COMPREHENSIVE AND PROGRESSIVE TRANS-PACIFIC PARTNERSHIP (CPTPP)
- United Kingdom recently announced that it will apply to join the Pacific free trade area, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
- The UK is the first non-founding country to apply to join the CPTPP and, if successful, would be its second biggest economy after Japan.
- The move comes a year after Britain left the European Union, ending more than forty years of membership, and after five years of complex trade discussions with the bloc.
- Negotiations between the UK and the partnership — which represents 11 Pacific Rim nations including Australia, Canada, Chile, Japan, Mexico and Vietnam — are expected to start this year.
- Britain has already made agreements with CPTPP members such as Japan and Canada in the wake of Brexit and, according to British media reports, CPTPP nations accounted for around eight percent of UK exports in 2019.
- Membership of the bloc has the potential to deliver new opportunities for UK business across different sectors.
- Britain’s departure from the European single market at the end of 2020 brought to an end the one-year Brexit transition period it had agreed with the EU. And the UK is seeking to advance the brand of “Global Britain” in 2021.
- The UK holds the rotating presidency of the G7 in 2021 and takes over the presidency of the UN Security Council in February.
Back to basics
About Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)
- It is a free trade agreement between 11 Pacific Rim nations: Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
- The free trade block aims to reduce trade tariffs – a form of border tax – between member countries.
- It includes a promise to eliminate or reduce 95% of import charges- although some of these charges are kept to protect some home-made products, for example Japan’s rice and Canada’s dairy industry.
- In return, countries must cooperate on regulations, such as food standards. However, these standards and regulations do not have to be identical, and member countries can strike their own trade deals.
- CPTPP evolved from the Trans-Pacific Partnership (TPP), which never entered into force due to the withdrawal of the United States.
- In January 2018, participants agreed to suspend 22 items from the original TPP agreement. It was subsequently signed in March 2018, in Chile.
- The Comprehensive and Progressive Agreement for Trans-Pacific Partnership – or CPTPP – covers a market of around 500 million people.
Importance of CPTPP
- It helps in creating jobs, strengthen economic relations and boost trade among important trading partners.
- It will form a trading bloc representing 500 million consumers and 13.5% of global GDP, providing countries with preferential access to key markets in Asia and Latin America.
- It covers virtually all aspects of trade and investment.
- It establishes rules that help create a consistent, transparent and fair environment to do business in CPTPP markets.
- It covers key issues like technical barriers to trade, sanitary and phytosanitary measures, customs administration, transparency and state-owned enterprises.