Published: 20th 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.
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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.
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What is Brexit?
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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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