Applying to join CPTPP, what is the UK calculating?

New door

The public must still remember the milestone of January 31, 2020, when the UK officially left the European Union, ending 47 years of membership in the bloc. To celebrate the 1-year milestone, the British government made another historic announcement - the decision to apply for membership.Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP). In the official announcement, the UK emphasized that CPTPP will help the country access fast-growing markets and large economies. It should also be recalled that CPTPP was signed in 2018 with 11 member countries including: Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Singapore, Peru and Vietnam. The member countries have a total population of more than 495 million and contribute about 13.5% of global GDP. According to analysts, if the UK joins, the contribution rate will increase to 16%. If approved, the UK will become the first country to join CPTPP (also known as TPP-11) since former President Donald Trump withdrew the US from this agreement in 2017.

The British government believes that joining the CPTPP will deepen relations with fast-growing economies. Photo: AP

Prime Minister Boris Johnson's clear message is: Membership of the CPTPP would demonstrate that, after leaving the EU, London is activelybuild new partnerships, showing that the country is an enthusiastic supporter of global free trade. Meanwhile, UK Trade Secretary Liz Truss believes that joining the CPTPP will boost the UK economy thanks to trade liberalization, digitalization, and rapid tariff elimination on products such as whisky or cars. For example, when the UK becomes a member of the CPTPP, the tax on British whisky exported to Malaysia will decrease from 165% to 0%; or the tax on car exports to Canada will also quickly decrease to 0% in 2022, which is 2 years earlier than if the UK-Canada bilateral trade agreement was passed. In addition, joining the CPTPP also creates more favorable and easier conditions for visa procedures for both British citizens and businessmen to other member countries; at the same time, creating opportunities for modern industries such as technology and services. Another benefit is the “rules of origin” that allow any product from a CPTPP member country to be recognized as having a clear “origin”…

With so many benefits, it is expected that today (February 1), Minister Liz Truss will discuss the proposal to join CPTPP with Japanese Minister of Economic Reconstruction Yasutoshi Nishimura - Chairman of the CPTPP Commission and New Zealand Minister of Trade and Development Damien O'Connor. New Zealand is currently keeping the official documents of CPTPP at the country's depository. Domestic public opinion immediately welcomed this move of the government. CEO of techUK Julian David emphasized that the event marked an important step on the path to developing modern trade policy of the UK, creating new opportunities for the country's technology sector. Or Chairman of the Federation of Small Businesses (FSB) Mike Cherry also said that becoming a member of CPTPP will be a welcome development for all small businesses looking to expand or start a business strategy.

British Prime Minister Boris Johnson made many strategic calculations when applying to join the CPTPP. Photo: Reuters

Don't expect too much!

There is no denying the benefits that CPTPP would bring to the UK if it officially becomes a member, especially after London has officially ceased to be a member of the EU. However, on the other hand, many critics argue that joining a trade agreement with 11 countries on the “other side of the world” would only bring limited economic benefits to London! The UK’s proposal to join CPTPP while terminating the free trade agreement with the EU is said to create a large number of border controls and trade restrictions. This is considered a paradox in the UK’s current trade policy. Because distance is a top important factor.

For example, onetrade agreementthat the UK recently achieved with the major economy of Japan. Basically, this is a transfer from the EU - Japan agreement. However, according to economists, this agreement is expected to increase the UK's GDP by only about 0.07% in the long term. Another study by the British Government in 2018 also showed that bilateral cooperation and trade with non-EU countries such as China, India, Australia or countries in Southeast Asia will only increase the UK's GDP by about 0.1% - 0.4%. Some even say that economic cooperation in the style of Prime Minister Johnson's "Canada-style trade agreement" could reduce the UK's GDP by nearly 5%. Furthermore, if agricultural issues have caused the UK's trade negotiations with the administration of former US President Donald Trump to become deadlocked, the UK's food standards rules could also complicate CPTPP accession negotiations with member countries such as Australia and New Zealand.

The future of the UK joining the CPTPP remains uncertain. Photo: Kepdowrie

Not only is it considered to bring limited benefits, another goal of Prime Minister Boris Johnson is also considered difficult to achieve. By joining the CPTPP, Mr. Johnson hopes that new US President Joe Biden will also decide to return to the agreement as committed. From there, UK-US trade relations will be mutually binding, opening up new hopes for cooperation between the two countries, when the prospect of a bilateral trade agreement is still at a standstill. However, perhaps Prime Minister Johnson also understands that, despite the commitment, Mr. Biden certainly will not be able to rush the US back into the agreement. Because Mr. Biden is also busy realizing another commitment, which is to improve the country's economy before signing new trade agreements, of course, including trade agreements with the UK or with the CPTPP group of countries. Some experts predict that it will be difficult for the US to rejoin before the next midterm elections in 2022.

So, maybe at this point,Prime Minister Boris Johnson's administrationwill have to carefully consider the pros and cons, advantages and disadvantages when officially submitting an application to join this Agreement. Of course, for their part, CPTPP member countries are all leaving the door open for the UK. Procedures will also be activated soon, such as a CPTPP Committee meeting to decide whether to agree to start the accession process for the UK or not. If the committee approves, a working group will be established immediately to begin negotiations between the two sides. However, whether to join the Agreement sooner or later, and to what extent, is entirely up to the UK Government.