Britain Joins Asia-Pacific Free Trade Pact in ‘Biggest Trade Deal Since Brexit’

UK Prime Minister Rishi Sunak speaks to an audience as he attends a Q&A session during a Connect event at Chelmsford Boys Club in Chelmsford, England, on March 27, 2023. Jack Hill-WPA Pool/Getty Images

The United Kingdom has struck a deal to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) after almost two years of “intense negotiations,” the British government said on March 31.

In a statement, the British government hailed the Asia-Pacific trade deal as the country’s “biggest trade deal since Brexit,” referring to the withdrawal of Britain from the European Union in 2020.

“The bloc is home to more 500 million people and will be worth 15 percent of global GDP [gross domestic product] once the UK joins,” it stated.

Britain said the CPTPP would help boost its economy by 1.8 billion pounds ($2.2 billion) “in the long run,” with wages expected to rise by 800 million pounds ($990 million) compared to 2019 levels.

“More than 99 percent of UK goods exports to CPTPP countries will now be eligible for zero tariffs, including key UK exports such as cheese, cars, chocolate, machinery, gin, and whisky,” the government stated.

Britain is the first European country to join the CPTPP—a landmark 11-country trade deal that includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The government stated that UK exports to CPTPP countries totaled 60.5 billion pounds ($74.86 billion) in the 12 months leading up to September 2022, with further growth expected under the trade pact.

British Prime Minister Rishi Sunak said the deal “demonstrates the real economic benefits of our post-Brexit freedoms,” which he believes will put the country in “a prime position” in the global economy.

“Joining the CPTPP trade bloc puts the UK at the center of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join,” Sunak said.

“British businesses will now enjoy unparalleled access to markets from Europe to the south Pacific,” he added.

Under the CPTPP, UK companies will not be required to establish a local office or be a resident to supply a service and will be able to operate on par with local firms.

The British government will also have a free trade agreement with Malaysia for the first time, according to its statement.

(L-R) Trade or foreign ministers of Singapore, New Zealand, Malaysia, Canada, Australia, Chile, Brunei, Japan, Mexico, Peru, and Vietnam pose for an official picture after signing the rebranded 11-nation Pacific trade pact Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, on March 8, 2018. Claudio Reyes/AFP via Getty Images

Asia Trade ‘Won’t Change Much’

The deal comes as the United Kingdom pursues an “Indo-Pacific tilt” in its economic and foreign policy in response to the region’s economic growth and China’s rising influence on the world stage.

Critics said the deal with nations thousands of miles away is insignificant compared to Britain’s trade with its neighbors in the 27-nation European Union.

David Henig, a trade expert at the European Center for International Political Economy, said that CPTPP membership would not have a huge economic impact but “on balance,” it was good for Britain.

“Doesn’t do a lot for us (services provisions for example are weak), but trade policy is all about marginal gains these days, and it should be that,” Henig wrote on Twitter on March 30.

“The reality is that of Global Britain, we’ve always traded with Asia, this won’t really change much, we’ve always traded with Europe, this also won’t change much (but the latter is where the focus will increasingly be),” he added.

Brexit has imposed barriers to trade between Britain and the bloc, which remains by far the UK’s biggest economic partner. The government’s Office for Budget Responsibility said in November that Brexit had “a significant adverse impact on UK trade.”

The United States, the world’s biggest economy, is not part of the CPTTP; former President Donald Trump withdrew the country from its predecessor, the Trans-Pacific Partnership. President Joe Biden has not rejoined.

China, the second-largest economy in the world, has applied to join the trade pact in September 2021, a move that would quadruple the group’s total population to some 2 billion people.

The Associated Press contributed to this report.