Posted: Tue 18th Jul 2023
"A big boost for British business", Kemi Badenoch said as she signed the treaty that confirms the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The business secretary was in Auckland to mark the formal start of the process required for the UK to join the trade group which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Together, the countries have a combined GDP of £12 trillion, are home to more than half a billion people and, according to the government, is worth 15% of global GDP with the UK as a member.
The UK is the first new member and first European country to join since CPTPP launched in 2018.
Badenoch's signing of the treaty is the formal confirmation of the UK's membership which is expected to come into force in the second half of 2024 after it has been scutinised by Parliament.
Once that happens, the government says 99% of UK goods exported to CPTPP member countries will be eligible for zero tariffs.
Examples of benefits cited by ministers include exporters of dairy products, such as cheese and butter, getting greater access to lower tariffs in Canada, Chile, Japan, and Mexico, with UK chocolate producers able to access zero tariffs on exports to Mexico and Malaysia.
Service businesses will also benefit, the government said. The UK currently sells £32.2bn in services to CPTPP members, which is more than goods. That includes £1.9 billion in auditing, accounting, legal and other business services to Australia and £1.4 billion in transportation services to Singapore.
Despite the advantages outlined by the government, critics of the deal say the impact will actually be small. Official figures predict it will add only £1.8 billion to the UK after 10 years, which is 0.08% of GDP. In addition, free trade agreements are already in place between the UK and all other CPTPP members apart from Malaysia and Brunei.
But commenting on the estimate, Badenoch said it "doesn't look at the future growth that's coming in and it also doesn't look at how we utilise the agreement", before adding: "If we don't use it, then it'll become a self-fulfilling prophecy".
On the existing trade deals with CPTPP members, Badenoch told Sky News:
"The contents of the free trade deals that we have with these countries is different from what we're getting with CPTPP.
"That's why it's called the comprehensive - as well as progressive agreement - for the trans-Pacific partnership.
"We've got agreements with many different countries - it is about the size, shape and scale and the cumulative impact of things like rules of origin, which are pooled between this trading bloc."
Enterprise Nation's reaction to the UK joining CPTPP
Included in the deal is a chapter covering small businesses with all countries committing to cooperate in a "dedicated committee on SMEs" through which they will:
share information on their experiences supporting SME exporters, for example through training programmes.
exploring further capacity building for their SMEs.
Emma Jones, founder of Enterprise Nation, said:
"International trade opens up a world of opportunity for entrepreneurs. Exporting, whether it be a product or a digital service, is a key driver of productivity and growth.
"Joining the CPTPP is a very helpful step in unlocking global ambitions. SMEs tell us accessibility and costs are the key barriers stopping them from exporting. By putting smaller businesses at the heart of this, for example with a dedicated SME committee, we are making progress.
"Let's celebrate and build on this by wrapping small firms with the support they need to get out there and trade. Over the next 12 months, the Enterprise Nation Go Global scheme aims to offer targeted guidance to 100,000 SMEs looking to take their business overseas."