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Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

  • Category
    International Relations
  • Published
    21st Jul, 2023

Context

Three years after leaving the European Union, the United Kingdom joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a club of 11 other countries which together generate 14% of the world’s income.

About the deal:

  • The CPTPP is a landmark pact agreed upon in 2018 that cuts trade barriers among 11 countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

All 11 countries of CPTPP are also members of the Asia-Pacific Economic Cooperation (APEC).

  • Those founding members signed the Pacific trade pact in March 2018.
  • Between them, they generate 13% of the world's income.
  • The UK is the first non-founding country to join, and will be its second biggest economy after Japan.
  • With UK membership, CPTPP will have a combined GDP of 12 trillion pounds and account for 15% of global trade.

What is Brexit?

  • Brexit refers to the U.K.'s decision to leave the European Union (EU). The country formally left the EU in January 2020, after a referendum in 2016.
  • Impact of Brexit on U.K.:
    • Changes in trade policies and tariffs with the EU and other countries.
    • Reduced access to the EU market for U.K. businesses.
    • Increased regulatory burden on U.K. businesses trading with the EU.

Highlights of the Deal:

  • The pact requires countries to eliminate or significantly reduce tariffs and make strong commitments to opening services and investment markets.
  • It also has rules addressing competition, intellectual property rights and protections for foreign companies.
  • Significance:
    • CPTPP removes 99% of tariffs on goods and services.
    • It prevents environmental abuses, such as unsustainable logging and fishing.
    • This is also has impact on wildlife trafficking.

CPTPP: Geopolitical impacts:

  • For Britain: The CPTPP is a "gateway" to the Indo-Pacific region, which is expected to account for a majority (54%) of global economic growth in the future.
    • As a CPTPP member, the U.K. will have a veto on whether China joins the treaty. U.K. firms will not need to establish a local office or be resident to provide services and will be able to operate on a par with firms in host countries.
  • India’s views:
    • India has recognized that the sweeping economic concessions required to join CPTPP have too far-reaching consequences, similar to RCEP.
    • India opted out of the bloc because it wants to impose stricter labour and environmental regulations on its other partners.
    • India also mentioned that the deal eliminates crucial issues such as data localisation and environmental standards.

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