15% of global GDP.
The Government will now take the steps needed to bring the agreement into force, expected to be next year.
Being part of CPTPP means that more than 99 per cent of current UK goods exports to CPTPP countries will be eligible for zero tariffs. Dairy farmers, for example, will benefit from reduced tariffs on cheese and butter exports to Canada, Chile, Japan and Mexico. This builds on the £23.9 million worth of dairy products we exported to these countries in 2022.
The agreement is a gateway to the wider Indo-Pacific which is set to account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come, bringing new opportunities for British businesses and supporting jobs.
Editors Notes
- The signing ceremony took place on Sunday 16th July.
- Other ministers from CPTPP countries expected to be in attendance alongside the UK Secretary of State for Trade Kemi Badenoch, New Zealand Trade Minister Damien O’Connor, and Chile’s Under-Secretary for International Economic Relations Claudia Sanhueza are Australian Deputy Trade Minister Tim Ayres, Canadian Trade Minister Mary Ng, Japanese Minister for Economic Revitalisation Goto Shigeyuki, Malaysian Trade Minister Tangku Zafrul Aziz, Mexican Trade Minister Alejandro Encinas, Peruvian Trade Minister Juan Carlos Mathews Salazar, Singaporean Trade Minister Gan Kim Yong and Vietnamese Trade Minister Nguyen Hong Dien.
- GDP and population data refers to data from 2022 and is taken from the IMF World Economic Outlook Database, April 2023 edition.
Additional benefits of UK accession to CPTPP include:
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Boosting services: The UK is the world’s second largest services provider and services accounted for 43% of our trade with CPTPP members last year. Joining the agreement can reduce 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
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Increased flexibility: Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely across the trade area. For example, UK car manufacturers could sell car engines tariff-free to a car maker in the grouping who could then sell those cars tariff-free to any other member country, subject to meeting the rules of origin. 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.
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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.
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Cutting-edge: Remotely delivered services from the UK to CPTPP were worth £23 billion in 2021. 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.
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New Markets: Joining means we will have a Free Trade Agreement with Malaysia for the first time, giving businesses far more access to an economy worth £330 billion in GDP in 2022. Tariffs of around 80% will be eliminated on UK exports of whisky within 10 years and tariffs of 30% on UK exports of cars will be eliminated within 7 years, helping the UK get a larger share of the market.
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Cheaper consumer prices: Reduced tariffs on imported goods could also lead to cheaper prices for British consumers on high-quality products like fruit juices from Chile and Peru and honey and chocolate from Mexico.
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