The UK has today announced the conclusion of trade talks with member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a vast free trade area spanning the Indo-Pacific, after 21 months of negotiations.
The bloc is home to over 500 million people and will have a total GDP of £11 trillion once the UK joins. As the fifth largest economy in the world by gross domestic product in 2021 and with a market of 67 million consumers, the UK is an attractive market for Malaysia.
Expanding CPTPP to include the UK will help CPTPP to diversify their supply chains, remove trading barriers and encourage more trade for our businesses. The UK’s accession to the dynamic trade bloc follows news of Malaysia’s ratification last November – meaning that both countries will soon gain significantly increased access to each other’s economies.
Negotiations, which began in June 2021, concluded after an intense round of talks in Vietnam, with representatives from all CPTPP member countries agreeing that the UK has reached conclusion of its accession process to join CPTPP.
The UK is the first European country to join the dynamic trade bloc, and the first new member since CPTPP was created, taking it from a Pacific agreement to a truly global one. CPTPP creates opportunities to deepen the UK’s trading links across the Asia-Pacific region, providing a range of different opportunities with the different countries.
CPTPP membership will complement and reinforce existing bilateral trade agreements we have already signed, including those with Australia, Japan, New Zealand, Singapore and Vietnam.
Accession could mean lower tariffs on some exports to the UK which are not already removed through the UK’s bilateral agreements with member countries.
UK Business and Trade Secretary Kemi Badenoch said, “Our accession to CPTPP sends a powerful signal that the UK is open for business and using our post-Brexit freedoms to reach out to new markets, including in the Asia Pacific region, and grow our economy. Joining this influential trade bloc will help us to shape the rules of global trade with like-minded nations, and work even closer together on our shared priorities of prosperity, security and free and fair trade.”
UK membership could also benefit businesses and investors in all CPTPP countries through modern rules that make it easier to establish, operate investments and do business in the UK.
It would send a powerful signal that the UK as an independent trading nation will continue to champion free and fair trade, fight protectionism and remove barriers to trade at every opportunity, helping to reinforce the rules-based international system at a critical time in our history.
Five rounds of in-person talks with UK and CPTPP chief negotiators took place in total, with many more intersessional and bilateral negotiations alongside, and for the final round in Vietnam alone more than 150 delegates from all CPTPP member countries took part.
As one of the largest free trade areas in the world, CPTPP accounted for 12 percent of global gross domestic product in 2021. This would rise to 15 percent with the UK’s accession, adding substantial value to this huge free trade area. The UK and CPTPP members will now take the final steps required for the UK to formally sign in 2023.
Malaysia is one of the CPTPP members which the UK does not currently have a bilateral agreement with, so both countries being in CPTPP will offer significantly increased market access to each other’s economies.
The potential increased trade between the UK and Malaysia, supported by the removal of barriers to trade could support further growth, and contribute to the prosperity of both countries.
The UK joining CPTPP could provide significantly better market access to the Malaysian market. UK businesses, that exported £3.3 billion worth of goods and services to Malaysia in the 12 months to the end of September 2022, could benefit from this agreement.
The UK joining CPTPP also means significantly better Malaysian market access to the UK market. The UK is the 5th largest country in the world by GDP and is home to over 67 million consumers. The UK is also the 5th largest source of outward Forward Direct Investment (FDI) stocks. The UK imported around £2.6 billion worth of goods and services from Malaysia in the four quarters to the end of Q3 2022. Businesses and consumers could benefit from preferential tariffs that the UK will offer to Malaysia in CPTPP.
British High Commissioner to Malaysia, Charles Hay said, “The UK’s bilateral trade with Malaysia currently totals £5.9 billion, and is on a positive growth trajectory. The UK’s accession to CPTPP and the increased market access for both the UK and Malaysia will enable us to harness the full potential of our bilateral trade and investment relations.”
HM Trade Commissioner for Asia-Pacific, Natalie Black said, “CPTPP is one of the world’s most progressive trade agreements and the UK’s accession will take it from a Pacific agreement to a truly global one. As its second-biggest member, our entry will boost the combined GDP of the bloc from £9 trillion to £11 trillion and provide greater access to 67 million consumers across the UK. Today’s announcement will help British businesses grow their trade with seven dynamic Asia Pacific economies, particularly Malaysia and Brunei which the UK does not currently have a bilateral agreement with.”
