The Prime Minister and his team of UK trade negotiators have had a productive spring. Since President Trump’s ‘Liberation Day’ tariff announcements in April, the Government has struck trade deals with India, the US and the EU.
Official estimates claim that the India and EU deals will add £35 billion to UK GDP by 2040, while the US deal presented a much needed and immediate lifeline for the UK car industry by lowering tariffs significantly on automotive exports to the US, which alone are worth £9 billion a year to UK plc.
As always, the devil is in the detail when it comes to the real benefit of such trade deals. But the pace with which the UK has moved in order to confirm such agreements is certainly admirable.
Much praise is due to the ‘hidden from view’ civil service who have worked tirelessly behind the scenes to get these deals over the line – and many exporters will feel reassured at the energy that Ministers are investing in trade.
Equally, one cannot help but feel that this nimbleness in negotiation is surely a benefit of being an independent trading nation. It is right that we should maximise this advantage as a commercial partner which is willing to strike mutually beneficial cross-border deals.
In and amongst this burst of trade related activity and deal-making, we should not forget to highlight the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the UK finally joined last year.
CPTPP membership is made up of 11 other countries based around the Asia-Pacific, including Japan, Australia, New Zealand, Canada, Mexico, Chile, Vietnam, Singapore and Malaysia, and collectively accounts for nearly 15% of global GDP.
The UK was the first non-founding member to join CPTPP and yet little fanfare has been made of it thus far. Perhaps it’s down to the sense of incongruity that we have joined a group associated with an ocean sited many thousands of miles away – or perhaps it’s because of the somewhat unwieldly ‘alphabet soup’ nature of the name!
Whatever the reason, few would doubt that we are living through Asia’s century and, with over half of the world’s middle-class estimated to be based in the Indo-Pacific by 2030, this represents a massive market and opportunity for all sorts of UK businesses, not least family-led investment businesses such as our own. We have been an active investor in Singapore, Australia and New Zealand now for a number of years, and will seek to do more in the future.
The most recent meeting of CPTPP was held in South Korea earlier this month (May) and the hosts have expressed their intention to join what is a growing club. Costa Rica promises to be the next country to sign up.
What is particularly significant both for the UK and for others is that, in this period of geopolitical uncertainty, the CPTPP is a body genuinely committed to boosting global trade and members reaffirmed their shared commitment to a “free, open, transparent, inclusive and rules-based trading system”.
There is much talk of closer co-operation with the European Union too, offering the real opportunity to enhance worldwide trade. While the EU already has bilateral trade deals with nine of the current CPTPP members (including the UK), it is easy to see the attractiveness of a closer relationship between the two blocs.
Combined, CPTPP and the EU would represent over 30% of global GDP and send a powerful signal to the rest of the world that there is plenty of road for the era of free trade left to travel, despite the seemingly relentless march of protectionism in recent times.
In the aftermath of the Second World War, Winston Churchill spoke of Britain’s unique role at the centre of three circles - the Commonwealth, Europe and the Anglo-American Alliance. Times have changed but, as a nation reliant on trade for our economic wellbeing, Britain must continue to inhabit different circles, including the Asia-Pacific, if it is to support future growth and jobs here in the UK.
Carl Richardson is a partner at Richardson Capital
