The UK’s accession to the CPTPP: Key insights from business leaders

By Thomas Scott-Bell, Programme Producer

Date: November 2024

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is gaining traction. Trade between member nations has grown since its establishment in 2018, according to separate studies by member countries Canada and New Zealand. The pact now has 12 member nations with a combined GDP of £12 trillion. In July 2023, the UK was formally accepted to join, marking an historic milestone as the first country from outside Asia-Pacific and the Americas to join the bloc.

As the UK prepares for formal entry in December, the CPTPP is also undergoing its first internal review. This process, involving all member nations including the UK, aims to ensure the agreement remains relevant and responsive to evolving trade and investment challenges. Findings from this review will be presented at the 8th meeting of the CPTPP Commission on 27-28 November in Canada.

Ahead of the publication of this review, Asia House, supported by the Embassy of Japan in the UK, convened a digital roundtable in October 2024. 19 participants across sectors from business, academia and think-tanks shared their insights, which are summarised below.

Key takeaways:

• Participants broadly agreed that the CPTPP is gaining traction, especially in goods, and is setting standards in services and digital trade agreements.
• Tracking realised benefits remains challenging, particularly in services and investment, with current models seen as inadequate.
• The CPTPP has set important benchmarks, particularly within its digital chapters, which may require updates to stay aligned with emerging technologies.
• UK participants saw significant potential in CPTPP, particularly in new markets like Malaysia.
• There was strong support for enhanced government efforts to raise awareness of CPTPP’s benefits among UK businesses.
• The CPTPP is viewed as a symbol of liberal trade values, though it faces challenges from rising protectionism and national industrial policies.
• There was a call for a Secretariat that would ensure rule adherence and manage disputes, with Japan seen as well-positioned to lead.

The CPTPP is gaining traction

Representing £12 trillion in combined GDP, the CPTPP has become a significant player in global trade.

Despite its relatively recent establishment, participants noted a clear trend of increasing influence, particularly in sectors that benefit from substantial tariff reductions not available under bilateral agreements. Some business leaders also highlighted the role of government-led promotion in making the agreement’s benefits more visible. Participants also underscored its role as a norm-setter, with the services and digital chapters establishing benchmarks for other agreements. The CPTPP’s function as a convenor for addressing issues – such as through the Committee on Electronic Commerce – was also positively noted. Amid rising protectionism and trade tensions between the US and China, the CPTPP has gained recognition as a stabilising force and a symbol of free trade.

Challenges in measuring CPTPP’s impact

While there was general consensus that the CPTPP is gaining traction, most agreed that accurately measuring its benefits has proven challenging. Current models, it was noted, do not adequately capture practical improvements, such as complicated rules of origin, and conflicting bilateral agreements add layers of complexity, particularly in services and investment sectors.

The COVID-19 pandemic, occurring shortly after the agreement’s inception, further obscured the CPTPP’s potential. While the agreement’s impact on goods was considered relatively easy to assess, measuring its effects on services and investments remains difficult. Many participants felt that these areas hold considerable promise but require enhanced regulatory interoperability and clearer outreach to the business community to unlock their full potential.

The CPTPP as a standard setter, especially in digital trade

The CPTPP’s influence as a standard-setter for multilateral trade agreements was widely acknowledged. The digital chapter was viewed as a significant and complex component of the agreement, serving as a benchmark for ASEAN members and in addressing growing concerns surrounding data localisation. By allowing data sharing outside of CPTPP markets, the chapter is seen as more liberal than comparable agreements.

However, the prohibition on data localisation does not include financial services, an area participants felt could benefit from modernisation. Updating the agreement to encompass emerging digital domains, such as AI, cloud computing, and cybersecurity, could also help ensure its relevance. With some members, such as Vietnam, struggling to adhere fully to these commitments, concerns were expressed that CPTPP’s provisions might be pressured to evolve, potentially compromising its liberalising force.

Enthusiasm surrounding the UK’s accession

The UK’s accession to the CPTPP was seen as a significant opportunity for the country to champion open trade and play a policy-shaping role in the evolving global landscape. Business leaders noted the potential for UK companies to benefit from expanded market access, particularly through reduced tariffs in CPTPP member nations.

Malaysia was highlighted as a particularly promising market, as there is currently an absence of a bilateral free trade agreement. However, participants agreed that greater outreach is needed to ensure UK businesses fully understand the benefits of CPTPP membership. Given the rising importance of free trade agreements in business strategy, a targeted government campaign could help maximise the potential of this new market access.

Future membership prospects, including for countries like Indonesia and China, were discussed, with some scepticism voiced over China’s ability to meet the high standards of the CPTPP, especially considering its inconsistent adherence to World Trade Organization commitments.

Calls for a CPTPP Secretariat

The establishment of a CPTPP Secretariat was seen as a potential enhancement to monitor and enforce compliance. Vietnam, for instance, has faced challenges in meeting digital trade commitments, despite receiving a five-year extension. A Secretariat could assist in ensuring consistent adherence to CPTPP rules and offer a structured avenue for dispute resolution.

Japan, as a founding member, was suggested as a possible leader for this initiative. Participants also entertained the concept of the CPTPP evolving into a “WTO 2.0”, a high-standards agreement capable of addressing future trade challenges. However, some expressed concerns that a CPTPP Secretariat might encounter issues like those facing the WTO, including stalled dispute resolution mechanisms.

Balancing national industrial policies and trade liberalisation

With increasing protectionism, participants raised concerns about the impact of domestic industrial policies that blend economic and security objectives. In this environment, the CPTPP is seen as a valuable counterweight to protectionist trends, offering a liberal framework that can maintain open markets and support global economic resilience.

The roundtable reinforced the view that, despite internal and external challenges, the CPTPP remains a crucial platform for promoting free trade. Its adaptability and future growth prospects will be key as member nations navigate the changing landscape of global trade.

Asia House will continue to support dialogue around the CPTPP’s impact and potential.

Asia House is working with governments across Asia, the Middle East and the West, as well as multilateral organisations and the private sector, to drive commercial and political engagement around key issues in global trade. For more information on our research and programmes, please contact Katie Reid, Stakeholder Engagement Associate via katie.reid@asiahouse.co.uk.