The UK took a significant step towards advancing its post-Brexit trading relationships this month with the formal signing of a free trade agreement with Japan, its first major deal since leaving the EU.
In doing so, it also took a step forward towards one of its other trading aims, which is to apply for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, better known as the CPTPP.
The UK-Japan deal includes a commitment from the Japanese side to support the UK's membership into the group, which covers 13 per cent of the global economy and was responsible for more than £110 billion in trade in 2019.
What are the chances of the UK joining the CPTPP?
Although the possibility of the UK joining the trading bloc has been talked about ever since the country left the EU, despite the geographical distance between the UK and other members, efforts have ramped up in 2020.
The partnership consists of 11 nations that border the Pacific Ocean - Canada, Australia, Chile, New Zealand, Brunei, Singapore, Japan, Malaysia, Mexico, Peru and Vietnam - and was formed as a way to deepen economic ties between its members and reduce tariffs, as well as acting as a counter to China's dominance in the region.
On the face of it, the UK, located on the other side of the world, may not seem like the most obvious candidate to join the bloc. However, there is no requirement that new members need to have a physical presence in the region, and the UK has strong cultural and economic ties to several existing members.
Canada, Australia, New Zealand, Malaysia, Brunei and Singapore are all members of the Commonwealth alongside the UK, for example, so may be more amenable to the UK's entry.
What could CPTPP membership offer the UK?
For the UK, the advantages of joining the group post-Brexit are clear. The free trade area removes tariffs on 95 per cent of goods traded between its members, which could reduce costs for businesses and create new economic opportunities for UK exporters looking for new markets outside the EU.
This may be especially important if trade talks with Europe fail to reach a positive outcome, leading to new tariffs with the UK's traditional trading partners.
In a briefing paper earlier this year, the UK government set out three key reasons for its push to join the CPTPP. These are:
- To secure increased trade and investment opportunities that will help the UK economy overcome the unprecedented challenge posed by coronavirus.
- To diversify trading links and supply chains and increase economic security at a time of great uncertainty.
- To help the UK secure its future place in the world and advance its longer-term goal of turning the UK into a global hub for businesses and investors.
International trade secretary Liz Truss added: "Joining CPTPP would send a powerful signal to the rest of the world that Britain is prepared to work with countries who champion free and fair trade."
At present, however, CPTPP members only make up a small part of the UK's trading relationships. In 2019, the 11 members combined only accounted for 7.8 per cent of the UK's total trade, compared with 47.3 per cent for the EU and 16.2 per cent for the US.
Would existing members react positively?
In order to successfully join CPTPP, all 11 existing members would have to agree. The UK has already secured a commitment from Japan - which as the largest economy in the group, is seen by many as the de facto leader of the bloc - so one major hurdle has already been overcome. However, the UK will still need to undertake individual bilateral negotiations with each existing member.
Trade ministers in Australia, New Zealand and Singapore have also signalled their interest in the deal. In a joint article written with Ms Truss, officials indicated their willingness to consider a deal, emphasizing the importance of free trade. Analysts have suggested that key sectors for many Asia-Pacifc countries such as agriculture could also greatly benefit from a larger tariff-free export market.
It has also been indicated that the UK's addition could increase the economic and political clout of the bloc, especially when it comes to countering China's economic influence in the region. Adding the UK would take CPTPP members from 13 per cent of global trade to 16 per cent - a small but potentially significant increase.
Finally, some have even suggested the UK's successful entry could even pave a roadmap and prove an incentive for the potential future membership of the US, which abandoned the previous TPP deal in 2017. While the country has no interest in joining as long as Donald Trump remains president, this may change in the future, so the bigger the bloc is, the more attractive it may be to a new US administration.