Impact assessment

Impact assessment of the UK's accession to the CPTPP executive summary (web version)

Published 17 July 2023

The Department for Business and Trade (DBT), with other government departments, has negotiated the United Kingdom’s (UK) accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This comprehensive agreement will support UK businesses by making it easier for them to trade with CPTPP. It will facilitate innovation and provide consumers with more choice. The agreement could generate long-term benefits for both the UK and CPTPP, support UK jobs and provide opportunities for growth in sectors across the UK.

CPTPP is one of the largest free trade areas in the world. The current members of CPTPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The CPTPP free trade area is populated by half a billion people with a joint gross domestic product (GDP) of £9 trillion in 2022.[1] The combined GDP of the 11 CPTPP members and the UK was around £12 trillion in 2022. This Free Trade Agreement (FTA) spans the Asia-Pacific and the Americas and includes some of the world’s largest current and future economies.

CPTPP will also provide the UK with a stepping stone to trade with the wider strategically important Indo-Pacific. It is expansionary at its heart. As new members join, the UK will be able to benefit from its expansion and increased opportunities to trade. Economies including Costa Rica, Ecuador and Uruguay have all formally applied to join CPTPP. Thailand, the Philippines and Republic of Korea have also expressed an interest in joining. The combined GDP of all CPTPP members and the UK could increase to over £14 trillion in 2022 if these other economies were to join CPTPP.[2] This expanded CPTPP would cover 9% of all UK exports in 2022.[3] In the future it is expected that CPTPP could expand even further, providing even greater economic benefits for its members. CPTPP has also been seen as a pathway to a potential pan-Asia-Pacific FTA.

CPTPP is a modern and comprehensive agreement which aims to enhance the existing trading and investment relationship between the UK and CPTPP members. This agreement will make trade easier by reducing or eliminating tariff and non-tariff barriers, leading to more trade and potentially lower costs for consumers. The agreement creates new opportunities for UK businesses, going further in some areas than our existing bilateral FTAs that we currently have with some CPTPP members. It will also increase collaboration and support the integration of global value chains between members, leading to economic opportunities beyond the scope of most UK FTAs.

Trade agreements lead to some degree of reallocation of resources across sectors. Some sectors expand, taking advantage of new opportunities for higher returns following lower barriers to trade and drawing resources from other sectors in the process. Accession to CPTPP is estimated to increase bilateral trade (between the UK and all CPTPP countries) by £4.9 billion when compared to 2040 projected levels of trade. 19 out of 23 UK sectors are expected to expand because of accession, with 4 sectors estimated to experience slower growth relative to the baseline. This is expected to contribute to an estimated increase in UK GDP of £2.0 billion and CPTPP’s GDP of £2.4 billion compared to 2040 projections. These incremental economic impacts are felt each and every year in the long run, once the impacts of the agreement have worked through the economy.

There are also substantial opportunities from the expansion of the agreement as CPTPP acts as a pathway to greater integration in a region that is also growing. This potential future expansion of CPTPP is outside of the direct scope of this agreement and therefore not included in the formal modelling scenario. It is nevertheless an important motivator for the agreement. Academics who have modelled the potential future expansion of members show economic potential arising from CPTPP leading to significantly greater gains to UK GDP. It also suggests CPTPP could help protect UK economic interests in a world of increasing geopolitical fragmentation.[4] DBT’s own illustrative modelling also shows the potential benefits of future expansion.

This impact assessment sets out DBT’s assessment of the economic, social, and environmental impacts of the agreement.

1. The agreement

CPTPP supports the government’s strategy of continuing to develop the UK’s status as an independent trading nation. CPTPP is a deep and comprehensive FTA that covers trade relations among its Parties, including on goods and services.

It further covers provisions which relate, for example, to regulatory coherence, labour standards and the environment.

1.1 Goods trade

• the agreement reduces tariff barriers for exporters. Joining this existing trade agreement means that over 99% of current UK goods exports to CPTPP members will be eligible for tariff-free trade. As membership to CPTPP expands, the UK will be able to export goods to these new parties on preferential terms. It particularly benefits our exports to Malaysia, since at the moment these exports face Malaysia’s standard, non-preferential tariffs
• it could reduce import prices for UK businesses and consumers. Joining CPTPP will also eventually remove nearly all tariffs imposed on UK imports from CPTPP, which could mean cheaper import prices on goods in the UK for businesses and consumers. It also retains protections for some products in sensitive sectors for the UK for a number of years
• the agreement provides the opportunity for UK businesses to diversify their supply chains. UK businesses can use inputs from all CPTPP Parties in the production of their goods. This could make it easier for UK exports with supply chains in CPTPP Parties to qualify for the preferential tariffs agreed in this FTA
• it will help reduce the administrative burden for businesses of all sizes across the UK, including through commitments to transparent and efficient customs procedures, agreements on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures as well as a dedicated small and medium-sized enterprises (SME) chapter

1.2 Services, investment and temporary entry for business persons

• the agreement could provide more export opportunities for UK services providers. The UK is the world’s second largest services exporter with service industries accounting for around 80% of total UK economic output in 2022.[5] CPTPP presents a significant opportunity for the UK’s service industries to expand their trading relationship with CPTPP markets. CPTPP sets ambitious rules for trade in services between members and will help prevent barriers that hinder UK firms from selling services in CPTPP markets. This includes:

  • prohibiting discrimination against other Parties’ service suppliers
  • prohibiting quantitative restrictions on cross-border trade in services
  • prohibiting requirements that service suppliers must set up an office or be resident in order to supply services
  • setting out rules on the administration of domestic measures, including those that relate to authorisations, and rules on transparency
• CPTPP will provide greater certainty on the terms of services trade for UK service suppliers who exported around £32 billion worth of services to CPTPP countries in 2022[6]
• it could encourage investment between the UK and CPTPP countries. Inward investment stocks to the UK from CPTPP countries were worth at least £181.8 billion in 2021. Outward investment stocks from the UK to CPTPP countries were worth at least £117.3 billion over the same period.[7] The investment chapter in CPTPP includes provisions that will further deepen those investment relationships between the UK and CPTPP Parties by limiting barriers to overseas investment and ultimately make it easier for UK investors to establish and operate in CPTPP economies. The investment chapter also encourages foreign investments by prohibiting a range of market distorting practices, including discriminatory treatment of foreign investors and the imposition of conditions for the making of investments
• it will also facilitate easier travel for UK business persons to CPTPP countries, providing greater legal certainty on temporary entry routes for UK citizens. This ensures important clarity for individuals and businesses across multiple sectors, paving the way for long-term economic growth and investment

1.3 Digital trade

• it includes cutting-edge digital trade provisions that reduce barriers. Remotely delivered services from the UK to CPTPP were worth £23.0 billion in 2021.[8] CPTPP sets modern rules for digital trade across all sectors and will support UK businesses of all sizes to seek new opportunities in CPTPP markets

1.4 Government Procurement

• CPTPP accession will ensure that UK businesses receive fair and non-discriminatory treatment when competing for government contracts of CPTPP members. This will build on the existing comprehensive agreements the UK has with most member countries. It will provide UK businesses with even greater access to opportunities in their government procurement markets in several areas
• it will also mark the UK’s first ever trade agreement containing government procurement provisions with Brunei and Malaysia. This will create entirely new access to opportunities for UK businesses in the government procurement markets of both countries

1.5 Supporting free trade

• the agreement supports free trade and high standards. For example, the agreement includes strong intellectual property protections. It also includes provisions that support free and trusted cross-border data flows and measures to reduce the market-distortive practices of State-Owned Enterprises. The agreement will also enable enhanced engagement between members on other trade-related issues such as labour standards
• the agreement also maintains high standards on issues that matter to UK consumers, such as food standards and the environment. For example, on food standards, all food and drink products imported into the UK will continue to have to comply with our import requirements. On the environment, the agreement seeks to promote mutually supportive trade and environmental policies. It also seeks to promote high levels of environmental protection and to strengthen cooperation in a range of areas

2. The impact of the agreement

CPTPP members’ economies accounted for £113 billion worth of UK trade in 2022, having grown 10% between 2018-2022.[9] DBT’s Global Trade Outlook projections suggest that, in the absence of the agreement, the future growth of CPTPP’s import market could lead to an extra £15.9 billion in UK exports by 2040. This represents a 28.4% increase in UK exports to CPTPP in real terms (2021 prices and exchange rates) compared to 2021.[10] Greater access to CPTPP markets and reduced regulatory burdens on goods and services are expected to bring extensive opportunities for UK businesses and consumers.

2.1 Macroeconomic impacts – central estimates

To provide a clear assessment of the incremental impacts, the core analysis focusses only on the additional liberalisation gained from accession, above and beyond any existing agreements. Therefore, this analysis does not attempt to capture the benefits from the number of existing agreements that have cumulated to form CPTPP. Even so, it is important to recognise that accession to CPTPP represents the culmination of a programme of negotiations. Collectively this has much greater value than that set out below and we explore this in additional illustrative analysis outlined in section 4. Furthermore, the value of CPTPP goes beyond the sum of the individual agreements that shape it. This value arises from the opportunity for deeper integration, institutional development, and expansion as protection from an increasingly fragmented world.

Our analysis shows that UK trade with CPTPP members could increase by the equivalent of £4.9 billion (3.9%) in the long run. This increase is compared to projected levels of trade in 2040 (in 2021 prices) without the agreement.[11] The increase is driven by reductions in regulatory restrictions to trade, tariff reductions, and income and supply chain effects as the UK economy grows. It does not capture any additional impacts of the increased flexibility to supply chains, which cannot be explicitly captured in the model. This, and other estimates are subject to a high degree of uncertainty. The modelling does not attempt to predict the many other influences that will shape the UK and global economies over this period.

This assessment also shows that UK gross domestic product (GDP) could increase by the equivalent of £2.0 billion in the long run. Like the trade results, the estimate is subject to a high degree of uncertainty.

Real take home pay for UK workers is estimated to increase by around 0.1%, the equivalent of £1.0 billion for the whole country.[12] This is when compared to 2021 estimates of wages without the agreement. The uplift is expected to apply in real terms, whatever the level of future wages.[13]

The aggregated GDP of CPTPP members could increase by £2.4 billion in 2040 (in 2021 prices).[14]

The estimated changes outlined above are in addition to any long-term underlying growth. In this context, the long run is typically assumed to be a period of around 10-15 years after implementation.

The point estimates presented do not represent precise estimates. They represent an indication of the direction of impacts and broad orders of magnitude. These estimates are based on certain assumptions about the global economy and the UK-CPTPP trade relationship and are subject to various forms of uncertainty.

There are wider sources of current and future uncertainty that are not reflected in the modelling. These include current uncertainties (such as high inflation and the conflict between Russia and Ukraine) and future uncertainties (such as climate change, globalisation, future health pandemics and technological developments).

CPTPP is set to expand its membership further with several other countries having already expressed an interest in joining. This would, if agreed, increase the economic value of membership and its longer-term strategic value, increasing its collective clout. We can raise the aspirations and standards of those who want to join and establish dialogue with any who do. Plurilateral deals like CPTPP give us the chance to go further and deeper in liberalising our trading arrangements with a group of likeminded countries. They raise ambition in trade policy - reaching more widely than bilateral agreements and moving more quickly than the World Trade Organization (WTO). Through CPTPP, we can create momentum behind ambitious approaches to trade, and support the progress the UK would like to see, ultimately, at the WTO.

DBT’s central estimate of a £2.0 billion GDP gain each year in the long run is based on the UK’s accession to the 11-member CPTPP. It captures the permanent gain from accession to the current membership only. It does not capture the potential economic benefits that could arise from CPTPP expanding further and acting as a pathway to greater integration in the region and beyond. This is in fact the fundamental strategic reason for pursuing accession to CPTPP.

Illustrative modelling undertaken by DBT shows the potential marginal impact for the UK if other countries join CPTPP. Should Ecuador, Costa Rica, Uruguay, Republic of Korea, Colombia, Philippines, and Thailand join alongside the UK, the modelling estimates that this could boost UK GDP by around £4.3 billion (2021 prices) in the long-run, relative to the absence of the agreement. Alternatively, if the US and the rest of ASEAN countries (Laos, Cambodia, and Indonesia) were to join CPTPP, this could boost UK GDP by £19.5 billion (2021 prices) in the long-run. These results are subject to uncertainty and further details are outlined in section 4. If all the countries above were to join, this could boost UK GDP by £21.4 billion (2021 prices). Note that these are hypothetical scenarios and do not reflect UK government policy on future CPTPP membership.[15] These results are subject to uncertainty and further details are outlined in section 4.

CPTPP represents the culmination of a programme of bilateral and plurilateral negotiations. If we look at the full standalone value of the agreement, compared to a situation where no agreements were in place with member countries, illustrative modelling suggests it could boost UK GDP by around £13.5 billion (2021 prices) every year in the long-run. This result is based on a number of simplifying assumptions and is subject to a greater degree of uncertainty than the core CGE results. It estimates the impact to the UK of joining CPTPP, absent existing bilateral agreements. It does not demonstrate the marginal impact of acceding to CPTPP, but is included here to highlight the overall benefit to the UK of this trading relationship with this group of countries.

Petri and Plummer (2023) estimate the impact of an expanded CPTPP and increased economic cooperation amidst increasing geopolitical fragmentation. Whilst these estimates do not account for some existing UK agreements (post-2017) with CPTPP members in the baseline, , they suggest an impact of up to $42 billion (2014 prices), equivalent to £31 billion (2021 prices), depending on the expanded membership scenario.[16] This analysis is not directly comparable with DBT’s estimates above due to differences in non-tariff and tariff assumptions and methodologies, and in the authors’ own words “the trends and policy alternatives examined […] are highly uncertain”. Further details on this study are included in section 7.

2.2 Limitations of Computable General Equilibrium (CGE) modelling

CGE modelling is a globally-used approach to provide indicative results of the order of magnitude of likely marginal macroeconomic impacts, and the relative importance of impacts on sectors. It is an inherently uncertain exercise and like any modelling depends on stylised assumptions. The CGE modelling presented in this impact assessment is subject to several limitations:

• it does not capture the full range of dynamic impacts that may result from the trade agreement such as increases in productivity that may occur through a range of channels, such as knowledge exchanges and improvements in firm productivity in response to the increased competition in UK and other markets resulting from the agreement
• it does not attempt to estimate the value of increased resilience for UK businesses and consumers in the face of regional or global shocks through enhanced and more secure access to a diverse range of markets
• in addition, because CGE models need data on all trade routes and national production across all regions, CGE models operate at a level of aggregation which may miss many of the nuances of supply chains and interlinkages that can provide a comprehensive understanding of the impacts from an FTA

In addition, CGE models do not provide a forecast of future output and trade flows by attempting to capture the effect of policies and changes outside the agreement, that might affect future growth and trade flows, including:

• future changes to the sectoral composition of the UK and CPTPP economies resulting from shocks, the implementation of other policies or changes in the global environment separate to the agreement, as outlined in section 7. This includes uncertainties such as the impact of, and response to, Russia’s invasion of Ukraine, climate change, changes in globalisation, the pandemic, and changes to CPTPP demographics.
• the impacts of recent and future policy choices or international trade agreements which may influence the value of the agreement

2.3 Future changes to UK and CPTPP economies and global trends

The modelling uses the latest available Global Trade Analysis Project (GTAP) dataset - 2017 - at the time of the analysis, as the benchmark dataset and therefore does not account for several trends or changes in trends that have appeared in subsequent years which could influence the impact of UK accession to CPTPP. The model does not take into account:

• global trends such as the increasing importance of Asia and Africa to the global economy
• changing demographics and the growing global middle class
• geo-political developments and their impacts on global value chains and UK-CPTPP trade in general

While these factors are likely to affect the impact of the agreement, they go beyond the scope of the CGE model. Some of these trends are discussed in DBT’s Global Trade Outlook. Wider uncertainties are also discussed in section 7 of this impact assessment.

2.4 Sectoral impacts

Our analysis shows that most of the GDP gains are driven by the reduction in non-tariff measures (NTMs) between the UK and CPTPP members. Non-tariff measures are measures other than tariffs and tariff-rate quotas that can act as a barrier to international trade (like regulations, rules of origin and quotas). Some of the sectoral results are driven by the growth of the most liberalised sectors increasing the demand for inputs such as labour. Subsequent increases in take home pay can lead to resources being allocated away from other sectors. This means that certain sectors can become less important for the UK economy over time even if they benefit directly from provisions of the deal.

Our analysis is conducted using a CGE modelling framework. While being considered best in class, the standard framework nevertheless relies on a range of assumptions, such as fixed labour force participation. These assumptions can have important implications particularly for the general equilibrium effects described above. In addition, these impacts only materialise in the long run as the economy has time to adjust. However, the modelling does not account for other structural changes that may affect the economy in the long run and could impact sectoral results. These factors need to be taken into account as they introduce uncertainty to the sector results.

Our analysis shows the strongest gross value added (GVA) contribution to estimated growth on a 2021 basis is concentrated within services and industry sectors (broadly classified). 19 out of 23 UK sectors are expected to expand as a result of the accession, by more than they would have done without accession, with 4 sectors estimated to grow less than they would have done otherwise.

2.5 Goods trade

Reduced tariffs boost market access and increase choice for businesses seeking to source inputs from CPTPP countries. They also help to widen choice and can lower prices for consumers. However, this will also expose some UK businesses to increased competition from CPTPP exporters.

Businesses will be able to access preferences on UK goods exports to CPTPP countries. On current exports, this would reduce the annual tariff duties by around £119 million if exports use all available preferences.[17] Businesses will be able to access preferences on UK goods imports from CPTPP. On current imports, this would reduce the annual tariff duties by around £33 million if imports use all available preferences.[18] This is the estimated annual reduction in tariff duties based on liberalisation at the end of the tariff staging period. These are over and above existing bilateral agreements (e.g., Japan, Australia and New Zealand FTAs). The estimates include new tariff liberalisation with Malaysia and Brunei relative to trading on most favoured nation (MFN) terms. Amongst the benefitting businesses are SMEs which are well-represented in sectors that benefit the most from the agreement.

The negotiated agreement will also reduce non-tariff measures, lowering the costs of accessing CPTPP markets, and facilitating trade.

Reductions in goods NTMs and tariffs make accessing the CPTPP market cheaper, which can facilitate higher exports from some UK sectors. The goods sectors that expand the most in GVA in absolute terms are the manufacture of motor vehicles (+£183 million) and textiles, apparel and leather (+£90 million). The reductions in tariffs and NTMs negotiated lead to higher exports in these sectors by £712 million and £186 million respectively. The goods sectors most at risk in terms of absolute GVA impacts are manufacture of electronic equipment (-£67 million compared to the baseline) and other transport equipment (-£24 million).[19] This is mainly due to increased import competition.

Sectoral results are subject to a high degree of uncertainty. This is due to the limitations of any economic modelling to fully capture the complexities of reality or to account for future global developments.

Consumers could also benefit from the removal of tariffs on UK imports of CPTPP goods through lower import prices. The extent to which consumers could benefit depends on the extent to which businesses pass on savings. The agreement will see the removal of tariffs on products currently imported from CPTPP such as tariffs on fruit juices from Chile and Peru, honey and chocolate from Mexico, and vacuum cleaners from Malaysia.

The estimated gains to CPTPP members are driven by expansions in the manufacture of other transport equipment, and textiles and wearing apparel sectors.

2.6 Services trade

Services sectors are among the main beneficiaries of the agreement. In 2022 services accounted for 43% of the UK’s total trade with CPTPP countries. The top services exports to and from CPTPP countries were other business services (£9.7 billion in exports and £7.1 billion in imports) and financial services (£6.7 billion in exports and £1.6 billion in imports).[20] ‘Other business services’ captures professional services, including auditing, accounting and legal services. The UK’s accession enables all parties to reduce services trade restrictions, reduce legal uncertainty over the terms of trade and increase services trade.

These reductions in services trade restrictions facilitate higher exports to CPTPP. UK exports of communications are estimated to increase by +£99 million, and business services exports are estimated to increase by +£55 million. UK imports from CPTPP countries increase most in the wholesale and retail trade (+£93 million) and financial services (+£82 million) sectors.[21]

Higher exports and expansions in goods and services sectors stimulate higher output in services sectors overall. On services, the modelling shows that the largest GVA expansions in absolute terms come from three main sectors. These are other services ‘transport, water, dwellings’ (+£187 million), construction (+£119 million) and public services (+£76 million). This is driven mainly by income and supply-chain effects as other parts of the UK economy, particularly manufacturing sectors, grow as a result of the agreement. This is as opposed to them expanding directly as a result of improved access under the agreement. Expansion of public services is not driven by any structural changes to the NHS. Instead, it is a reflection of households demanding more goods and services as the economy grows. Reductions in regulatory burdens to trade in services are also central driving factors.

Joining CPTPP will lead to greater opportunities for UK financial services firms through a reduction in barriers from cross-cutting services provisions and specific commitments.

2.7 Competition

The overall structure of the UK economy remains broadly unchanged by the agreement. There will be wider structural changes that occur in the economy that are not taken into account in this assessment, in order to isolate the impacts of the deal alone. However, part of the gains results from a reallocation of resources away from some sectors and towards the growing sectors, as set out above.[22] The economic benefits of FTAs do not arise without reallocation of resources within the economy (sometimes referred to as the gains from greater specialisation). The process of economic adjustment can give rise to adjustment costs for affected sectors, businesses, and their employees. There is a risk that these adjustment costs are more likely to be felt by businesses in regions where these sectors are concentrated.

2.8 Impacts on UK nations and English regions

All UK nations and English regions could see an increase in output from UK accession to CPTPP. Growth in the UK’s manufacturing sectors is the core driver of estimated differential effects across UK nations and regions.

Modelled expansions to services sectors accounts for positive growth across all UK nations and English regions. This partly reflects growth in non-tradeable services sectors. These sectors expand as a result of higher demand from manufacturing sectors which use their services as intermediate inputs.

Some regions grow relatively more due to their greater concentration of expanding manufacturing sectors. The economies of the West Midlands and East Midlands are estimated to expand by around £320 million and £210 million respectively relative to 2019 values. This is based on a 0.22% and 0.19% modelled increase in their GVA respectively. London is estimated to expand by 0.15%, the lowest relative to all other UK nations and regions, this is nonetheless equivalent to around a £700 million increase in GVA.

GVA in Scotland, Wales and Northern Ireland is also estimated to increase as a result of the agreement. Scotland and Wales are estimated to see an increase in GVA of around £240 million and £110 million respectively relative to 2019 values. This is based on a 0.16% modelled increase in both Scotland’s and Wales’ GVA. Northern Ireland’s GVA is estimated to increase by around £70 million relative to 2019 values, which is also based on a 0.16% increase.

2.9 Wider Impacts

An FTA could have wider effects on economic and social development of third party countries as well as environmental impacts.

The GDP of most other developing countries is estimated to be largely unaffected as a result of the FTA, with the exception of Thailand. There is a small negative impact on Thailand of less than -£0.1 billion (compared to 2021 levels) as a result of trade reallocation. However, this reduction in GDP does not imply that its economy will not grow over the long-term.

The increase in economic activity and trade arising from FTAs can also entail consequences for the environment. Other things equal, increased economic activity is typically associated with increases in greenhouse gas emissions and implications for environmental outcomes such as air pollution, water-quality, and biodiversity.

The net increase in global greenhouse gas (GHG) emissions as a consequence of the UK’s accession to CPTPP is likely to be negligible. It is estimated that global emissions could increase by around 1.03MtCO2 (0.003%). This mainly reflects an increase in UK and CPTPP GHG emissions, which are estimated to increase by 0.5 MtCO2e (0.12%) and 1.45 MtCO2e (0.05%) respectively.[23] These estimates do not capture transport emissions.  The analysis does not account for reductions in emissions from the baseline year or projected reductions in emissions in the future.

Trade flows between the UK and CPTPP are estimated to increase by 3.9% relative to the baseline. Our modelling suggests that this could be associated with around a 4% increase in transport emissions between the UK and CPTPP - or 0.13 MtCO2e to 0.15 MtCO2e respectively.[24] For comparison, total UK GHG emissions in 2019 were equivalent to 547 MtCO2e.[25]

The agreement is not expected to have a significant impact on wider environmental issues, such as biodiversity, deforestation, and water pollution. The extent of any impacts will depend on how domestic and international policies mitigate this risk.

2.10 Next steps

Ongoing monitoring and evaluation (M&E) of the implementation and impacts of the agreement is an important part of ensuring that the predicted impacts materialise. They are also an important part of ensuring that the benefits are maximised for businesses, workers, and consumers. M&E activities help to ensure that the new trade opportunities are fully realised. They also help to ensure that the full range of impacts, intended and unintended, are understood and inform future policy development. DBT will monitor the implementation and conduct a comprehensive ex-post evaluation for the agreement. This is outlined in Section 8.

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[1] IMF World Economic Outlook Database, April 2023 edition.

[2] IMF World Economic Outlook Database, April 2023 edition. And Bank of England 2022 average exchange rate. The combined GDP of £14 trillion includes all eleven CPTPP current members, the UK, Costa Rica, Ecuador, Thailand, Philippines, Republic of Korea and Uruguay

[3] ONS, UK total trade: all countries seasonally adjusted data, released 27 April 2023

[4] Petri & Plummer’s contributions to “ASEAN and Global Value Chains” (Chapter 6) https://www.adb.org/sites/default/files/publication/871976/asean-global-value-chains-resilience-sustainability.pdf

[5] ONS, GDP Output Approach – low level aggregates, released May 2023

[6] ONS, UK total trade: all countries seasonally adjusted data, released 27 April 2023

[7] ONS Foreign direct investment (FDI) totals for inward and outward flows, positions and earnings, released 24 January 2023

[8] ONS, UK Trade in services by modes of supply: 2021, released 5 April 2023. Please note data does not include figures for Brunei, Peru, and Vietnam.

[9] ONS, UK total trade: all countries seasonally adjusted data, 2022, released 27 April 2023

[10] 2040 projections for UK total exports and imports are calculated using the methodology described in DBT’s Global Trade Outlook, February 2023

[11] 2040 projections for UK total exports and imports are calculated using the methodology described in the Global Grade Outlook. For bilateral trade between the UK and CPTPP in 2040, it is further assumed that both the UK and CPTPP lose market shares of partner import demand in line with their relative loss of global market shares.

[12] This is a long run estimated wage impact, when applied to 2021 wage data.

[13] This does not take inflation in subsequent years into account. This is not captured in the CGE modelling, and the potential impact of inflation on the results is discussed in Section 7.

[14] Refers to CPTPP members prior to the UK acceding. UK impacts are presented separately.

[15] We understand that the following economies have formally applied to join CPTPP: China, Taiwan, Costa Rica, Ecuador, Uruguay and Ukraine.

[16] This figure is calculated using Petri & Plummer’s $42 billion estimate (2014 prices) and converting this into 2021 £ values using the ONS GDP deflator and the Bank of England exchange rate.

[17] Estimated reduction in annual tariff duties paid on current exports calculated after all staging is complete. They are based on 2017-2019 average trade flows and do not reflect changes in the UK’s trading pattern since then, including the UK’s exit from the EU. These estimates assume full utilisation of all available preferences, which is unlikely to be in the case in practice.

[18] Estimated reduction in annual tariff duties paid on current imports calculated after all staging is complete. They are based on 2017-2019 average trade flows and do not reflect changes in the UK’s trading pattern since then, including the UK’s exit from the EU. These estimates assume full utilisation of all available preferences, which is unlikely to be in the case in practice.

[19] Long run changes in GVA are presented in 2021 prices.

[20] ONS, UK trade in services: service type by partner country, non-seasonally adjusted, 2022, released 27 April 2023

[21] Long-run changes in imports or exports by sector are presented in 2021 prices.

[22] In our CGE model factors of production, i.e. capital and labour, are allowed to reallocate across sectors without any frictions, resembling a long-run equilibrium. However, as in every modelling exercise, this might be an oversimplifying modelling assumption and over the short to medium term it might not be a comprehensive description of the reality for a variety of reasons (e.g. sector-specific and non-transferable skills).

[23] Million tonnes of CO2 emissions. On average each year.

[24] Million tonnes of CO2 emissions. On average each year.

[25] ONS, Atmospheric emissions: greenhouse gases by industry and gas , released June 2022