By Carl Richardson
This article first appeared in the June edition of The Business Influencer magazine - www.thebusinessinfluencer.co.uk.
When the UK and Australia issued a joint statement towards the end of April saying that they had agreed the “vast majority” of a free trade deal and would now “enter into a sprint to agree the outstanding details” it felt important to go on the record and praise the progress, saying that
“when the agreement is completed it will provide an opportunity for a post-Covid shot in the arm for businesses in this country.”
A Free Trade Agreement (FTA) with Australia will undoubtedly be most welcome, assuming that ongoing UK cabinet discussions around tariff-free access to Australian farmers can be resolved satisfactorily. An FTA would add an estimated £500 million per annum to UK GDP and be one of the first post-Brexit trade deals we will have negotiated that is not simply a ‘rollover deal’ replicating trading arrangements previously negotiated on our behalf by the European Union.
Our family business, which I jointly lead alongside my brothers, already has multiple investments around the Pacific Rim, and a deal which among other advantages reduces or eliminates tariffs will encourage further investment and make business simpler.
We are for sure actively on the look-out for opportunities in the region to back ambitious management teams who are actively seeking growth capital, and news such as this only strengthens our appetite to invest further.
At the same time, we believe that the importance of the progress with Australia could go far beyond being just another trade deal ticked off the ‘to do’ list, and it can act as a significant stepping stone for the UK to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in the near future.
The CPTPP is a free-trade agreement between 11 countries around the Pacific Rim: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Their collective economies represent nearly 14% of global GDP, at over £9 trillion per annum, and it is set up to operate as a genuine free-trade area, without the political and legal convergence seen with the EU in recent decades. While the economic benefits of membership for the UK remain to be fully quantified, it will certainly improve existing trading conditions and opportunities for British businesses in the services sectors, especially financial and digital, and put us in a stronger position for reducing other trade barriers with our partners in the future.
Over and above the economic benefits, membership of the CPTPP would also provide a golden opportunity for the UK to participate as a front-row player in what is increasingly being viewed as the Asian Century. For Brexit Britain read Pacific Britain.
The idea that we are approaching, or indeed are already in, the ‘Age of the East’ is not a new concept, but is certainly one that is critically relevant and exciting today, and CPTPP membership would signal to the world Britain’s ambition to embed itself in this strategically important region.
When the CPTPP was established in 2018 it was anticipated that other countries would join. The UK is now well placed to be the first, having lodged a formal application to join in February this year, and our understanding is that Japan, as current Chair of the CPTPP, will shortly decide whether or not to give the application the green light on behalf of the group. Liz Truss, the International Trade Secretary, will then set out full objectives and the pathway to membership in Parliament before the summer recess, all with a view to UK membership being formally ratified in 2022 after final negotiations are concluded (although it goes without saying that timetables for trade discussions are never set in stone).
Joining the CPTPP really would be a marvellous outcome for Great Britain and her businesses who are either already trading, or thinking about trading, around the Pacific Rim.
With 66% of the world’s middle class estimated to be living in Asia by 2030, many wanting to buy British products and services, it is imperative that the UK as a whole seizes such opportunities to strengthen trading relationships in the region.
Equally, with the UK’s credentials for competence in all elements of industry and commerce as the world’s sixth largest economy, our acceptance would logically also make the group more attractive for other countries to join. The big prize here of course would be the US, which had been an original signatory to a precursor of CPTPP before President Trump withdrew the US shortly after his election. With President Biden’s team having recently cooled expectations around a quick FTA between the US and the UK, sharing a common seat around the CPTPP table would certainly do no harm to enhancing those prospects, as well as further strengthening the significance of the group as a whole.
While talking about CPTPP can sometimes feel like wrestling with a bowl of alphabet soup, its potential geopolitical and trading importance to the UK and our businesses is significant and worthy of greater awareness. Securing membership would be a critically worthy goal on many levels and for many reasons, which is why the progress made towards securing a trade deal with Australia is such an important step for Global Britain.