UK joins CPTPP: A symbolic move or a strategic shift?

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On 15 December 2024, the United Kingdom (UK) officially acceded to the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), marking a significant step in its post-Brexit trade strategy. Spanning the Pacific Rim, the CPTPP comprises 11 of the world’s fastest-growing economies and grants greater market access to members while lowering trade tariffs. The UK’s inclusion as the second-largest economy (after Japan) within the CPTPP and first European member solidifies the latter’s position as a global Free Trade Agreement (FTA), with member countries accounting for a total GDP of €12 trillion and 15 percent of global output.

The UK’s Indo-Pacific tilt and CPTPP bid

The CPTPP exemplifies the UK’s independent stance in shaping its trade policy outside the perceived shackles of the European Union (EU). One year following Brexit, the UK formally applied to join the CPTPP in 2021.

The UK’s approach to the region is based on securing trade and investment opportunities and diversifying supply chains and economic linkages.

The Integrated Review 2021, the British government’s principal foreign policy paper, underscored the ambition for Global Britain to demonstrate the UK as an open and outward-looking geopolitical actor. The Indo-Pacific tilt forms a key pillar of this vision, reflecting a shift in global power dynamics towards the East. The UK’s approach to the region is based on securing trade and investment opportunities and diversifying supply chains and economic linkages. In this context, Britain has attempted to strengthen its diplomatic & military ties in the region, signed FTAs with Indo-Pacific countries and become a dialogue partner of the Association of Southeast Asian Nations (ASEAN).

In its updated Integrated Review Refresh 2023, the government emphasised that the prosperity and security of the Euro-Atlantic and Indo-Pacific theatres are inextricably linked. As the first member from outside the Indo-Pacific region, the UK’s accession enables the CPTPP to become a global agreement, bridging the two theatres.

The Indo-Pacific is expected to account for 54 percent of global growth by 2050 and become home to half of the world’s consumers by 2030. According to the UK government, the CPTPP serves as the country’s gateway to the Indo-Pacific, which it perceives as a region with unparalleled economic opportunities. Thus, the UK’s accession to the CPTPP is not just an economic move but a strategic decision to enhance its influence and presence in the Indo-Pacific.

Benefits of joining the CPTP 

According to the UK Trade Policy Observatory and British Chamber of Commerce, joining the CPTPP may not inherently boost trade but will foster an enabling environment for sustained growth. The UK government’s own impact assessment predicts a mere 0.08 percent growth to the country’s GDP over 10 years, accompanied by a modest expansion of bilateral trade with CPTPP countries by £4.9 billion. The House of Lords International Agreements Committee reports limited economic benefits, as the UK already has bilateral FTAs with nine out of 11 CPTPP member countries (mostly rollovers from previous EU agreements). While Malaysia and Brunei are not covered, these two countries account for merely 0.33 percent of the UK's total trade.

A potential expansion of the agreement to include new members such as South Korea, Uruguay and Ecuador would also benefit the UK, with the latter as the first non-founding country to join the CTPTPP, setting the stage for newer entrants.

However, some benefits are likely. In 2022, UK exports to CPTPP members, including whisky, cars, dairy and services, amounted to £64.7 billion (7.8 percent of the UK total’s exports). By reducing tariffs on 99.9 percent of UK exports, trade is estimated to increase to £3.3 billion, with £1.7 billion attributed to exports. Through the deal, Malaysia’s tariffs on scotch whiskey will be reduced from 80 percent to 0 percent. However, on other primary exports to CPTPP members, including machinery, precious metals and automobiles, existing tariffs are already minimal. Since Chile, Peru, and Mexico are also part of the agreement, the UK may gain better access to markets in Latin America, which are home to extensive reserves of critical minerals that would support its energy and climate ambitions. A potential expansion of the agreement to include new members such as South Korea, Uruguay and Ecuador would also benefit the UK, with the latter as the first non-founding country to join the CTPTPP, setting the stage for newer entrants.

Britain is the world’s second-largest services exporter, exporting services worth £32,2 billion to CPTPP countries in 2022 and £23 billion in digital services alone in 2021, thereby enjoying a services trade surplus of £5 billion with the CPTPP. Membership in the CTPTPP is expected to elevate digital trade and services as key pillars of the UK’s engagement in the Indo-Pacific. The agreement revolutionises digital trade by fostering seamless data flows, limiting data localisation mandates and prohibiting the compulsory disclosure of source codes. This aligns with the UK’s National Data Strategy to champion the international flow of data.

Moreover, as small & medium enterprises (SMEs) comprise 99.9 percent of UK businesses and employ 16.64 million people, the CPTPP has a dedicated annex for SMEs, ensuring regulatory transparency and streamlining processes, and several provisions to ensure protection. The Rules of Origin (ROOs) feature will expand input supply and strengthen supply chain integration. For example, a UK firm may export machinery equipment to Japan, using inputs from Australia. The ROOs may benefit the UK’s automotive industry and clean-energy sectors, as the UK currently imports many electric vehicle components from the CPTPP nations but exports few finished goods.

The UK’s post-Brexit trade policy has been guided by ideas of sovereignty in addition to economic and trade interests. In this context, rather than imposing harmonisation, the CPTPP framework allows the exchange of side letters between members to allow specific exceptions to the rules. For instance, Britain signed side letters with Australia and New Zealand to disapply Investor State Dispute Settlement (ISDS).

The ROOs may benefit the UK’s automotive industry and clean-energy sectors, as the UK currently imports many electric vehicle components from the CPTPP nations but exports few finished goods.

In the Indo-Pacific, the CPTPP competes with the Regional Comprehensive Economic Partnership (RCEP). The CPTPP sets higher standards and includes a broader range of rules, whereas the RCEP takes a more flexible approach with less stringent requirements. The CPTPP allows dispute resolution mechanisms in digital trade and worker welfare measures, which are not found in the RCEP. Yet, the agreement also ensures that the UK’s investment screening decisions are not subject to CPTPP dispute settlement mechanisms.

The UK’s accession to the CPTPP has faced criticism from several domestic quarters. The National Farmers Union warned against increased competition from overseas products with lower regulatory standards, while the Worldwide Fund for Nature argues that the deal rewards environmental destruction and encourages trade in pesticides banned in the UK. Trade unions have expressed concerns over weak safeguards and competition from low-cost foreign labour. Civil society groups fear that a rise in carbon emissions may threaten climate ambitions and that lowering tariffs on Malaysian palm oil may encourage deforestation. However, the Trade and Agriculture Commission finds that the CPTPP would strengthen, not alter, the UK’s existing levels of statutory environment protections.

Domestic opposition notwithstanding, while the accession may be perceived as a post-Brexit win, the economic gains are unlikely to compensate for the losses resulting from Brexit, given that the EU continues to remain the UK’s largest trading partner. On the other hand, the UK’s trade with the CPTPP bloc, coupled with the caveat of greater physical distances, is likely to remain much lower. Yet, membership in the agreement allows the UK to shape the evolving global trade architecture, especially in the wake of rising protectionist trends. Ultimately, the UK’s accession to the CPTPP reflects its deeper strategic and economic engagement with the Indo-Pacific.

Shairee Malhotra is the Deputy Director of the Strategic Studies Programme at the Observer Research Foundation 

Jayaa Auplish is a Research Intern with the Strategic Studies Programme at the Observer Research Foundation

• International Affairs
• European Union
• Asia Trade Club
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership
• CPTPP trade bloc
• indo pacific trade bloc
• UK in CPTPP
• uk signed cptpp

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