Britain can still score victories on the global trade stage after Brexit

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP) is due to be officially signed in Chile tonight. While it is difficult to miss the sense of regret that there will only be 11 signatories rather than 12, the text itself is clearly structured to allow the US to re-join in a straight-forward manner. Nor does the text cap membership at 12. Should the UK become the trade equivalent of cricket’s Twelfth Man?

Both Japan and Australia have welcomed the prospect of British membership of the TPP and it is easy to see the attraction. For British companies seeking new markets, the TPP-11’s collective GDP is just over 70% of the European Union (ex-UK). With stronger demographics and future demand, expected growth rates also far surpass that of the EU.

For British investors, finding new investment opportunities in a world where traditional asset markets and asset classes are becoming more expensive and crowded is equally important. While the likes of Canada and Japan have long been accessible for portfolio and direct investments, Vietnam (possibly the biggest star of the so-called ‘frontier markets’) and Malaysia offer a range of new opportunities.

There is also much the UK could offer to the group and not just in trade per se. For example, the financial services chapter entails much liberalisation on market access, such as the removal of numerical or transactional quotas, but also provides for mutual recognition of regulation and other prudential measures.

Nevertheless, the TPP is not perfect. US- and China-sized (and to a lesser-extent, Korea-) holes notwithstanding, the UK needs to carefully consider whether to prioritise bilateral agreements or immediate trading bloc membership.

In some respects, joining a pre-existing club does mean the UK will need to be an initial rule-taker rather than rule-setter. This could become more problematic over time if some structural matters which are not deemed to be in the national interest become more apparent (exhibit A: long-term European political union). In the specific case of the TPP, even before the US’s withdrawal, the lingering sense that the project was more strategic than economic had led to hesitation for participation, not least in Beijing.

But TPP membership does not preclude concluding bilateral free trade agreements with current or non-current members. Multiple streams can be pursued simultaneously, and Britain should use this option to its advantage.

The China-led trade agreement, the Regional Comprehensive Economic Partnership (RCEP), would give Britain similar access to Asia-Pacific and offer tariff reductions. The terms are far less comprehensive on matters such as labour standards and service market access widening, but if the UK was a founding member, it might be able to secure preferential provisions.

There is no ‘perfect’ trade partnership but the UK must be flexible and devote significant resources to pursuing every option possible. The UK should feel no sense of shame about potentially being the TPP’s substitute player: it should see it as an opportunity to go out and win a free trade victory. But, it doesn’t need to stop there. Britain can be a permanent player on the global trade stage, winning other prizes, like RCEP, too.