Indo-Pacific deal opens up zero tariff trade links
Businesses across the UK are expected to benefit from a new trade deal in the Indo-Pacific region that will see British goods exports become eligible for zero tariffs.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) embraces some of the world’s fastest growing economies that are home to more than 500 million people.
Britain is the first European country to join and it will take total GDP of the bloc to £11 trillion.
In the long run, it could boost the UK economy by £1.8 billion and lead to a £1.7bn increase in UK exports to CPTPP countries.
More than 800 Scottish businesses exported to the bloc in 2021. Key Scottish exports such as whisky could benefit from the removal of tariffs, with the UK having exported over £1.1bn worth of whisky to CPTPP countries in 2022 in current prices.
Tariffs of around 80% will be eliminated on UK exports of whisky to Malaysia over 16 years, improving market access for Scottish exporters.
However, sceptics note that of the 11 countries in the CPTPP, Britain already has deals with several which have been rolled over from Britain’s EU membership (Canada, Chile, Mexico, Singapore & Vietnam). Deals with Japan, Australia and New Zealand have followed. It means that Brunei, Peru and Malaysia are the only additions in today’s agreement.
Nonetheless, Prime Minister Rishi Sunak declared that today’s agreement demonstrates “the real economic benefits of our post-Brexit freedoms.”
He added: “As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.”
Director General of The Institute of Export & International Trade (IOE&IT) Marco Forgione, said: “This agreement not only reduces trade tariffs for goods, but also sets new rules in areas such as services, investment, intellectual property, digital trade and advanced manufacturing.
“This is all good news for UK businesses, giving them greater access to one of the fastest growing regions in the world, accounting for around 13% of global GDP.
“It will also enhance our ties with countries we already have trading partnerships with, building more resilient supply chains between nations.”
Business and Trade Secretary Kemi Badenoch said: “This is an important moment for the UK. Our accession to CPTPP sends a powerful signal that the UK is open for business and using our post-Brexit freedoms to reach out to new markets around the world and grow our economy.”
UK Government minister for Scotland Malcolm Offord said: “Finalising this trade deal is great news for Scottish business – CPTPP countries already represent a large part of the Scottish export market.
“It lifts the red tape for items from whisky to textiles and produce, opening new markets and increasing the global appetite for Scottish goods and services.”
Anishka Jelicich, director of public affairs at Pernod Ricard UK, said: “CPTPP is a big opportunity for our Scotch whisky business. Five of our top 20 export markets are CPTPP members.
“We expect tariff cuts and smoother access to some of the world’s fastest growing economies to increase exports and secure jobs and investment in the UK, with sales doubling in some markets.”
Edinburgh-based digital forensics firm Cyacomb is currently growing its exports to CPTPP member Canada, and actively working on expanding into Australia and Singapore – and the UK joining the trading bloc will help these efforts.
Ian Stevenson, CEO of Cyacomb, said: “As a growing business offering disruptive technology, time spent navigating the complexities of international trade is time not spent on delivering value to customers or advancing our mission.
“CPTPP will simplify doing business and remove economic barriers in working with our customers in Canada, and in other markets we’re working to enter including Australia and Singapore.”