Britain’s CPTPP Entry Extends Pact to Europe

14/07/2023    70

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) took effect Wednesday in Brunei, the last of the original 11 signatories to implement the trade pact.

The United Kingdom is set to officially join the agreement on Sunday at a CPTPP ministerial-level commission meeting in New Zealand, which will extend to Europe an economic zone that originally comprised Pacific rim countries.

The CPTPP, which includes Japan, will phase out tariffs on nearly all items. The agreement is characterized by a high level of liberalization, including protection of intellectual property rights, and restrictions on data distribution and excessive subsidies to state-owned enterprises.

Although the combined gross domestic product of CPTPP member countries is less than that of the 15 members of the Regional Comprehensive Economic Partnership (RCEP) — which includes Japan, China and South Korea. However, such trade pacts are expected to increase business transactions beyond goods trade.

Negotiations for a trade pact based around the Pacific rim began in 2010 with the United States and seven other countries, and Japan joined the group in 2013.

In 2016, 12 countries signed the agreement. But in 2017, then U.S. President Donald Trump withdrew the United States from the pact. As a result, the remaining 11 countries negotiated a new agreement.

The CPTPP entered into force in six countries in 2018, and since then, the other five original signatories have implemented the agreement in turn.

The United Kingdom will be the first new member of the pact. Britain has been looking for trade partners outside Europe since leaving the European Union in 2020. It applied for CPTPP membership in February 2021 and received the green light from the 11 signatories in March.

Britain’s participation will increase the global GDP share of CPTPP members from 12% to 15%, and the total population from 510 million to 580 million.

“Britain’s accession will contribute to further promoting free trade, open and competitive markets and a rules-based trading system,” economic revitalization minister Shigeyuki Goto told reporters Tuesday.

Britain concluded an Economic Partnership Agreement (EPA) with Japan in 2021. Countries such as Malaysia that have not yet signed such agreements with the United Kingdom will be able to increase trade via the CPTPP. And as a result, Japanese companies in those countries might also be able to strengthen supply chains and expand business opportunities.

China, Taiwan, Ukraine and others have applied to join the CPTPP. Kyiv is thought to be aiming to secure support and investment from member countries with a view to reconstruction after the Russian-triggered war in Ukraine. Meanwhile, Beijing is expected to become the biggest focus of accession talks.

China’s huge market has raised expectations in some quarters, but others think Beijing’s subsidization of state-owned enterprises is a problem. There is also a strong sense of caution about the threat of economic coercion, such as trade curbs, to apply pressure on other members.

Consensus among member countries will be necessary to begin accession talks. If China is allowed to join, America’s return to the pact — which Japan and other countries are seeking — may become more difficult.

Goto, who handles CPTPP affairs, said Tuesday, “We will deal with new memberships while evaluating if they are ready to fully meet [the high level of liberalization in] the agreement.”

Osamu Tanaka, chief economist at Dai-ichi Life Research Institute Inc., said: “With Britain’s accession, the CPTPP has the potential to become a global framework. However, we have yet to see contenders for disucssions on the next accession.”

Source: The Japan News