UK joined CPTTP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) on December 15th 2024, becoming the first European nation to join the pact.
Other members are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. These nations together account for around 13% of the global economy, reflecting their significant economic influence.
The agreement’s main aim is to reduce trade barriers, enhance economic cooperation, and foster a more integrated market across the Pacific region.
What are the benefits of CPTPP membership for the UK?
Most imports and exports between UK and CPTPP countries are duty free.
The UK’s membership in the CPTPP should bring huge economic benefits, particularly through increased access to new markets. British businesses will see improved trade conditions, with over 99% of their exports to CPTPP countries now eligible for tariff-free access. This includes key UK exports such as cars, machinery, and dairy products, which will benefit from reduced tariffs, enhancing the competitiveness of British goods in international markets.
One of the most promising aspects of the UK’s entry into the CPTPP is the potential for a £2.6 billion boost in exports to other member countries over time. Specifically, UK dairy exporters, including those selling cheese and butter, will gain more access to lower tariffs in markets like Canada, Chile, Japan, and Mexico. Similarly, UK chocolate exporters will enjoy zero tariffs on exports to markets such as Mexico and Malaysia, boosting the UK’s export potential in these key areas.
Another benefit of becoming a CPTTP member means that the cost of consumer goods which are purchased abroad should decrease as well, with fruit juices, honey, and vacuum cleaners becoming more affordable. Additionally, UK businesses could benefit from cheaper imports of manufacturing inputs, such as machinery and chemicals, creating a more efficient supply chain for the UK’s industrial sectors.
What are the CPTPP benefits for SMEs?
The UK’s accession to the CPTPP is also a significant opportunity for the nation’s small and medium-sized enterprises (SMEs), which make up 99.8% of the UK’s business landscape, employing 16.6 million people as of 2024.
SMEs, while thriving in many cases, often face challenges when expanding into foreign markets. Recognizing the crucial role SMEs play in fostering job creation and driving inclusive economic growth, the CPTPP includes a dedicated chapter aimed at helping SMEs navigate international trade. This chapter seeks to reduce barriers and enable SMEs to better integrate into global supply chains, making it easier for them to compete on a larger scale.
Conclusion
The CPTPP represents a strategic move for the UK to solidify its presence in global trade, providing both large corporations and SMEs with valuable opportunities to expand their reach and enhance their competitiveness in a dynamic, international marketplace. With its growing membership and evolving opportunities, the CPTPP continues to be an important trade agreement that will shape the future of global commerce.
Sources:
- BBC News, Explainers: The CPTPP BBC
- Commons Library, The UK’s Accession to CPTPP Commons Library
- UK Government, Benefits for the UK from Joining the CPTPP gov.uk
- UK Government, The UK’s Accession to CPTPP for SMEs gov.uk