On 15 December 2024, the United Kingdom (UK) joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The UK has joined the 11 existing members of the CPTPP – Japan, Canada, Australia, Singapore, Mexico, Malaysia, New Zealand, Brunei, Chile, and Peru – becoming the first non-founding member of the CPTPP and also the first European country to join the bloc. The CPTPP is a trade agreement, spanning five continents and covering almost 600 million people, that aims to enhance trade and economic integration among its member countries by reducing tariffs and promoting trade in goods and services. The UK’s accession is expected to boost UK businesses by providing greater access to markets in countries like Japan, Singapore, Chile, New Zealand, and Vietnam.
The UK is now formally recognised as a member of the CPTPP (and can therefore benefit from the agreement’s preferential conditions) in 8 of the 11 other members. This will also be the case in Australia from 24 December 2024 and in Canada and Mexico 60 days after the countries ratify the agreement.
The UK already has bilateral free-trade deals with nine of the eleven CPTPP members, but the CPTPP marks the first trade agreement that the UK has with Malaysia and Brunei. The UK will benefit from reduced tariffs and increased market access for UK businesses, including in sectors like services and digital trade. In particular, the following benefits now apply:
- Tariffs: Over 99% of UK goods exported to CPTPP-member countries are now eligible for zero tariffs. Tariff reduction is particularly impactful relating to Malaysia, with key industries such as whisky and cars benefiting from reductions of up to 80% and 35% respectively.
- Reduced “red tape”: CPTPP membership results in the removal of the requirement to establish local offices or be resident to supply services and instead, UK businesses are now able to partner with local firms. Service providers also have greater certainty on licensing processes.
- Diversification of supply chain: UK businesses are able to diversify and expand their supply chains across member countries, including expanding where raw materials are purchased. Utilising the rules of origin, UK businesses can now count input from all CPTPP members in the production of goods towards meeting the requirements, thus making it easier for UK exporters to qualify for preferential tariffs agreed in Free Trade Agreements.
- Economic growth: As part of CPTPP, the UK is now party to one of the largest trading blocs globally, accounting for over 500 million people and 15% of global GDP. As the bloc continues to grow, the UK will gain access to new markets which include some of the fastest growing economies globally.
As the first country to accede to the CPTPP after its creation, the UK is expected to have a unique position to influence the future development of the agreement, as well as potentially advocating for the expansion of the group to include new economies.
Businesses with operations in any of the CPTPP members, but particularly in the UK, should look to review opportunities as a result of the UK’s accession, in particular to ensure that they are making full use of tariff reductions and rules of origin treatment.
For further information on the impact of the accession on UK businesses, please see our prior blog post.
