By Matthew Grainger.

This morning, the Business & Trade Secretary announced that the UK had concluded negotiations to join the Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP for short.

This is a trade area spanning 11 (now 12) countries around the Pacific rim, with a market of 500m people and a GDP of £11 trillion (15% of global GDP). 

Inevitably, as with most government announcements these days, the hot takes are already starting to flow with everyone using the announcement for confirmation of their existing world view. The deal is either fantastic/worthless, a vivid demonstration of Global Britain/nowhere near as good as EU membership and plugs us in to the fastest growing region of the world/prioritises countries thousands of miles away over our largest trading partner. Sigh. 

CPTPP membership was never intended to be a replacement for EU membership and those pointing to it as being a pale imitation of this are being disingenuous and lazy.

Cut beneath the hyperbole though, and I would argue that this is undoubtedly a positive for the UK for two reasons: one economic, and the other geopolitical. 

Let’s start with the economic benefits, as these will get the most scrutiny.

CPTPP is a pretty good trade agreement, though like most trade agreements does more for goods via tariff reductions than it does for services. It is also quite thin on breaking down regulatory barriers to trade. In terms of hard numbers, the government’s own economic modelling projects that CPTPP membership will boost GDP by 0.08% in the long which sounds pretty paltry. I believe that this assessment is flawed though.

The government uses Computable General Equilibrium models to arrive at these figures which essentially provide a static view analysis of the benefits i.e. the world as we know it right now. They do little to account for future developments, something which was a particular bugbear of Liz Truss when she was the Trade Secretary. 

The reason this figure is so low is that the UK already has (or will soon have) bilateral trade agreements with 9 of the 11 members of CPTPP. Malaysia and Brunei are the only countries that we don’t have agreements with, with over half of the projected growth expected to come from increased trade with the former. However, CPTPP could (and likely will) grow further. Other countries have already publicly expressed an interest in joining, most notably China (more on which in a moment) and South Korea, and as new countries join, the economic benefits of the deal will increase.

Of arguably greater importance though, are the geopolitical benefits of CPTPP membership. In the recent refresh of the Integrated Review, the government reaffirmed its Indo-Pacific tilt (of which I must admit to being a bit of cynic) with accession to this agreement being a powerful manifestation of this. Membership will also play an important part of the UK’s China containment strategy, by binding a large group of important countries in the fastest growing region of the world more closely into the rules based international system. 

Membership will also play an important part of the UK’s China containment strategy, by binding a large group of important countries in the fastest growing region of the world more closely into the rules based international system. 

As indicated earlier, China has already formally submitted a request to accede to CTPP, causing unease amongst existing members. The UK being the first new country to join provides them with a counterweight and safety net in this regard, making it much easier for them to say no.

The UK accession also seems to have been fairly straight forward with few opt outs. This sets an important precedent should the mood ever shift in favour of Chinese membership. It would mean China having to abide by the rules like everyone else, in the process levelling the economic playing field. This dynamic is largely overlooked in the UK amongst commentators, particularly given it is one of the main reasons some of the existing members have been keen for the UK to join.

CPTPP membership was never intended to be a replacement for EU membership and those pointing to it as being a pale imitation of this are being disingenuous and lazy.

As I’ve argued, I think the long run economic benefits will be greater than those projected, but more importantly, being part of CPTPP provides a hedge for the UK in an increasingly unstable world.


Matthew Grainger is a Director of Strategy & Communications with Teneo UK and works with CEO’s and their leadership teams on policy, political and regulatory issues that impact on their business.

Follow Matthew Grainger on Twitter and Linkedin.

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