A Great Day for World Trade
On Sunday without much fanfare, one of the most monumental days in world trade took place. It generated few headlines, but its effect will be significant and long lasting. The UK became the twelfth member to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (usually abbreviated to the CPTPP).
The UK are now trading partners with Mexico, Japan, Singapore, New Zealand, Canada, Australia, Vietnam, Peru, Malaysia, Chile, and Brunei. We now have privileged access to each other’s markets. The twelve members have combined economies representing 14.4 percent of global gross domestic product, at approximately US$15.8 trillion as of 2024. The CPTPP is thus one of the world's largest free trade areas measured by GDP. There are larger ones, but the crucial significance for the UK is that we have joined a rapidly growing trade area. The EU single market is larger, but it diminishes annually as a percentage of global trade, whereas the CPTPP is growing each year.
Furthermore, it represents a shift in UK trade policy as we look further afield than Europe and toward the growing markets and economies of the East and South. The UK is the first European country to join, and it is able to do so because it is no longer in the EU. The EU single market is not a free trade area, but a Zollverein, a protectionist customs union designed to protect its domestic producers behind a tariff wall that acts to deter outside and cheaper competition.
EU members cannot join because they must obey the EU’s Common External Tariff, whereas the point of the CPTPP is a lowering of tariff barriers to encourage greater trade between its members.
Sunday’s accession to the CPTPP by the UK means that we cannot rejoin the EU or sign a trade deal with them that involves tariffs on goods from our CPTPP partners.
In joining the CPTPP, the UK has turned away from its past associations and nailed its colours firmly to the mast of the future. Other nations are in the pipeline to join the bloc, which means it will grow even more in size and economic significance. Bravo for Britain, and Bravo for the future of world trade.