The UK has reached an agreement to join a major free trade bloc in the Pacific region.
The UK will be the first new member to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) since it entered into effect in 2018.
Despite the government’s claim that it is the “biggest trade deal since Brexit.” Its own projections indicate that joining the CPTPP will boost UK economic output by less than 0.1% in the long run, or over approximately 15 years.
“At our core, we are an open and free-trading nation,” British Prime Minister Rishi Sunak said Friday.
According to Sunak’s office, the bloc is home to more than 500 million people and will be worth 15% of global GDP once the United Kingdom enters.
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam are the 11 signatories of the CPTPP. It took the place of the Trans-Pacific Partnership after the United States withdrew in 2017 under previous President Donald Trump.
The agreement comes nearly two years after the United Kingdom started talks to join the pact.
The UK economy is unlikely to benefit significantly from joining the CPTPP. Britain already has trade agreements with nine of the existing members.
Deal Compensate economic impact of leaving EU
The deal will also not compensate for the economic impact of leaving the European Union. The UK Office for Budget Responsibility, which provides government economic forecasts. Estimates that Brexit will reduce Britain’s output by 4% over 15 years compared to remaining in the EU.
As a result of joining the CPTPP, more than 99% of UK exports to the other 11 nations will now be eligible for tariff-free trade. This includes important exports like cheese, automobiles, chocolate, machinery, gin, and whisky.
Sunak’s office said in a statement that the United Kingdom exported £60.5 billion ($75 billion) in goods to CPTPP nations from September 2022 to September 2023.
Dairy producers, for example, sent £23.9 million ($29.6 million) in products like cheese and butter to Canada, Chile, Japan, and Mexico last year, and were set to “benefit from lower tariffs,” according to the report.
The agreement also seeks to reduce red tape for British companies, which will no longer be required to establish local offices or be residents of the pact’s member countries in order to provide services there.
According to Sunak’s office, services accounted for 43% of total UK commerce with CPTPP members last year.