[Ship trade credit to Pixabay]
After 21 months of intense negotiations in Vietnam by the Department for Business and Trade, Prime Minister Rishi Sunak announced on March 31st, 2023 that the U.K. will join the Indo-Pacific trade bloc (CPTPP), the country’s biggest trading deal since Brexit in 2018.

The CPTPP, short for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, is a multilateral free-trade agreement (FTA) among 11 countries in the Trans-Pacific region, which include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The pact aims to reduce trade barriers and facilitate smoother trade between these nations by eliminating import tariffs and quotas.

The U.K. will be both the first non-founding and European nation to join this trade pact. 

The CPTPP originated from former U.S. president Barack Obama's “Pivot to Asia” plan back in 2009. 

Later in his presidency, the U.S. and 11 other nations that are now CPTPP members, created the Trans-Pacific Partnership in 2016. 

However, three days into office, then newly-elected President Trump withdrew the United States from the bloc, stating that free trade agreements would hurt the U.S. economy. 

Since then, former Japanese prime minister Shinzo Abe has taken the leading role in place of the U.S., and the rest of the 11 nations formally signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2018.  

The CPTPP encompasses  approximately half a billion people and 15 percent of the global economy. 

For British exporters, the multilateral trade agreement opens new opportunities in the emerging Asian market, specifically for food, drink, and cars. 

Since 2016, the U.K’s trade with CPTPP nations has grown at an 8% annual rate.

The U.K. exported 60.5 billion pounds worth of items to the members of CPTPP from September 2021 to September 2022. 

Moreover, five of the CPTPP members are Britain’s top 20 export markets. On Friday, Britain’s Prime Minister Sunak announced, “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms,”.

He continued, “British businesses will now enjoy unparalleled access to markets from Europe to the South Pacific.” 

The entry into the CPTPP, however, will not bring economic prosperity to the U.K. in the next few years.

Its expected contribution to the U.K.'s GDP growth is a mere 1.8 billion pounds, or 0.08% of the current U.K. GDP, over the next ten years.

While the CPTPP is not comparable to being in the European Union (EU), it is the first significant step towards what British conservatives call post-Brexit freedom. 

Furthermore, acceptance into CPTPP promises access and influence in the emerging Asian market.

This could potentially be an enormous opportunity, as 65 percent of all middle-class consumers will be in Asia by 2030. 

It also means that the U.K. now has the power to limit Chinese influence and entry to the CPTPP as it requires a unanimous agreement of existing members.

The deal is expected to be finalized by the end of this year.