The UK is currently in talks to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in an effort to increase its exports after it leaves the EU in 2019. If successful Britain would enter into a low-tariff trading group that includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Trade minister Greg Hands said that there was no geographical restriction on the UK joining the trade groups. If the UK successfully joins the partnership, it would be the first member country that does not have borders on South China Sea and the Pacific Ocean.
“Nothing is excluded in all of this,” Hands said. “With these kind of plurilateral relationships, there doesn’t have to be any geographical restriction.”
However, it is unlikely that any agreement would be reached soon between the UK and member countries of the CPTPP. Apart from the fact that the partnership is still recovering from the U.S.’ withdrawal from the group, the UK isn’t allowed to make any trade deals before it formally leaves the EU in 2019.
“We have set up 14 trade working groups across 21 countries to explore the best ways of progressing our trade and investment relationships across the world,” said a spokesperson for the UK’s Department of International Trade said. “It is early days, but as our trade policy minister has pointed out, we are not excluding future talks on plurilateral relationships.”
The combined spending of all current CPTPP countries only makes up 8% of the UK’s exports, with Japan only taking 1.6% of the country’s exports. Despite the low figures, proponents of Brexit say that becoming a CPTPP member is a good step towards strengthening the sterling and stabilising the economy.
Not everyone agrees with the government’s plan of joining the CPTPP. The staunchest opponent of the idea is Shadow Trade Minister Barry Gardiner.
“It is not the main event and at the moment the government is making a hash of that,” said Gardiner.
The former leader of the Liberal Democrats Tim Farron echoes Gardiner’s sentiments, saying: “This plan smacks of desperation. These people want us to leave a market on our doorstep and join a different, smaller one on the other side of the world. It’s all pie in the sky thinking.”
Economists in London will hope that this move could stop the value of the pound declining by a large amount after March 2019. FXCM states that political uncertainty affects the value of the pound, noting how the lead up to the Scotland referendum in 2015 caused the GBP/USD to experience “significant volatility”. The 2016 referendum result caused the pound to drop to a 31-year low and the pound has reacted positively and negatively to any speculation since, regarding the final Brexit deal. Even one year after the referendum the GBP lost more than 14% against the dollar, just days ahead of the first Brexit negotiations.
The CPTPP, which was formerly called the Trans-Pacific Partnership (TPP), suffered a huge blow when the U.S. left the agreement last November. President Donald Trump had made leaving the agreement a key part of his campaign pledge. Economists across the world warned that move would reduce American influence in Asia and demonstrate that the country was no longer a reliable ally.
Political correspondent Ben Kentish believes that the U.S.’ withdraw could be an advantage for the UK as the CPTTP members will be looking for a partial replacement. Yet the fact still remains that Britain’s trade exports to CPTTP countries are significantly lower than its exports to Europe. While this may give the British market hope that the economy will survive after March 2019, it is not a replacement for the Single Market.