The International Business Transactions Blog

U.K. to Join Growing Pacific Trade Club

By Yuki Taylor
Law Student Editor

On March 8, 2018, 11 countries, namely Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, Malaysia, New Zealand, Peru, Singapore, and Viet Nam, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a version of the Trans-Pacific Partnership Agreement (TPP) succeeding the withdrawal of the United States.  On December 30, 2018, CPTPP entered into force, with ratification by a majority (Australia, Canada, Japan, Mexico, New Zealand, Singapore, and Viet Nam).  The free trade agreement (FTA) concluded as a contingency to TPP has thus far been ratified by 10 original signatories except for Brunei, representing approximately 13% of global GDP.

The origin of TPP was a 2005 trade pact between a small group of Pacific Rim countries comprising Brunei, Chile, New Zealand, and Singapore.  In September 2008, President George W. Bush announced that the United States would begin talks with the group, leading Australia, Vietnam, and Peru to join.  The United States was the lead architect, with support from U.S. presidents from both political parties.  TPP was set to become the world’s largest FTA, covering 40% of the global economy, and would have been the most comprehensive commercial accord since the ill-fated 1948 Charter for an International Trade Organization (ITO).  On February 4, 2016, TPP was signed by the 11 CPTPP signatories plus the United States under the Obama Administration with a presidential comment that “TPP allows America – and not countries like China – to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific.”

Unlike most treaty negotiations, the TPP drafts were kept secret until a completed draft was ready to be released.  In the United States, the TPP text was classified until June 2014, even from the eyes of Congress.  On his first day in office, on January 23, 2017, President Trump issued an executive order withdrawing the U.S. signature from the TPP, because it was “too complicated” for him to understand or even read, and it was part of a Chinese plot.  China was not part of the negotiations, however.

To salvage the pact, the remaining 11 signatories continued talks and agreed to CPTPP one year later.  Further, the U.S.’s withdrawal essentially paved a way for China to join the world’s largest FTA, the Regional Comprehensive Economic Partnership (RCEP), which was signed by 15 Asia-Pacific countries in November 2020.  Consequently, six countries, Australia, Japan, Malaysia, New Zealand, Singapore, and Viet Nam are members of both CPTPP and RCEP

On February 1, 2021, one year after Brexit, the UK became the first country to submit an accession request to CPTPP.  After acquiring unanimous consent among all original signatories, on March 31, 2023, UK’s accession was substantially concluded, and the former EU member soon joins the FTA in the Pacific region.  Following the UK, five other states have thus far requested accession to the FTA, specifically China and Taiwan in September 2021, Ecuador in December 2021, Costa Rica in August 2022, and Uruguay in December 2022.  No other membership applications have earned the requisite unanimous consent to commence negotiations. 

The UK’s membership to CPTPP would reportedly result in a trivial increase in the nation’s GDP, calculated at 0.1% in exchange for losing 4% from Brexit.  The UK Investment Minister Dominic Johnson defends the membership on the basis that the FTA is also a salient concept to help boost the economy in many intangible ways while protecting state sovereignty for the domestic economy.  CPTPP is currently the fourth largest trade bloc after RCEP, the USMCA, and the EU.  With the high bar set for accession, an increase in CPTPP membership may be limited in the future.  However, now that CPTPP includes three G7 members, Canada, Japan, and the UK, the prestige of its membership is certainly heightened.