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CPTPP: UK transition to trans-Pacific trade partnership does not compensate for Brexit



The UK Department of International Trade says membership of the comprehensive and progressive agreement on the Trans-Pacific Partnership would bring an economic downturn by lowering tariffs on “major UK exports” such as cars and whiskey, while allowing farmers to sell more meat to “fast-growing” markets like Mexico. It could also increase trade in services and make it easier for technology companies to expand abroad.
“Joining the CPTPP would pull the UK into some of the world’s largest current and future economies, populated by half a billion people and with a combined GDP of £ 9 trillion ($ 1
2.5 trillion) in 2019,” the trade department said in a statement. “It is a glittering price after Brexit that I want us to seize,” added Trade Minister Liz Truss.
But trade experts say joining the CPTPP – a pact in 11 countries that includes Mexico, Australia, Canada and Singapore – will provide only modest economic benefits and will not compensate for the hit of UK trade caused by exit The European Union.

They point to the challenges of doing business with countries that are many thousands of miles away. The United Kingdom has already concluded bilateral trade agreements with seven of the 11 CPTPP members – a figure that would rise to eight if an agreement in principle with Australia announced last week is included. It raises questions about how much extra benefit membership will provide.

“The biggest problem with CPTPP is that it especially helps those companies that have supply chains across the Pacific,” said David Henig, British director at the European Center for International Political Economy on Twitter. “The UK is mostly involved in European supply chains. And that’s why the economic consequences are trivial. It can even be negative.”

At the discretion of the British Government, membership could be lifted annual GDP by only 0.08% – or 1.8 billion. £ ($ 2.5 billion) – in the long run. It can be compared to a production loss of 4% from leaving the EU, based on previous modeling from the government’s economic forecasting agency.

Membership of the CPTPP “does not in any way replace trade with the EU or balance the effects of leaving it,” said Anna Jerzewska, founder of the international trade consultancy Trade & Borders on Twitter.
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The United Kingdom exported 294 billion. £ ($ 408.7 billion) of goods and services to other EU countries in 2019, accounting for 43% of all UK exports, according to the Office for National Statistics.

But between January and March, ONS data show that UK exports to the bloc fell 18% to 32.2 billion. £ ($ 44.8 billion) Compared to the last three months of 2020, when companies struggled with new trading rules.

In comparison, exports to CPTPP countries are expected to increase by DKK 37 billion. £ (51.4 billion $) To 94 billion. £ ($ 130.7 billion) By 2030, according to UK government forecasts.

“Participation would boost this growth and support UK jobs,” it said on Tuesday, adding in a strategy paper that it “puts Britain at the heart of a dynamic group of countries.”

But Jerzewska warned that the UK would “come in from outside” and hope to integrate into supply chains established over decades. “It’s going to be quite a challenge,” she told CNN Business.

While membership could reduce tariffs on goods, it does not escape other barriers to trade such as bureaucracy and rules, she added. In this sense, it is similar to the agreement that Britain has with the European Union after Brexit.

However, an agreement with the CPTPP could assure Britain’s existing trading partners that it still favors trade liberalization, Jerzewska added.

“Brexit was a signal that Britain is becoming a little more protectionist, so this is a way to show everyone that we are serious about free trade,” she said.

“The geopolitical targets should not be ignored, and a small positive impact on GDP is still a positive impact on GDP, but something tells me that we are hearing a lot of inflated figures and exaggerated claims about this agreement.”




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