UK Department for International Trade says joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership would produce an economic boon by lowering tariffs on ‘major UK exports’ such as cars and whiskey, while helping farmers to sell more meat to markets like Mexico. It could also boost trade in services and facilitate the expansion of technology companies abroad.
“Joining the CPTPP would connect Britain to some of the world’s largest present and future economies, populated by half a billion people and with a common GDP of £ 9 trillion ($ 12.5 trillion) in 2019, ”the Commerce Department said in a statement. “This is a sparkling post-Brexit price that I want us to grab,” added Trade Secretary Liz Truss.
But trade experts say joining the CPTPP – a pact of 11 countries that includes Mexico, Australia, Canada and Singapore – will bring only modest economic benefits and will not offset the blow to UK trade by the exit the European Union.
According to the UK government’s own estimate, membership could increase Annual GDP of just 0.08% – or £ 1.8bn ($ 2.5bn) – in the long run. This compares to a 4% production loss on leaving the European Union, based on previous modeling by the government’s Economic Forecasting Agency.
The UK exported £ 294 billion ($ 408.7 billion) of goods and services to other EU member states in 2019, accounting for 43% of all UK exports, according to the Office for National Statistics.
But between January and March, ONS data shows UK merchandise exports to the bloc fell 18% to £ 32.2 billion ($ 44.8 billion) from the three last few months of 2020, as companies grapple with new trade rules.
By comparison, exports to CPTPP countries are expected to increase from 37 billion pounds ($ 51.4 billion) to 94 billion pounds ($ 130.7 billion) by 2030, according to the UK government forecast.
“Membership would boost that growth and support British jobs,” he said on Tuesday, adding in a strategy document that he “puts Britain at the heart of a dynamic group of countries.”
But Jerzewska warned the UK would “come from outside”, hoping to fit into supply chains established over decades. “It will be quite a challenge,” she told CNN Business.
While membership can reduce tariffs on goods, it does not remove other barriers to trade such as red tape and regulations, she added. In that sense, it is similar to the deal post-Brexit Britain has with the European Union.
However, a deal with the CPTPP could reassure Britain’s existing trading partners that it is still in favor of trade liberalization, Jerzewska added.
“Brexit was a signal that the UK was getting a little more protectionist, so it’s a way to show everyone that we are serious about free trade,” she said.
“Geopolitical goals should not be ignored and a small positive impact on GDP is always a positive impact on GDP, but something tells me that we are about to hear a lot of exaggerated numbers and exaggerated claims in About this agreement. “