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U.K. to join Trans-Pacific Partnership
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.
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Asia-Pacific Economic Cooperation (APEC):
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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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