CPTPP: what is UK’s ‘biggest trade deal since Brexit’, which countries are in it - how much is it worth?

Prime Minister Rishi Sunak announced today (16 July) that the UK has signed up to the CPTPP trade group, which he says will ‘unlock the benefits of Brexit’.

Business and Trade Secretary Kemi Badenoch formally signed the treaty to accede to CPTPP trade group in New Zealand this morning. The signature signals the UK’s agreement to join the trade block - it will formally join up once the agreement is ratified by all member states.

The government has called it ‘one of the biggest trade deals of all time’, and the biggest since the UK left the EU in 2016, and states that it will give the UK access to tariff-free trade with some of the world’s fastest growing economies.  

CPTPP stands for The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which is a bit of a word salad, but this is what the agreement actually means for the UK:

What is the CPTPP?

The CPTPP is a trade agreement involving 11 nations (12 when the UK formally joins), with a population of more than 500 million, and an estimated GDP today of £11 trillion. The UK is the first European country to join the CPTPP, and the move is being touted by Sunak as a Brexit benefit.

The government has suggested that joining the CPTPP will increase investment into the UK, bring down the cost of certain imported goods for consumers, and increase trade with other CPTPP countries. 

Which countries are in the CPTPP?

These are the other 11 countries in the CPTPP and their estimated GDP in 2021:

• Australia (GDP: £1.18 trillion)
• Brunei (GDP: £10.7 billion)
• Canada (GDP: £1.51 trillion)
• Chile (GDP: £242 billion)
• Japan (GDP: £3.77 trillion)
• Malaysia (GDP: £285 billion)
• Mexico (GDP: £972 billion)
• New Zealand (GDP: £191 billion)
• Peru (GDP: £170 billion)
• Singapore (GDP: £303 billion)
• Vietnam (GDP: £279 billion)

The UK had an estimated net worth of £2.39 trillion in 2021, making it the second wealthiest nation in the trade group after Japan.

How much is the CPTPP deal worth?

Currently, one in every 100 UK workers is employed by a company that is headquartered in a CPTPP country, and the British government is hoping that this deal will increase investment by CPTPP signatories in the UK due to the added protection the trade agreement brings. Additionally, investment in the UK from CPTPP countries was valued at £182 billion in 2021, and this figure is expected to rise in the coming years.

More than 99% of UK goods exported to CPTPP member countries are set to be eligible for zero tariffs, which will make it easier to sell to these countries. Sunak announced that UK cars sold to Malaysia currently have a 30% tariff which could be slashed to zero under the agreement.

Whisky could also be exported tariff- free to CPTPP countries - however it is expected to take up to 10 years for these tariffs to be eliminated.

UK consumers are also expected to benefit from cheaper goods as import tariffs on many goods coming from CPTPP countries will also be slashed.

However, the government’s own analysis earlier this year, estimated that the trade deal would boost the UK’s GDP by just 0.08%, or £1.8 billion - whereas a Bloomberg report found that Brexit was costing the UK an estimated £100 billion each year. 

Could the UK have joined the CPTPP if it was still in the EU?

It is unlikely that the UK could have joined the CPTPP whilst still an EU member, as the rules it will sign up to are expected to conflict with those imposed on EU member countries, although some economists have suggested that the EU itself should join the CPTPP.

It has also been argued that membership of the CPTPP will prevent the UK ever returning to the EU in future. This is not likely to be the case, as the UK could amend its relationship with the CPTPP or withdraw entirely if it decided to rejoin the EU.

Additionally, EU members have an estimated total GDP of £12.6 trillion, meaning that the single market remains a more attractive prospect in regard to the core value of its members.