The United Kingdom Is Joining the CPTPP. What Comes Next?
The United Kingdom reached an agreement with Indo-Pacific partners to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at an virtual ministerial meeting late March 31, 2023. Soon to be the CPTPP’s 12th member, the United Kingdom’s anticipated accession to the regional trade bloc represents the first expansion of the grouping since the CPTPP came into effect in 2018. The CPTPP is already one of the world’s largest free trade agreements (FTA). The combined GDP of its member states (some of the largest and fastest-growing economies in the world) is $13.5 trillion. The United Kingdom’s imminent acceptance, likely to be finalized at the upcoming CPTPP ministerial meeting in Auckland in July, represents a significant victory for post-Brexit UK leadership and the CPTPP itself. However, it also means that CPTPP members now face difficult decisions about the applications of five other economies—including China and Taiwan.
Q1: What was agreed to in order to let the United Kingdom join the CPTPP?
A1: Despite being a large, advanced economy with strong trading relationships in the Indo-Pacific, the United Kingdom had to meet the CPTPP’s high standards for market access requirements, sanitary and phytosanitary standards, and binding investor-state dispute settlement (ISDS) provisions to join CPTPP. The accession process, chaired by Japan, required the United Kingdom to reach agreements with the 11 CPTPP members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam.
One year after the post-Brexit United Kingdom left the European Union, its then-international trade secretary Liz Truss formally applied to join CPTPP on February 1, 2021. As the first non-founding country to apply to join CPTPP, it took until June 2, 2021, for CPTPP nations to begin the UK accession process. Though the United Kingdom already had trade deals with 9 of CPTPP’s 11 members, complex negotiations on Britain’s entry took over two years.
CPTPP members would not concede to the United Kingdom receiving many derogations or exceptions to the agreement’s binding commitments and high standards. As the CPTPP’s first precedent-setting applicant, Japan was insistent that the United Kingdom accept virtually all existing CPTPP rules for entry. Parties to the agreement also looked for a resolution to the long-simmering UK-EU dispute about the Northern Ireland Protocol as a condition for Britain’s CPTPP entry, a concern that was assuaged in early March 2023 with the finalization of the Windsor Framework before a recent CPTPP negotiating round in Phu Quoc, Vietnam.
The final roadblock to UK accession was a last-minute impasse between the United Kingdom and Canada over agricultural market access. With the United Kingdom no longer party to the EU-Canada Trade Agreement (CETA) following Brexit, disagreement over Canadian access to the British beef market emerged as a key bilateral trade tension in ongoing negotiations for a bilateral UK-Canada FTA. Canada objected to Britain’s CPTPP accession with this issue in mind. Only in mid-March 2023 did officials from Ottawa partially relent at the request of Tokyo, reaching a settlement with counterparts in London to take up these market access concerns in bilateral, rather than multilateral, negotiation, clearing the way for UK CPTPP accession.
Q2: What is the significance of the United Kingdom joining CPTPP?
A2: UK accession to the CPTPP is a win for UK prime minister Rishi Sunak’s government and for the Indo-Pacific trade bloc. Tories in the British government have long championed UK accession to the CPTPP as a move that would elevate “Global Britain” post-Brexit. Following UK withdrawal from the European single market, British leaders saw acceptance into the CPTPP’s trade area—an area roughly on par with the European Union in terms of GDP—as a way to mitigate Brexit losses and guarantee future economic growth. However, many critics do not see UK entry into the CPTPP as commensurate with rejoining the European single market.
According to the UK Department for Business and Trade, joining the CPTPP would make UK businesses eligible for tariff-free access to over 99 percent of goods exported to a market of over 500 million customers. CPTPP accession also provides the United Kingdom significant economic growth potential via financial services and digital trade CPTPP members. Over 15 years, it is estimated that UK accession to the CPTPP would grow British GDP by only 0.08 percent—a relatively small figure given Britain’s existing trade agreements with most CPTPP members. While these economic benefits may be modest, joining CPTPP will boost likely the Sunak government’s domestic political legitimacy and add momentum to Britain’s “Indo-Pacific tilt” in conjunction with AUKUS.
Britain’s accession to CPTPP also injects energy into the trade bloc as it approaches its fifth year of being in effect. From its inception, the agreement was meant to grow—as evidenced by the inclusion of an accession process—and UK accession proves that the agreement remains dynamic and attractive to global economies. With its first European member, this trans-Pacific agreement has essentially become trans-Atlantic as well, suggesting further expansion of this trade bloc beyond the geographic confines of the Pacific Rim. However, the addition of a new member to CPTPP raises the stakes for parties to enhance the lackluster implantation of CPTPP enforcement mechanisms, as detailed in an October 2022 report by the CSIS Scholl Chair in International Business. In the long term, these enforcement failures could dilute the benefits and attractiveness of the trade agreement. With a new and engaged member, momentum may also grow among CPTPP parties for upgrading the agreement to better address emerging issues in digital trade, sustainability, and inclusivity—all priorities of New Zealand’s 2023 chairmanship.
Q3: What does UK accession to CPTPP suggest for the future of the trade area?
A3: With one applicant accepted into the agreement, CPTPP members now turn to five other applicants: China, Taiwan, Ecuador, Costa Rica, and Uruguay.
China and Taiwan’s are the next two applicants in line to join the trade bloc, having each applied to join in fall 2021. On its economic merits, Taiwan’s status as an advanced liberal market economy makes the island a qualified candidate to meet the high standards of CPTPP membership. However, its political relationship vis-à-vis China complicates its potential membership. China, as the world’s largest nonmarket economy, faces a highly complex accession process—with its membership remaining uncertain based on the country’s debatable economic merits for joining. As a result, many CPTPP members are reluctant to accept both economies into the agreement; nor is any member comfortable admitting one before the other. Ecuador, Costa Rica, and Uruguay, which all applied between 2021 and 2022, all face lengthy accession processes, but their acceptance into the trade area is less politically controversial.
However, as CPTPP grows, the absence of its largest founding member, the United States, only becomes more notable. Nearly a decade ago, the United States was the driver of negotiations for the Trans-Pacific Partnership (TPP). U.S. withdrawal from the agreement in 2017 prompted the creation of the CPTPP as a successor deal. Though the United States has since introduced its own Indo-Pacific Economic Framework for Prosperity (IPEF) as an alternative regional economic arrangement, CPTPP members who are party to IPEF negotiations still see the framework as a second-best option to the United States joining the CPTPP.
In the short term, the accession of one of the United States’ closest allies to CPTPP is unlikely to change the calculus of Washington’s reluctance to join the agreement. In the long term, Britain’s inclusion in the intercontinental trade area will only increase the gravitational pull of the agreement.
Aidan Arasasingham is a research associate with the Economics Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Emily Benson is a senior fellow with the Scholl Chair in International Business at CSIS. Matthew P. Goodman is senior vice president for economics at CSIS. William A. Reinsch holds the Scholl Chair in International Business at CSIS.