Britain joining the CPTPP trade bloc isn’t about economics, it’s about influence
Joining the Asia-Pacific trade bloc, the CPTPP, will give us an economic benefit, but membership will also give us influence over China’s trade future, writes Ben Ramanauskas
Finally, after years of schmoozing with Foreign Secretaries across the Asia Pacific, the UK looks set to join the 11 country trade bloc known, somewhat wordily, as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Joining the bloc was always billed as a future Brexit dividend. Now, as we’re on the cusp of securing membership, reactions have rather predictably divided down Leave versus Remain lines, with many Brexiteers being keen to hail it a huge win. Meanwhile, those on the other side seek to talk down its relevance.
As ever, the truth lies somewhere in between the two points.
Let’s start with the potential economic benefits. According to the government’s own scoping assessment, joining CPTPP will increase UK GDP by 0.08 per cent. This is obviously pretty small and not something to get too excited about, but that’s because the UK already has free trade deals with the majority of CPTPP countries, so it won’t change most tariff rules.
What is more, it does very little to tackle non-tariff barriers – the things which really hamper trade by making it more difficult and costly. It also focuses mainly on trade in goods, not services. This is of course welcome news for UK manufacturers, but given that the UK economy is tilted far more towards services, we again shouldn’t expect to see huge gains for the economy here.
None of this is necessarily a unique failing of CPTPP. It’s an issue with most modern free trade deals. They focus on trade in goods, eliminating tariffs, but neglecting other barriers, as well as focusing on trade in services.
It sounds simple, but it’s also important to point out the sheer distance between the UK and other CPTPP countries. I say this because distance still matters when it comes to international trade. A country is more likely to do more trade with countries and blocs which are close to them than countries which are further away.
But the bloc is looking to expand. For example, South Korea is set to join it at some point which will in turn increase the economic benefits for the UK. The US may also decide to rejoin, if it ever sheds itself of its protectionist position under the Biden administration.
The other point to consider is the geo-political significance of the UK joining CPTPP. The government has rightly said it wants to pivot towards the Asia-Pacific. The area is home to the fastest growing economies and the influence, and reach of the region, is becoming ever more important. This must not become a reason to neglect our European allies, but it will help expand our diplomatic reach.
This brings us to China. It has been rumoured for a while that China would very much like to join the bloc, to further strengthen its economy and influence. This would not be in the UK’s interests, or in the interests of many other countries in the region. It is a strategic decision from both the members of the bloc and the UK, that Britain’s membership would make it look less desirable to China. As a member, the UK could join with other countries such as Japan to block their accession.
It brings with it modest economic benefits, but it is geopolitically incredibly significant. It’s not to say we should shelve the economic side; we should use this as a base to try and remove non-tariff barriers with other member states. But as with most things, it’s best to ignore the hype and the haters: joining the CPTPP is a good thing for the UK.