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The Guardian - UK
The Guardian - UK
Business
Phillip Inman

UK joins Asia-Pacific CPTPP trade bloc that includes Japan and Australia

Kemi Badenoch
The trade secretary, Kemi Badenoch, said the deal reflected ‘post-Brexit freedoms to reach out to new markets around the world and grow our economy’. Photograph: Jonathan Brady/PA

Britain has joined the 11-member strong Asia-Pacific trade bloc that includes Japan and Australia after nearly two years of negotiations.

The deal, part of a push to agree worldwide trade deals after Brexit, secures access for British exporters to 500 million people in the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The agreement, secured after 21 months of talks, will allow exporters to “seize opportunities for new jobs, growth and innovation”, the government said.

Spanning Canada, Mexico, Japan, Australia, Vietnam and Malaysia, the CPTPP is expected to be ratified by the UK parliament and those of the other 11 member states later this year.

The government said the deal, which will cut tariffs on exports of food, drink and cars, would generate £1.8bn of extra income once it had been up and running for 10 years, which is about 0.08% of the UK’s annual gross national product (GDP).

Unions condemned clauses in the deal that will allow large companies to sue the UK government behind closed doors if they believe their profits have suffered from changes to laws or regulations.

The TUC’s general secretary, Paul Nowak, said: “This deal allows multinational corporations to sue the UK government in secret courts for introducing policies which threaten their profits – this could include an increase in the minimum wage or bringing energy companies back into public ownership.”

Nowak said the deal would sanction the exploitation of workers in Vietnam and Brunei “where independent unions are banned, and Malaysia where migrant workers are subject to forced labour”.

As the first non-founding member of the bloc, the UK is expected to set the template for other applicants to join, including Costa Rica and Uruguay.

China, which applied to become a member in 2021, several months after the UK, is likely to face significant pushback from members, including the UK, that will argue Beijing should be blocked unless it complies with existing international trade rules.

The trade secretary, Kemi Badenoch, said the deal reflected newly acquired “post-Brexit freedoms to reach out to new markets around the world and grow our economy”.

Some trade experts said joining the CPTPP bloc would harm the UK’s ability to rejoin the EU at a later date, arguing that harmonising trade rules with the CPTPP countries would drive a wedge between Brussels and London.

Sam Lowe, a trade expert at the advisory firm Flint Global, said: “CPTPP membership does make it more difficult for UK to rejoin EU customs union. But, given the UK will seemingly join without significant changes to EU-inherited regulations, it also demonstrates that EU and CPTPP regulatory approaches are compatible.”

The prime minister, Rishi Sunak, said: “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms.”

The UK has bilateral deals with many of the countries inside the bloc, including Australia, New Zealand and Japan, minimising the benefit of the overarching agreement.

However, ministers expect the deal to become increasingly important as the trade bloc, which will boast a GDP of $11tn, offers access to more nations.

Allowing secret courts to govern trade disputes between CPTPP members and the UK is expected to spark protests similar to those that helped scupper trade talks between the EU and Washington in 2016.

Brussels was forced to abandon the TTIP trade talks after the European parliament refused to ratify any deals that included the investor-state dispute settlement mechanism, which provides foreign investors with the right to access an international tribunal to resolve disputes in camera.

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