The UK is set to join CPTPP

What’s happened?

The deposition on August 28th by Peru of articles of ratification of UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) means that the UK will formally join the bloc on December 15th. The economic impact will be minimal, other than in some niche areas, given that the UK’s primary trade relationships are with the US and the EU. The main impact is instead geopolitical, with the UK boosting its economic and diplomatic presence in the Asia-Pacific.

Unanimity was not required for the ratification process, with only six of the 11 CPTPP members needed to secure this outcome. The UK’s accession was ratified by Japan, Singapore, Vietnam, New Zealand, Chile and Peru. We expect Australia, Brunei, Canada, Malaysia and Mexico to ratify these protocols by end-2025.

Why does it matter?

The inclusion of the UK in the CPTPP will not be a transformative economic move, either for its own economy or the existing members of the trade mega-pact. Our forecasts for UK growth assign greater importance to domestic factors, including the beginning of monetary easing and the direction of policy under the new Labour government. In addition, the UK already enjoys existing trade agreements with most CPTPP members. Nevertheless, CPTPP accession may offer some new market access opportunities for British exporters, particularly in sectors where existing deals are absent, such as automotives and beverages exports. The provisions on services trade may give a lasting fillip to trade in financial services and professional services. Notably, Malaysia and Brunei currently have no free-trade deals in place with the UK, and stand to potentially benefit the most from these developments (once they complete their own ratification processes).

CPTPP members September 2024

The implications for future CPTPP enlargement are more paramount. The UK’s inclusion has expanded the list of CPTPP members who have grown increasingly wary of China’s economic rise. Its accession may enhance the risk that China’s own application to join the CPTPP will be vetoed. Nevertheless, the UK’s more cautious approach to its ties with China to date (which has contrasted with the increasingly hawkish stances adopted by Canada, the EU and the US) suggests that these developments will not be a death knell for China’s CPTPP aspirations.

China’s challenges in joining the CPTPP will instead reflect growing global friction stemming from its economic model. Its deepening reliance on external demand as a ballast for slowing growth haves fanned concerns over Chinese industrial overcapacity, which are translating into a flurry of global trade defence measures. This will complicate China’s attempts to secure the unanimous consent required among all CPTPP members for a successful bid, particularly as some CPTPP signatories raise alarm bells around the potential “flood” of Chinese imports into their markets. We expect Japan and Canada to adopt the strongest positions against Chinese inclusion, including as a result of quiet US lobbying against China’s bid (even if the US continues to shun its own participation in the CPTPP). By contrast, Australia, which has enjoyed a recent improvement in its ties with China, may strike a softer tone.

What next?

Most or all remaining CPTPP member states yet to ratify UK accession will do so before the year-end, or within 2025. That said, the CPTPP’s potential will be constrained by the emerging geopolitical reality of strategic competition between the West and China.

The analysis and forecasts featured in this article are accessible through EIU’s Country Analysis service. This comprehensive solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify potential opportunities and risks effectively.