The CPTPP agreement: What it is and its importance for international trade

As specialists in market entry PR, we have been keeping an eye on the progression of the UK’s accession to The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). We recently attended a virtual briefing hosted by the Ministry of Foreign Affairs and Trade (MFAT) in NZ, where Vangelis Vitalis, Deputy Secretary of the Trade and Economic Group at MFAT, shared background information on the agreement as well as sharing the challenges that they’ve faced and the benefits that the CPTPP will provide to its members.

The CPTPP is one of the biggest trading blocs in the world (worth £9 trillion), which covers everything from labour and the environment to investment, services, and public procurement. Member countries within the CPTPP include New Zealand, Australia, Singapore, Japan, Canada, Vietnam, Mexico, Chile, Malaysia, Peru, and Brunei.  It is a unique agreement in that it goes beyond the bilateral trade deals that many countries already have in place.

Two years ago, the UK applied to join the CPTPP, and it is expected that the UK’s accession will come into force in Spring 2023.  If successful, the UK will be the first non-founding member to join the CPTPP. This was a clever move by the UK as it will enable the UK to secure higher-level agreements with CPTPP members, while allowing it to set or renew its trade terms with 11 trading partners in just one negotiation.

This year, New Zealand will host the CPTPP, leading a year-long programme of meetings and events. In preparation for the UK’s accession to the CPTPP, the Department for Business and Trade has held many talks with the 11 CPTPP member countries at Ministerial and official level and has spoken with both businesses and civil society in the UK and overseas to get plans underway.

What are the benefits of the CPTPP?

CPTPP will be a ‘force for good’ in promoting free trade, while providing economic opportunities for hundreds of millions of people and helping to establish new links with some of the world’s fastest growing economies.

What are the benefits of the CPTPP for the UK?

The primary benefit of the CPTPP for the UK is that it could boost UK goods exports, while eliminating tariffs from 99.9% of what the UK sends to the CPTPP members. CPTPP members currently account for 13% of global GDP and £95bn worth of the UK’s trade.

In addition to this, there are also provisions supporting digital services, which will make it easier for the UK to sell digital services globally more cost effectively, while also making it easier for tech firms to expand internationally. The CPTPP will also open new financial and professional services markets for British firms, making it easier for Brits to live and work in member countries.

Other key advantages of the CPTPP include dedicated provisions on anti-corruption, women’s economic empowerment, and the environment, all of which are hugely beneficial for the betterment of society.

What are the benefits of the CPTPP for New Zealand?

The CPTPP will prove beneficial for New Zealanders by making it easier for them to export their goods and services to the UK. In addition to this, it preserves New Zealand’s right to make laws to protect its people and the environment, while also upholding the Treaty of Waitangi. Furthermore, it will create jobs that will help generate a better standard of living for New Zealanders.

The CPTPP will be economically significant for New Zealand as the 10 other economies within it (which include three of NZ’s top trading partners – Australia, Japan, and Singapore) are the destination for 26 percent of New Zealand’s goods exports (NZ$17 billion) and 31 percent of New Zealand’s services exports (NZ$4.5 billion) annually (year to the end of June 2022).

What are the benefits of the CPTPP for businesses looking to break into the UK market?

Many businesses face barriers when they look to export, particularly import duties, and agreements like the Trans-Pacific Partnership would make it simpler for businesses to launch in the UK and reach new customers.

CPTPP – Is it time for a refresh?

As many of the laws within the CPTPP date back to 2008, many members believe that it’s in desperate need of an update – especially relating to areas such as ecommerce, inclusivity for minorities, and sustainability.

From an environmental point of view, one of the major issues with the current agreement is that there is no reference to the Paris Agreement, which means there is no obligation for members to adhere to it. A big negative for the environment.

Despite its flaws, there has been some resistance to amend the CPTPP, as many members worry that if they open the agreement to ratify some areas, then it could open other areas for discussion, which they don’t necessarily want to amend (e.g., those that relate to the restriction of trade).

Historically speaking, trade agreements such as the CPTPP are generally great for businesses – especially start-ups and scaleups – as it makes expanding into new territories and markets a much easier process by removing some of the barriers to trade.

As an agency that specialises in helping build the profile of start-up and scaleup businesses looking to break into the UK market, we look forward to seeing what future developments unfold, and we hope that the new and improved CPTPP will withstand the test of time, help ease the path for businesses looking to enter the UK, and set the precedent for other major global trade initiatives.

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