Kemi Badenoch signs treaty for UK to join Indo-Pacific trade bloc
The business secretary, Kemi Badenoch, has signed off UK membership to a large Indo-Pacific trade bloc that the government argues will bring British businesses a step closer to selling to a market of 500 million people with fewer barriers.
Badenoch signed the accession protocol for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand on Sunday.
Critics say the impact will be limited, with the government’s technical estimates suggesting it will add just £1.8bn annually to the economy after 10 years, the equivalent of 0.08% of Britain’s gross domestic product.
Badenoch said the deal would bring “significant” benefits. Asked by the BBC’s Laura Kuenssberg whether the public would feel any difference if it would add only 0.08% of UK GDP in a decade, she replied: “They will if they use it.”
The trade minister, Nigel Huddleston, told Times Radio that UK membership of the CPTPP could make a “whole lot of difference” to individual companies. “I wouldn’t be too snippy about this, we are talking about billions of pounds of additional economic generation from this deal,” he added.
The shadow foreign secretary, David Lammy, said last month the Conservatives were being “dishonest” by claiming membership of the bloc would make up for lost trade with the rest of Europe. In 2022, Britain exported £340bn of goods and services to the EU, 42% of total UK exports.
The deal represents a continuation of the post-Brexit policy tilt towards the Indo-Pacific, which is expected to be home to about half the world’s middle-class consumers by 2035. The UK already has free trade deals with nine of the 11 member states of the CPTPP, many of which were rolled over from when it was a EU member.
With Labour ahead in the polls, it is unclear whether the next government will focus as much on the Indo-Pacific as it does on mending the battered ties with the EU.
Britain is the first new member to join the CPTPP since its formation in 2018. It is also the first European country to gain entry to the bloc, which comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The deal represents Britain’s biggest trade agreement since leaving the EU, cutting tariffs for UK exporters to a group of countries that will have a combined GDP of £12tn, about 15% of global GDP, according to officials.
The Office for Budget Responsibility has estimated that Brexit will reduce Britain’s GDP by 4% over 15 years from 2016, wiping about £100bn from the economy.
Goods including Australian Ugg boots, kiwifruit from New Zealand, blueberries from Chile and maple syrup from Canada will all now become cheaper for UK consumers, according to the Institute of Export and International Trade.
Analysts raised doubts about the significance of the deal. “The impact appears mainly cosmetic, for the UK to show it made a trade deal after Brexit,” Chris Devonshire-Ellis, the chair of the investment advisory firm Dezan Shira & Associates, told Nikkei Asia. “No one in Asia is taking the pact very seriously.”
After two years of negotiations, Britain and the other 11 member states will begin work to ratify the deal. In the UK, this will involve parliamentary scrutiny and legislation to bring it into force, a process estimated to take place in the second half of 2024.
Attention may shift to other potential new members, with applications by China and Taiwan likely to cause tensions. The UK has said that other new entrants will need to meet high standards.
Badenoch acknowledged that the probability of the UK securing a free trade agreement with the US was “very low”, despite it being a priority for many pro-Brexit Conservatives.
She blamed the lack of progress towards such a deal on the change of administration from Donald Trump to Joe Biden after the 2020 election.
“The US is not carrying out any free trade agreements with any countries, so I would say very low,” she told Sky’s Sophy Ridge on Sunday programme. “It all depends on the administration that’s there; different presidents have different priorities.
“Lots of countries have been looking to have a free trade agreement with the US, including us, but for now they’ve said that’s not something they want to do and we need to respect that. Instead, we’re having other types of trading interactions and trading deals with them.”