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CPTPP: 10 benefits for the UK

Published 17 July 2023

Benefits of the UK’s accession to CPTPP

A gateway to growth

CPTPP is a vast free trade area consisting of 12 sovereign countries spanning the Asia Pacific and the Americas, as well as the UK.

It is a gateway to the wider Indo-Pacific region, which will account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come.^{[footnote 1]} Joining will strengthen our ties with some of the world’s most dynamic economies, with a combined GDP of £12 trillion including the UK.^{[footnote 2]} Accession puts the UK at the heart of a dynamic group of countries, including Vietnam which is predicted to be one of the fastest growing economies in the next decades.^{[footnote 3]}

CPTPP was created to expand and as it grows the UK will stand to benefit from access to new markets. Economies including Costa Rica, Ecuador and Uruguay have formally applied to join CPTPP. Thailand, the Philippines, and South Korea have also expressed an interest in joining. If these economies were to join CPTPP with the UK, the combined 2022 GDP would increase to just over £14 trillion, an expanded group which covered 9% of all UK exports in 2022.^{[footnote 4] [footnote 5]}

Opening new markets for UK service providers

CPTPP is one of the most modern trade agreements in the world, with ambitious services provisions that are ideally suited to the UK as the world’s second largest services provider (2022).^{[footnote 6]}

The UK already sells more services than we do goods to CPTPP members, worth £32.2 billion, including £1.9 billion in business services such as auditing, accounting, and legal services to Australia, £1.4 billion in transportation services to Singapore, and £1.5 billion in insurance and pension services to Canada.^{[footnote 7] [footnote 8]}

CPTPP puts services and digital trade at the forefront of our trading relationship with countries in the Asia-Pacific. UK businesses will be operating more on a par with local firms and red tape can be reduced, providing greater certainty on our terms of trade.

Commitments will also facilitate business travel to CPTPP Parties, providing greater legal certainty for individuals and businesses across multiple sectors and supporting long-term economic growth and investment. Companies such as Standard Chartered and their clients are likely to benefit from smoother access to markets such as Singapore, Malaysia, and Vietnam.

Data flows

Digital trade is creating a new global economy, with remotely delivered services from the UK to CPTPP worth £23.0 billion in 2021.^{[footnote 9]} Data flows are vital for modern trade, enabling everything from more efficient manufacturing and supply chains to more reliable infrastructure. Joining CPTPP will help remove the barriers our companies face like data localisation requirements, ensuring data can flow between the UK and CPTPP members.

The City of London Corporation says accession to the agreement will help the UK become a leader in digital trade, with modern rules on data and freer access to each other’s services sectors. The membership is committed to the highest data protection standards, so British business can expand into CPTPP markets with confidence, ensuring that individuals and businesses know their data and intellectual property are safe.

Benefitting UK exporters – cutting tariffs on goods exports

Over 99% of our current goods exports to CPTPP member countries will be eligible for zero tariffs, improving goods market access for British firms.^{[footnote 10]} Businesses selling key UK exports such as cars and machinery will benefit from the removal of tariffs. In the long run, joining CPTPP could lead to a £2.6 billion boost to UK exports to other CPTPP countries.^{[footnote 11]} Exporters of dairy products, including cheese and butter, will get greater access to lower tariffs in Canada, Chile, Japan, and Mexico, building on the £23.9 million of dairy products we exported to these countries in 2022; and exporters of chocolate will benefit from zero tariffs on exports to Mexico and Malaysia.^{[footnote 12]}

The removal of tariffs should also help UK businesses, such as Derbyshire-based Denby Pottery, be more competitive and reach CPTPP’s vast consumer base. Companies like the Conker Distillery could gain from new opportunities to export their Conker Coffee Liqueur.

Benefitting UK exporters – new opportunities from diversifying supply chains

CPTPP offers new opportunities to diversify supply chains, which could support greater economic resilience by deepening our trading links across the Asia-Pacific and Americas.

Modern rules of origin could help British businesses by allowing them to trade more freely across the region. For example, UK automotive manufacturers could sell car engines to a car maker in the region, who could then sell the final cars on preferential tariff terms to any member country subject to meeting the rules of origin. This could help exporters with supply chains in the Indo-Pacific to benefit from the FTA.

Benefitting the whole of the UK

CPTPP will support jobs and create opportunities for UK businesses in every part of the UK, from beverage producers in Scotland, to manufacturers of machinery in Wales, to car manufacturers in Northern Ireland and the West Midlands. Total UK exports to CPTPP countries were worth £61.3 billion in 2022.^{[footnote 13]}

Joining CPTPP will help companies like Wales-based AI company, AMPLYFI, reach new markets through CPTPP’s ambitious services and digital provisions. CPTPP could also benefit companies including Northern Ireland-based Lowden Guitars and Scotland-based Cyacomb to grow their exports to new markets.

A trade deal with Malaysia for the first time

CPTPP goes above and beyond the existing FTAs that we have with most CPTPP members. And joining CPTPP means the UK will have a trade deal with Malaysia for the first time.

This will give UK businesses much better access to an economy worth £330 billion in GDP in 2022, which could support jobs across key sectors in the UK and could boost our services exports to Malaysia which were worth £1.7 billion in 2022.^{[footnote 14] [footnote 15]}

Tariffs of around 80% ^{[footnote 16]} will be eliminated on UK exports of whisky to Malaysia over time, helping the UK to get a larger share of the market. UK car manufacturers will also benefit from the staged removal of tariffs of 30% on UK exports of cars to Malaysia.^{[footnote 17]}

British businesses like Sheffield-based chilli paste manufacturer Mak Tok could benefit as it seeks greater access to the Malaysian market.

More access to high-quality imported goods

As a member of an agreement where most goods imports are eligible for zero tariffs, consumers and businesses could benefit from better choice, quality, and affordability. This should include cheaper import prices for high-quality consumer goods like fruit juices from Chile and Peru, honey and chocolate from Mexico, and vacuum cleaners from Malaysia.

It could also lead to cheaper import prices for inputs to manufacturing with tariffs eliminated on a wide range of inputs, including machinery and chemicals. Greater access to global supply chains is an important source of competitive advantage for businesses.

Strengthening economic security

The UK is helping to ensure its future economic security by joining one of the world’s most dynamic trading areas while protecting our sovereignty. As CPTPP grows, the UK will help shape its development to fight unfair and coercive trading practices that threaten the future of international trade. British businesses will benefit from enhanced access to more markets while trading under fair rules that allow them to compete and thrive on the global stage.

Encouraging investment

In 2021, the level of investment from CPTPP countries in the UK was around £182bn, accounting for at least 9% of the total UK inward investment.^{[footnote 18]} Investment from CPTPP countries supported the creation of over 5,000 new jobs in 2021 and 2022.^{[footnote 19]} Being a member of CPTPP encourages further investment by guaranteeing protections for investors, supporting jobs across the UK.

CPTPP’s rules will help protect UK investors from unfair, arbitrary, or discriminatory treatment and enable them to access a modern, transparent dispute settlement mechanism in case these rules are broken.

Investors in the UK, including Japanese company Fujitsu, which employs more than 7,000 people in the UK, say CPTPP will help to strengthen the UK’s relationship with countries like Japan.

1. DBT Global Trade Outlook, 2023. ↩

2. IMF World Economic Outlook Database, October 2022 edition. ↩

3. DBT Global Trade Outlook, 2023. ↩

4. IMF World Economic Outlook Database, October 2022 edition. ↩

5. ONS, UK total trade: all countries seasonally adjusted data, released April 2023. ↩

6. HMRC overseas trade statistics: March 2023. ↩

7. ONS UK total trade: all countries, non seasonally adjusted, April 2023 ↩

8. ONS, UK trade in services: service type by partner country, non-seasonally adjusted, released 27th April 2023 ↩

9. ONS, UK trade in services by modes of supply: 2020, released 5th April 2023 ↩

10. CPTPP impact assessment, July 2023. ↩

11. CPTPP impact assessment, July 2023. ↩

12. HMRC overseas trade statistics, January 2023. ↩

13. ONS UK total trade: all countries, seasonally adjusted, April 2023 ↩

14. IMF World Economic Outlook, April 2023 ↩

15. ONS UK total trade: all countries, non-seasonally adjusted, April 2023. ↩

16. DBT-calculated estimate of ad valorem equivalent (AVE) for Malaysia’s most-favoured nation (MFN) whisky tariff. ↩

17. DBT analysis of tariffs of CPTPP countries based on sources such as data exchanges, national customs authorities, WTO TAO and MacMap. ↩

18. ONS Foreign direct investment (FDI) totals for inward and outward flows, positions and earnings, released 24th January 2023 ↩

19. ONS, levels of inward investment projects in the UK for the financial year 2021 to 2022. ↩