The UK has officially become the first European country to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a full member, marking a significant step
in its global trade strategy. The move, announced today (15 December), is expected to boost the UK economy by up to £2 billion annually in the long term.
The CPTPP, a major trade alliance, includes nations such as Japan, Vietnam, Malaysia, Peru, and Chile. With the UK’s accession, the bloc now represents a combined GDP of £12 trillion, further enhancing its economic clout.
Economic benefits across the UK
The UK’s membership is anticipated to deliver economic benefits across all regions and nations of the country. Compared to 2019 figures, Scotland is projected to see a £240 million boost, Wales £110 million, and Northern Ireland £70 million. In England, regions such as the South East and the North West are expected to gain £450 million and £310 million, respectively.
From today, UK businesses will enjoy reduced tariffs and fewer trade barriers across three continents. Key sectors such as financial services, manufacturing, and food and drink are poised to benefit significantly. This aligns with the Government’s Plan for Change, aimed at driving growth, increasing wages, and putting more money into households, with an estimated £1 billion annual uplift in wages.
Expanding opportunities with CPTPP membership
CPTPP is designed for expansion, with new members expected to join over time, further amplifying its economic and strategic impact. Costa Rica is currently in the process of joining, and Indonesia—the largest economy in Southeast Asia, with a GDP exceeding £1 trillion and a population of approximately 280 million—has shown interest in becoming a member.
The trade bloc’s modern “rules of origin” provisions are particularly advantageous for industries such as automotive and food and drink. These rules allow goods made from components sourced within CPTPP countries to qualify for lower tariffs. For example, a UK-based car engine manufacturer using parts from other CPTPP nations can more easily export the final product within the bloc at reduced tariffs.
UK service industries, which account for over 80% of the nation’s workforce, will also see opportunities for easier exports to CPTPP markets. UK firms will now be able to manage funds globally and compete on an equal footing with domestic companies in key sectors across the bloc.
Consumer benefits and new trade partnerships
Consumers in the UK could benefit from lower prices on imported goods, as tariffs are removed on products such as Peruvian fruit juices and Malaysian vacuum cleaners. Additionally, the agreement establishes free trade deals with Malaysia and Brunei for the first time, adding access to economies with a combined GDP of over £330 billion in 2023.
The UK’s entry into CPTPP complements its efforts to secure other major trade agreements, including with the Gulf Cooperation Council, India, Switzerland, and South Korea. These agreements are part of a dual-track approach to trade, which aims to build new partnerships while strengthening ties with the European Union.
As the UK deepens its engagement with CPTPP and expands its trade relationships, it cements its position as a key player in global trade, driving growth and new opportunities for businesses and consumers alike.
CEO of HSBC UK Ian Stuart said:
“Being part of the CPTPP signals that the UK is open for business with some of the world’s most exciting growth markets. Since the announcement of the UK’s accession in July 2023, we have seen an increase in payments between the CPTPP markets and the UK, and we expect this growth to continue. As the world’s leading trade bank, with deep roots across many CPTPP countries, we are well-positioned to connect UK businesses with growth opportunities in markets such as Japan, Singapore, New Zealand, Vietnam, Malaysia, and Australia”.
Chairman and CEO of Chivas Brothers Jean-Etienne Gourgues said:
“At a time of increasing barriers to trade globally, the UK’s accession to the CPTPP is welcome news for Chivas Brothers Scotch whisky business. Improved access to markets in dynamic regions like South East Asia and Latin America in a trading bloc which covers almost a fifth of the total value of Scotch whisky exports should help boost our £1BN annual exports”.
Chief Executive Officer of Scalerr Matthew Borthwick said:
“International expansion isn’t just for the big businesses out there. Due to agreements like the CPTPP, UK SMEs will also benefit, making it easier to trade with CPTPP countries. As a tech scale-up consultancy with customers across the world, we at Scalerr welcome the support the CPTPP will provide by reducing costs, easing administrative burdens, and facilitating international trade”. Photo by Gobierno de Chile, Wikimedia commons.