The UK has signed an agreement to join one of the world’s largest trading blocs, which Rishi Sunak says will help Britain capitalize on “post-Brexit freedoms”.
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), made up of 11 members of the Asia-Pacific Trade Bloc, approved UK membership last night after two years of quota and tariff negotiations.
The UK will be the first country to join the CPTPP since the group’s inception in 2018, and ministers have said the deal will add £1.8bn a year to the UK economy by the end of the decade.
It is the first major deal signed by Kemi Badenoch, the new trade and commerce minister, who said it would be “the gateway to the wider Indo-Pacific.”
The government claims that joining the group will boost UK exports by lowering tariffs on goods such as cheese, cars, chocolate, cars, gin and whiskey.
The prime minister also hailed the deal as an example of “the real economic benefits of post-Brexit freedoms” and said it would help the UK economy “seize opportunities for new jobs, growth and innovation”.
However, critics stress that the economic benefits from the CPTPP will be limited as the UK already has trade deals with the vast majority of its existing members and the deal will generate just 0.08% of GDP.
The new pact has also met with opposition from activists who have called the UK’s decision to cut import tariffs on products such as palm oil “outrageous”.
Here I considers the potential problems and controversies associated with the new Trans-Pacific Trade Agreement:
Limited economic benefits
The government’s own estimate is that participation in the CPTPP will increase the size of the UK economy by only around 0.08% over the next 10 years.
Critics point out that this is unlikely to offset the estimated 4% reduction in potential UK economic growth due to Brexit, according to the Office for Fiscal Responsibility (OBR), which prepares government forecasts.
It is understood that the announced £1.8bn annual growth for the UK economy from the CPTPP trade deal will not begin until the full benefits of joining the bloc have taken effect, likely in 10 years.
David Hoenig, UK director of the European Center for International Political Economy, said the partnership was a “perfunctory” trade deal, “mostly focused on lowering tariffs, like our existing nine-member free trade agreements.”
The UK already has trade agreements with Australia, Canada, Japan, Mexico, New Zealand, Singapore, Chile, Peru and Vietnam, which make up the vast majority of the 11 CPTPP member states.
Mr Hoenig said the deal could “provide little benefit to the UK economy, mainly by lowering trade barriers with Malaysia, with which we have no agreement.”
Brunei, the only other CPTPP member with which the UK does not have a valid trade deal, is expected to receive minimal benefits to the UK from the new deal.
However, Mr. Hoenig said that imports from countries such as Vietnam could “increase over time” and bring better profits in the long run.
The government reportedly believes the new deal will go beyond existing trade agreements with member countries and that it will be easier to trade things like car parts with countries like Singapore as rules of origin are more liberal.
More countries are likely to join the bloc, meaning the UK could gain access to new markets. Costa Rica, Uruguay and Ecuador have applied for the CPTPP, while Thailand and South Korea have expressed interest.
Palm oil
Charities reacted to news that a new trans-Pacific trade deal would cut tariffs on Malaysian palm oil, a product blamed for widespread deforestation.
Daniela Montalto, Forestry Manager at Greenpeace UK, called the deal “outrageous” and added that lower palm oil prices would only cause more destruction.
Claire Oxborrow, senior sustainability analyst at Friends of the Earth, also warned that the trade deal undermines the UK’s commitment to ending deforestation in its supply chains.
Ms Oxborrow said: “Many parts of Southeast Asia have been hit hard by deforestation, especially from palm oil production. As our natural world is in a state of emergency, we must take stricter measures to ensure that products bought and sold in the UK comply with strict environmental and human rights laws.”
workers’ rights
Unions expressed concern that the new agreement could make the UK complicit in the exploitation of workers in member states.
TUC General Secretary Paul Novak said the agreement would authorize the exploitation of workers in Vietnam and Brunei, “where independent trade unions are banned, and in Malaysia, where migrant workers face forced labour.”
Nick Thomas-Symonds, Labour’s shadow secretary for international trade, said ministers still “need to answer key questions” and UK trade policy must “advance democracy, workers’ rights and the environment around the world, including through supply chains.
litigation
Unions also condemned clauses in the new agreement that allow large companies to sue the UK government behind closed doors if they believe their profits have been hurt by changes in laws or regulations.
Mr Nova said: “This deal allows multinationals to take legal action against the UK government in secret courts for imposing policies that threaten their profits, which could include raising the minimum wage or repatriating state-owned energy companies.”
It is believed that the government is rather indifferent to this provision, since the UK has already concluded several such deals and has not yet lost the dispute between investors and the state.
beef
The UK has also agreed to cut tariffs on products such as bananas, rice and crab sticks in a new trade deal following demands from Peru, Vietnam and Singapore respectively.
However, the decision to increase imports of beef from other Member States raised concerns about potential animal welfare issues.
The fears are largely unfounded as hormone-treated beef remains banned under a new trans-Pacific trade deal after a last-minute row with Canada.
Under the new agreement, Canada is allowed to export 13,000 tons of beef to the UK annually.
Although Canada urged the UK to lift its ban on imports of hormone-treated beef, its demands were ultimately defeated and ministers insisted that the UK’s ban on hormone-treated beef remain absolute.
Source: I News
I am Moises Cosgrove and I work for a news website as an author. I specialize in the market section, writing stories about the latest developments in the world of finance and economics. My articles are read by people from all walks of life, from investors to analysts, to everyday citizens looking for insight into how news will affect their finances.