Following a request made by the then UK International Trade Secretary Liz Truss to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) on 1st February 2021, and formal trade negotiations thereafter, the UK Government announced on 31st March 2023 that negotiations on the UK’s accession to the CPTPP had substantially concluded.
The CPTPP is a trade bloc of 11 current members that is populated by around half a billion people with a joint gross domestic product (GDP) of £9 trillion in 2021. These include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
In the 12 months to the end of Q3 2022, trade between the UK and CPTPP was worth £110.9 billion, representing around 6.8% of total UK trade, including £60.5 million worth of UK exports to the trading bloc.
When the UK officially joins the bloc, more than 99% of current UK goods exports to CPTPP members will be eligible for tariff-free trade. It is estimated that it could lead to a £1.8 billion boost to UK exports to CPTPP countries.
According to the UK Government, the deal will boost UK GDP by 0.08% over 10 years, although reports suggest the number might have been much smaller had the previous model for calculating GDP been used.
All UK exports to Australia, Brunei, New Zealand and Singapore will be eligible for tariff-free access, after staging in some cases, the same as in the existing free trade agreements.
In terms of beef, UK exports to Canada will be subject to a Tariff Rate Quota (TRQ), Most Favoured Nation (MFN) tariffs of up to 25% will be eliminated on exports to Mexico, and a staged liberalisation will apply on beef exported to Peru.
There will be additional opportunities of various degrees to sell dairy products, including cheese, butter, cream and milk powder to Canada, Chile, Japan and Mexico. Similar conditions will apply to pork and poultry products.
The UK Government claims that they have negotiated a number of protections for the most sensitive UK sectors. These include staged increases in access to UK markets for sensitive products, permanent annual limits on volumes of certain goods at a reduced or zero tariff, and a transitional safeguard mechanism to provide a temporary safety net for industries that could potentially face a threat from increased imports as a result of the agreement.
The UK will retain full access to mechanisms under the agreement to raise any concerns regarding impacts domestic industries may face as a result of the trading arrangements.
For beef coming into the UK, Brunei, Canada, Chile, Malaysia, Mexico and Peru will share a single duty-free TRQ whose volume will increase incrementally over 10 years, capped at a permanent quota of 13,000 tonnes from year 10. Duties for Singapore, Japan, Vietnam, Australia and New Zealand will be consistent with the bilateral FTA.
The current TRQ for both fresh and frozen beef imports from Canada is 3,800 tonnes which is not currently utilised to any extent because of the requirement for imports into the UK to be hormone-free - Canadian farmers use growth hormones in beef production which the UK has banned and this is currently a barrier for Canadian exports and could prevent exports increasing significantly in the future.
For sheepmeat, duties will be eliminated at entry into force for all CPTPP parties except for Australia and New Zealand which will remain subject to the recently signed trade agreements with those countries.
An initial analysis by AHDB has concluded that the CPTPP deal will not cause dramatic changes to trade, particularly in the short-term, but may have the potential to result in modest increases in UK exports of beef, dairy and pork in the medium to long-term.
In light of the fully liberalised trade agreements agreed with Australia and New Zealand, it is welcoming to acknowledge that at least some level of safeguards will be put in place.
However, given that the CPTPP is an existing agreement, it has been up to the UK Government to come to terms with those already agreed by its members rather than to negotiate new arrangements, notwithstanding some minor opportunities to make alterations during negotiations.
It is also notable that four out of the eleven current members of the CPTPP are net exporters of red meat and already have established markets in countries such as China, while members Australia and New Zealand together make up 70% of total global trade of sheepmeat.
The UK and CPTPP members will now take the final legal and administrative steps required for the UK to formally sign in 2023