What is CPTPP, and why has UK to trade with Asian countries?
The UK to trade with Asian countries as they have signed a deal to join the trade pact, including Japan and Australia.
The name of this deal – CPTPP – is an unwieldy mouthful, but it’s even a new club of 500 million people the UK can access. So what does it mean for the assets of businesses and households?
What is CPTPP?
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade deal between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Those founding nations signed the Pacific trade deal in March 2018. Between them, they generate 13% of the world’s revenue.
The UK is the first non-founding nation to join and will be its second-biggest economy after Japan. It brings the deal of the new grouping to £11 trillion.
Why UK to trade with Asian countries?
The short-term profits are marginal.
The UK already had contracts with most of these countries as part of its EU membership which has been taken over. Since Brexit, the UK has counted Australia and New Zealand to its trade pact tally.
Only Brunei and Malaysia left that the UK didn’t have a contract, and between them, those two account for less than 0.5% of the total UK business.
Even with a few changes to the trading pacts with other nations, the gains from the expanded agreement are anticipated to be pretty small – roughly 0.08% of GDP over ten years, according to the government’s best stab at an estimate.
However, the Business and Trade Secretary likens CPTPP to a start-up, meaning the estimates should account for the fact that some members – for instance, Vietnam – are rapidly rising in importance in international trade.
Even so, the government’s independent predictors reckon that leaving the EU will have lessened the UK’s growth by far more – possibly 4% of our revenue.
The CPTPP accounted for 8% of UK trade in 2019 – less than we sold to Germany.
