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U.K. to join Trans-Pacific Partnership

  • Published
    1st Apr, 2023
Context

The U.K. has recently acceded to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

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

  • It is a free trade agreement (FTA) between 11 nations.
  • It was signed in March 2018.
  • It succeeded the Trans-Pacific Partnership (TPP) after the United States withdrew from the TPP in 2017.
  • All 11 countries of CPTPP are members of the Asia-Pacific Economic Cooperation (APEC).
  • Member countries:
    • Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.
  • It accounts for nearly 13% of global GDP.

Asia-Pacific Economic Cooperation (APEC):

  • It is a forum of 21 Asia-Pacific economies established in 1989.
  • It seeks to promote free trade and economic cooperation throughout the Asia-Pacific region.
  • The APEC Secretariat, headquartered in Singapore, provides advisory and logistic services as well as research and analysis.
  • APEC decisions are reached by consensus, and commitments are made on a voluntary basis.
About the agreement:
  • The agreement between the UK and trans-pacific countries will now need to be ratified by Westminster and each of the CPTPP countries.
  • The British government said the deal would mean that more than 99% of British exports — including for key markets such as cheese, cars, chocolate, machinery, gin and whisky — would have zero tariffs.
Significance:
  • Boost to GDP: It also claimed that the deal would add GDP 1.8 billion ($2.2 billion) annually to the U.K. economy in the long run. This, however, translates to a modest boost of 0.08% to GDP.
  • Post Brexit Freedom: Prime Minister Rishi Sunak describing the outcome as an example of “post-Brexit freedoms”, which will help Britain’s economy.
  • Gateway to Indo-pacific: The government said the deal was a “gateway” to the Indo-Pacific region which would account for a majority (54%) of global economic growth in the future.
  • Benefits to companies: Once Britain becomes a member of the bloc, 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, the government said.

What’s good about TPP?

  • New economic growth: Those in favour say this trade deal will unleash new economic growth among countries involved.
  • Improve people’s living standards: It is being said that the TPP has high potential to improve people’s living standards by facilitating the free cross-border movement of key factors of economic activity, such as goods, people, money, and information.
  • Failure to bring the TPP into force would be a great loss to not only the TPP countries such as Japan and the US but also the global economy.
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