The UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade area of 11 countries spanning the Indo-Pacific region, Prime Minister Rishi Sunak said on Friday.
The agreement follows two years of intense negotiations by the Department for Business and Trade, and will put the UK at the heart of a substantial group of economies.
Britain is the first European member of the CPTPP and first country to join since the bloc was created.
The UK would not have been able to join as a member of the EU and the government aims to maximise its new post-Brexit trade freedom to drive jobs and growth across the country.
The move will cut tariffs on exports of food, drink and cars.
The last legal and administrative steps will now be taken for the UK to formally sign the agreement.
But according to official estimates, the pact will generate £1.8 billion ($2.2 billion) in extra income, which is only 0.08 per cent of gross domestic product, once it is up and running for 10 years.
Business and Trade Secretary Kemi Badenoch said the pact offers the potential for further growth.
Speaking on Friday on Radio 4, she said: “What we are doing is looking at what the future is going to be like. So, we will have lots of people talking about 'this is only 0.08 per cent'.
“Think of it like us buying a start up. It’s not about what it’s doing today but about the potential for growth tomorrow.”
Mr Sunak said the UK was at its heart “an open and free-trading nation” and the deal demonstrates the real economic benefits of our “post-Brexit freedoms”.
“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,” he said.
“Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join.
“British businesses will now enjoy unparalleled access to markets from Europe to the South Pacific.”
The bloc is home to more 500 million people and will be worth 15 per cent of global GDP when Britain joins.
It is estimated that joining it will boost the UK economy by £1.8 billion in the long run, with wages also forecast to rise by £800 million compared with 2019 levels.
Being part of the CPTPP will support jobs and economic growth across the country, the government says.
More than 99 per cent of UK exports to CPTPP countries will now be eligible for zero tariffs, including key goods such as cheese, cars, chocolate, machinery, gin and whisky.
Total UK exports to CPTPP countries were already worth £60.5 billion in the 12 months to the end of September and are set to grow.
The UK’s leading services industry could also benefit from reduced red tape and greater access to growing Pacific markets with an appetite for high-quality UK products.
The agreement protects Britain’s vital industries and entities, including agriculture and the National Health Service, while it upholds the UK’s high standards on animal welfare and food safety, the government said.
“This is an important moment for the UK,” said Ms Badenoch. “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.
“Joining CPTPP will support jobs and create opportunities for companies of all sizes and in all parts of the UK.
The government views membership to the bloc as a gateway to the wider Indo-Pacific region, which has 60 per cent of the world’s population.
The region is also set to account for the majority (54 per cent) of global economic growth and around half of the world’s billion middle-class consumers in the decades to come.
