A North-Atlantic country joining the trans-Pacific free trade pact is being marked up as a symbolic win for the UK’s Brexit drive to break away from the EU.
It demonstrates how the country can apply new thinking to its trade position in the world. UK Business and Trade Secretary Kemi Badenoch was last week quick to praise predecessor Liam Fox who five years ago kicked off the UK’s efforts to tie up with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – or simply CPTPP.
Looked at another way, it demonstrates that the UK is finally getting its strategy, sealed in the wake of the 2016 vote, in place. As well as sealing promising opportunities, it can revamp other areas where progress has been slower.
There is a growing number of calls for a fresh start on the UK’s negotiations with countries in the Middle East. Not least in regard to the UK’s talks with the GCC, where influential members of parliament are now discussing an approach that would bring a faster result – a bilateral trade deal with the UAE.
At a talk hosted by the UK’s Emirates Society late last month, Steve McCabe, the Labour Party veteran with a deep interest in the region, said post-Brexit trade deals was one area in which the UK was simply not doing enough to remain relevant to countries in the region. Mr McCabe pointed to an international diplomatic scene that was not simply about the orbits of superpowers but countries seeking co-operation in areas such as trade and climate.
The UK's negotiations with the GCC are hardly moribund. The formal third round of the talks wrapped up last month and there were positive statements from both sides about the substantive issues being addressed.
But Mr McCabe, who was recently part of a parliamentary delegation to the UAE, is one of those warning about the limitations of talking for talking’s sake. “We need to be clearer and more direct with what we think is possible, and we need to be absolutely explicit that if we are going to do trade deals, they are urgent and not something that can sit on the backburner for an undue period of time,” he told the Society.
A bilateral trade deal would “step outside” the older and more conventional thinking that led to the GCC talks, which are closely modelled on the also ongoing EU-GCC free trade negotiations. Mr McCabe added that this approach was something that the Labour party should well take onboard, should it form the next government, in relation to the Abraham Accords.
The CPTPP was established in 2018. Its members include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, plus in future the UK.
The boost to the UK GDP is modest, perhaps as little as a few billion pounds annually initially. The bloc is, however, making up 16 per cent of global GDP. It makes good on the recent reboot of the UK Integrated Review, which puts emphasis on pragmatic and evolving alliances with middle-power countries as a potential strength for the UK’s diplomacy.
With faster growth, the CPTPP could represent a fifth of the global economy. The UK is getting a chance to shape one of the fastest-growing global blocs from the inside. With an emerging set of three regulatory powers (US, EU and China), the CPTPP has an opening to set its own fourth-pillar approach to how standards are set.
One area worth watching is how this profile is enhanced in the global data transfer stakes, with competing approaches coalescing around the US, the EU’s General Data Protection Regulation, and the Chinese Digital Silk Road.
As London offers another voice alongside those such as Japan and Australia, which are not keen on the Chinese application to join the CPTPP, the UK entry into the bloc is globally significant.
For London, there is the ability to show that it can make its Indo-Pacific commitments and ambitions into a manifest reality. When Prime Minister Rishi Sunak spoke recently in San Diego and declared that “Britain is back” in the Pacific, that was exactly what he meant.
For a country that prides itself on the promotion of a free and open liberal trade order, the accession is a big move forward. The battle against protectionism gets a fillip from such moves. So there is a change in direction that London can take further. For its regional ambitions, one of those opportunities lies with the UAE.
A trade-off between speed and depth of agreements is a commonly recognised dynamic in trade talks. The same is true for any country’s political and diplomatic position.
After the coup of the geographically wide-ranging CPTPP tie-up, the UK could act speedily to take a step into a Free Trade Agreement with the UAE. The low barriers to trade and services between the two countries would make such talks easier – as would their shared predisposition towards open international economies.
It would be a bold step that would get the UK’s trade diplomacy noticed and pay dividends across a broader front.
