The Government has substantially concluded negotiations on the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement (FTA) including 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
CPTPP is a trade bloc that is populated by around half a billion people with a joint gross domestic product (GDP) of £9 trillion in 2021. The combined GDP of the 11 CPTPP members and the UK was worth around £11 trillion in 2021.[1] In the 4 quarters to the end of Q3 2022, trade between UK and CPTPP was worth £110.9 billion, representing around 6.8% of total UK trade.[2] UK exports to CPTPP were worth £60.5 billion over the same period.
Joining CPTPP shows how the Government is taking advantage of its independent trade policy, championing openness, and doing trade deals that work for the UK. Being part of CPTPP will deliver new opportunities for growth in a way that is tailored to the UK’s economy and reflects the future of the global economy.
This comprehensive agreement will support UK businesses by making it easier for them to trade with CPTPP Parties. It will facilitate innovation and provide consumers with more choice. CPTPP will generate long-term benefits for both the UK and CPTPP, support UK jobs and provide opportunities for growth across the UK. Businesses in all parts of the UK are expected to benefit. CPTPP is a gateway to the wider Indo-Pacific region, which is expected to account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come.[3] CPTPP, together with the Windsor Framework, will give Northern Irish businesses full unfettered access to the rest of the UK and unique access to the EU market as well as preferential access to this dynamic bloc.
Joining CPTPP will link the UK to one of the most dynamic trading areas in the world, a key aim of the Integrated Review. It puts the UK at the heart of a dynamic group as the world economy increasingly focuses on the Indo-Pacific region. CPTPP’s strong rules will benefit the UK’s businesses, and us joining will help strengthen international consensus in these areas.
The negotiation outcome will be set out in a Protocol of Accession that is now undergoing legal review. This document and the market access schedules will be published at signature.
When a signed treaty text is laid in Parliament, it will be accompanied by an Explanatory Memorandum and the Government will publish an independently scrutinised impact assessment.
Once the agreement is signed, it will be subject to pre-ratification scrutiny under the Constitutional Reform and Governance Act 2010 (CRaG), and any legislation required to implement the agreement will need to be passed. Prior to commencing scrutiny under CRaG, the Government will commission and publish the advice of the independent Trade & Agriculture Commission, as well as laying its own report under section 42 of the Agriculture Act 2020.
In addition, CPTPP Parties will need to complete their own domestic ratification procedures to approve the UK’s accession. Entry into force will take place once both the UK and CPTPP Parties have finished their legislative processes.
Benefits of the UK’s Accession to CPTPP
The UK’s accession to the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) offers several benefits for the country, including access to new markets, opening new opportunities for service providers, smoother data flows, and cutting tariffs on goods exports.
Firstly, joining the CPTPP will provide the UK with access to a vast free trade bloc consisting of 11 sovereign countries spanning the Asia Pacific and the Americas. This will open up opportunities for the UK to strengthen its ties with some of the world’s most dynamic economies, with a combined GDP of £11 trillion once the UK joins. Moreover, economies such as Costa Rica, Ecuador, and Uruguay have formally applied to join the CPTPP, while Thailand, the Philippines, and South Korea have also expressed an interest. This means that the UK will have access to new markets as the CPTPP expands.
Secondly, the CPTPP is one of the most modern trade agreements in the world, with ambitious services provisions that are ideally suited to the UK; the world’s second-largest services provider. Joining the CPTPP will enable the UK to sell more services than goods to member countries, including business services such as auditing, accounting, and legal services, transportation services, and insurance and pension services.
Thirdly, data flows are vital for modern trade, enabling everything from more efficient manufacturing and supply chains to more reliable infrastructure. Joining the CPTPP will help remove the barriers UK companies face, such as data localisation requirements, ensuring data can flow between the UK and CPTPP members. This will help the UK become a leader in digital trade, with modern rules on data and freer access to each other’s services sectors.
Fourthly, over 99% of the UK’s goods exports to CPTPP member countries will be eligible for zero tariffs, improving goods market access for British firms. This will benefit businesses selling key UK exports such as cars and machinery, dairy products, and chocolate. The removal of tariffs should also help UK businesses be more competitive and reach CPTPP’s vast consumer base.
Lastly, joining the CPTPP will help UK exporters diversify their supply chains, making it easier for companies to buy and use raw materials from across the bloc. This will provide businesses with the ability to increase economic resilience by deepening their trading links across the Asia-Pacific and Americas.
In summary, the UK’s accession to the CPTPP offers several benefits, including access to new markets, opening new opportunities for service providers, smoother data flows, and cutting tariffs on goods exports, which will help UK businesses be more competitive and reach CPTPP’s vast consumer base.
The Agreement
- Japan will eliminate or reduce tariffs on a range of UK agricultural exports, including pork, beef, and salmon.
- Canada will provide duty-free access for 97% of UK goods exports, including agricultural products such as beef, pork, and wheat, as well as industrial products such as pharmaceuticals and cars.
- Mexico will eliminate tariffs on UK exports of pork, poultry, beef, and cheese.
- Australia will reduce tariffs on a range of UK agricultural exports, including beef, lamb, and cheese, and eliminate tariffs on all UK industrial exports.
- New Zealand will eliminate tariffs on all UK industrial exports, as well as reduce tariffs on a range of UK agricultural exports, including sheep meat, beef, and honey.
Overall, the Agreement provides significant benefits for UK exporters of goods to CPTPP countries, particularly in terms of improved market access and reduced tariffs.
| Country | Access |
|---|---|
| Australia | All UK goods exports will be eligible for tariff-free access, after staging in some cases, the same as in the existing bilateral FTA. |
| Brunei | All UK goods exports will be eligible for tariff-free access, after staging in some cases. |
| Canada | Access to Canada’s CPTPP tariff schedule (beef exports will be subject to a TRQ under CPTPP), with benefits beyond the existing bilateral FTA with Canada including: Dairy, poultry & eggs: Additional opportunities to sell dairy products, including cheese, butter, cream, and milk powder, as well as poultry and eggs. The cheese quota provides an extra 16,500 tonnes of shared tariff-free access. |
| Chile | Access to the same tariff preferences that Chile grants to other CPTPP members, with benefits beyond the existing bilateral FTA with Chile, including: Dairy: Staged tariff liberalisation on dairy products such as cheese, butter, and cream. |
| Japan | Access to the same tariff preferences that Japan grants to other CPTPP members, with benefits beyond the existing bilateral FTA with Japan, including: Dairy and cereals: Additional opportunities to sell dairy products, including butter and milk powder, and cereal products. |
| Malaysia | Access to the same tariff preferences that Malaysia grants to other CPTPP members, with benefits for the following products: Whisky: Tariffs of around 80% will be eliminated on UK exports of whisky to Malaysia within 10 years. Chocolate and sugar confectionery: UK exporters of chocolate and sugar confectionery will benefit from 0% tariffs on exports of these products to Malaysia where they currently face tariffs of 10 to 15%. Cars: UK car manufacturers will benefit from the staged removal of tariffs of 30% and improved rules of origin make it easier for UK exports of cars to Malaysia to meet the tariff preferences. |
| Mexico | Access to the same tariff preferences that Mexico grants to other CPTPP members, with benefits beyond the existing bilateral FTA with Mexico, including: Dairy: Additional opportunities to sell dairy products, including cheese, butter, cream, and milk powder. The cheese quota provides an extra 6,500 tonnes of shared tariff-free access. Chocolate and sugar confectionery: UK exporters of chocolate and sugar confectionery will benefit from 0% tariffs on exports of these products to Mexico. Beef: Most Favoured Nation (MFN) tariffs of up to 25% will be eliminated on UK exports of beef to Mexico after staging. Pork: MFN tariffs of up to 20% will be eliminated on UK exports of pork to Mexico immediately upon the UK’s accession. Poultry: MFN tariffs of up to 75% will be eliminated on UK exports of poultry to Mexico after staging. |
| New Zealand | All UK goods exports will be eligible for tariff-free access, after staging in some cases, the same as in the existing bilateral FTA. |
| Peru | Access to the same tariff preferences that Peru grants to other CPTPP members, with benefits beyond the existing bilateral FTA with Peru, including: Beef and poultry: Staged tariff liberalisation on beef and poultry meat. |
| Singapore | All UK goods exports will be eligible for tariff-free access, the same as in the existing bilateral FTA. |
| Vietnam | Access to the same tariff preferences that Vietnam grants to CPTPP members, with benefits beyond the existing bilateral FTA with Vietnam, including: Chocolate and pork: Tariffs will be eliminated sooner on some UK exports with Vietnam. |
the UK has negotiated a trade agreement with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members that recognizes the benefits of imports while also securing new market access opportunities for UK exporters of high-quality food and drink produce.
The UK has also negotiated protections for sensitive agricultural sectors, including staged increases in access to the UK market and permanent annual limits on the volume of the most sensitive agricultural goods that can be imported tariff-free from major producing countries. For goods not covered by specific restrictions, a general transitional safeguard mechanism will provide a temporary safety net for industries if they face serious injury or threats from increased imports.
Additionally, the UK has confirmed with the CPTPP parties that they will have full recourse to mechanisms under the agreement to raise any concerns that the UK domestic industry is being adversely affected by differences in tariff treatments or unintended diversion of trade.
| Good | Access |
|---|---|
| Beef | Brunei, Canada, Chile, Malaysia, Mexico, and Peru: Parties 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. Singapore: Duties will remain at the base rate through year 2 and will be eliminated from year 3, consistent with the bilateral FTA. Japan and Vietnam: Duties will be eliminated at entry into force, consistent with the bilateral FTAs. Australia and New Zealand: Beef will remain subject to the staging agreed under these members’ bilateral FTAs with the UK. |
| Pork | Brunei, Canada, Chile, Malaysia, Mexico, and Peru: Parties will share a single duty-free TRQ whose volume will increase incrementally over 10 years, capped at a permanent quota of 55,000 tonnes from year 10. Singapore and Vietnam: Parties will share the same TRQ as above, before duties are eliminated from years 3 and 5 respectively, consistent with the bilateral FTAs. Japan and New Zealand: Duties will be eliminated at entry into force, consistent with the bilateral FTAs. Australia: Pork will remain subject to Most Favoured Nation (MFN) tariff rates, as agreed under our bilateral FTA. |
| Chicken | Brunei, Canada, Chile, Malaysia, Mexico, and Peru: Parties will share a single duty-free TRQ whose volume will increase incrementally over 10 years, capped at a permanent quota of 10,000 tonnes from year 10. Singapore and Vietnam: Parties will share the same TRQ as above, before duties are eliminated from years 3 and 5 respectively, consistent with the bilateral FTAs. Japan and New Zealand: Duties will be eliminated at entry into force, consistent with the bilateral FTAs. Australia: Chicken will remain subject to MFN rates, as agreed under our bilateral FTA. |
| Sheepmeat | Australia and New Zealand: Sheepmeat will remain subject to the staging agreed under these members’ bilateral FTAs with the UK. All other CPTPP Parties: Duties will be eliminated at entry into force. |
| Long grain milled rice | Brunei, Chile, Malaysia, and Peru: Parties will share a single duty-free TRQ whose volume will increase incrementally over 10 years, capped at a permanent quota of 10,000 tonnes from year 10. Vietnam: Vietnam will receive access to a separate duty-free TRQ whose volume will increase incrementally over 8 years, capped at a permanent quota of 17,500 tonnes from year 8. Singapore: Duties will remain at the base rate through year 2 and will be eliminated from year 3, consistent with the bilateral FTA. Canada and New Zealand: Duties will be eliminated at entry into force, consistent with the bilateral FTAs. Australia, Japan, and Mexico: Long grain milled rice will remain subject to MFN rates. |
| Sugar | Brunei, Chile, Malaysia, Peru, and Vietnam: Parties will share a single duty-free TRQ whose volume will increase incrementally over 10 years, capped at a permanent quota of 25,000 tonnes from year 10. Canada and Singapore: Parties will share the same TRQ as above, before duties are eliminated from years 2 and 3 respectively, consistent with the bilateral FTAs. Mexico: Sugar will remain subject to MFN rates. Australia and New Zealand: Duties will remain at the base rate through years 14 and 7 respectively and will be eliminated from years 15 and 8, respectively. Japan: Duties will be eliminated at entry into force, consistent with the bilateral FTA. |
| Eggs | Australia: Eggs will remain subject to MFN rates. All other CPTPP Parties: Duties will be eliminated linearly from base rates over 10 years. Eggs will be duty-free effective from year 10. |
the UK has also reached outcomes on other products of interest, such as palm oil and bananas. For palm oil, duties will be eliminated at entry into force for all CPTPP Parties, regardless of current tariffs which range from 0% to a maximum of 12%. However, the UK will continue to work domestically and with international partners to pursue sustainability goals in the palm oil industry.
For bananas, duties will be reduced to 62.00 GBP/1000kg at entry into force and will remain at that rate in each subsequent year for all CPTPP Parties. Mexico and Peru will also receive additional access to separate tariff-rate quotas of 8,000 tonnes each at entry into force, facing an in-quota rate of 40.00 GBP/1000kg. The UK has taken into consideration the potential impacts of preference erosion on developing countries and has therefore maintained a permanent tariff level.
Overall, it appears that the UK has negotiated a trade agreement with the CPTPP members that takes into account the interests of various stakeholders and seeks to balance the benefits of increased trade with protections for sensitive sectors and sustainable development goals.
