Tilting towards Indo Pacific Trade – the CPTPP

The UK is tilting towards the Indo Pacific. The US previously pivoted towards Asia. I think you’d have to be a judge on Strictly to explain the difference between a tilt and a pivot. But it is clear that we are stepping up engagement with a region that presents huge economic opportunities as well as some serious security challenges.

The successful conclusion of the UK’s negotiations to join the CPTPP (Comprehensive and Progressive agreement for Trans Pacific Partnership) is the latest manifestation of our Indo Pacific tilt. We are joining a group of 11 countries who collectively represent 13% of the world’s GDP. Personally I feel I’ve been tilting towards the Indo Pacific for most of my career. I lived in the region for some 20 years, and served as Ambassador in 3 of the 11 CTP member states. So I very much welcome the new deal.

Of course, joining the CPTPP brings valuable new business opportunities. But I think the most important benefit is that we are deepening our relationship with a wider Indo Pacific region that will generate much of the world’s growth in the years ahead.?This gives a clear signal to British companies that they can make a serious commitment to pursuing opportunities in the region with greater assurance.

The strategic consultancy that I advise, Stonehaven, has certainly recognised the potential of the Indo Pacific, opening offices in Australia and in Singapore, which I visited last month. We are helping new and existing clients in the region with complex challenges like how to navigate the energy transition and promote sustainability.

I remember being in Tokyo when Liam Fox, the former Trade Secretary, first mooted with his Japanese counterparts the idea of the UK acceding to the CPTPP. They warmly welcomed the idea. Japan, and in particular the late Shinzo Abe, former Prime Minister, had played a key leadership role in creating the grouping, after the Trump Administration walked away from it in 2017. Japan was also a strong supporter of the UK’s accession throughout the negotiations process.

Sadly it doesn’t look like the US is going to be taking a leadership role on new trade agreements anytime soon. So trade deals with strong rules like CPTPP, can help set standards which will shape the global trade scene in the decades ahead.

One sign of a successful club is a queue of people lining up to become members. There are five other applicants behind the UK – Costa Rica, Taiwan, Uruguay, China and Ecuador - and others have also shown interest.?Handling China’s application is complicated, and views among existing members vary considerably. At present China would fall a long way short of the CPTPP’s high standards on issues like State Owned Enterprises, forced technology transfer and labour rights. But some experts have noted that in other areas, China might be closer to meeting the criteria than many people realise. Taiwan’s application further complicates this issue. So that will all probably remain in the long grass for now. And there are some in the region who hold out the hope that the UK’s accession may help encourage the US to reconsider membership in the much longer term, though that seems some way off for now.

In terms of the direct commercial benefits, the UK government estimates that CPTPP accession will increase UK GDP by around 0.08%.?I know that’s not huge, not least because the UK already had bilateral trade deals with most major member states. But there will be a number of new opportunities in sectors from whisky to cars to services. And there will be significant gains in access to Malaysia, with whom we didn’t previously have a trade agreement.?And more to come in future, if countries like South Korea and Thailand decide to join in due course.

Trade deals are sometimes presented in the popular press as wins for our exporters, and losses for domestic producers who face increased imports. Of course, it’s not as simple as that. Cheaper imports bring benefits to consumers. And in a world with increasing concerns about the resilience of supply chains, the opportunity to broaden sources of supply from like-minded countries can bring important benefits to our businesses.?

Having been deeply involved in the UK/Japan Comprehensive Economic Partnership Agreement in 2020, I know how much work goes on behind the scenes in these negotiations, involving a wide range of officials from across Whitehall and in our embassies around the region, working closely with business and NGO representatives. I’d like to congratulate Graham Zebedee of DBT and his team on achieving this significant new step.