UK manufacturers are less than one month away (15 December) from enjoying the benefits of the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the largest free trade areas in the world which will account for 15% of global GDP, or £12tn, once the UK joins.
The agreement will span 12 economies: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and now the UK. Seven other countries have also already applied to join, including most recently Indonesia – the largest economy in Southeast Asia and home to almost 280 million consumers in 2023.
UK trade with CPTPP already accounts for 7%, £122 billion, of total UK trade, and our accession could boost this further, offering particular benefits for our manufacturing sector. Through CPTPP, we will also have free trade deals with Malaysia and Brunei for the first time – economies worth over £330bn in 2023.
The UK exported £26bn of manufactured goods to CPTPP countries in 2023, and the greatest estimated increases in exports from the UK to CPTPP thanks to the deal are primarily in manufacturing sectors. Our accession could see exports to CPTPP increase by over £1bn in the long run, with motor vehicles seeing the largest increase – a projected £712m.
British manufacturers will benefit from:
- More than 99% of current UK goods exports to CPTPP countries will be eligible for zero tariffs.
- This includes the gradual removal of 30% tariffs on UK exports of cars to Malaysia within 7 years, and gradual removal of tariffs of up to 30% on exports of engine parts to Malaysia within 5 years.
- Modern rules of origin provisions could help British businesses whose goods are produced using materials from other CPTPP countries to qualify for lower tariffs.
- For example, a UK car engine manufacturer using components from other CPTPP countries would more easily qualify for preferential tariffs when exporting the final engine within the region.
- Access to CPTPP’s significant middle-class which will play to Britain’s strengths in creating and selling premium products – the Indo-Pacific region is expected to account for around half of the world’s middle-class consumers in the decades to come.
- Service provisions in the agreement, such as temporary entry for businesspeople and digital trade provisions, will benefit UK manufacturers as services such as logistics are key to strong global supply chains.
- For example, qualifying UK individuals transferring to the office of their company in Malaysia will now have a guarantee of being able to stay for two years; they may also be able to bring their partners and children with them.
Trade Minister Douglas Alexander said: “With only one month to go until we join my message to UK manufacturers is simple: get ready for CPTPP.
“In a few short weeks we will be part of one of the largest free trade areas in the world, spanning five continents and twelve dynamic economies, with even more countries including Indonesia, Costa Rica and Ecuador queuing up to join.
“With 99% of current UK goods exports to CPTPP becoming eligible for zero tariffs and modern, flexible rules of origin, CPTPP enables UK manufacturers to enhance their competitiveness in CPTPP’s market of over 500 million people.
“British manufacturers will have enhanced access to millions of customers eager to buy the high-quality goods the UK is known for. With the wider Indo-Pacific region set to host half of the world’s middle-class consumers in the years ahead, the demand for premium British products will continue to rise.
“I strongly encourage UK manufacturers, from established industries to emerging innovators, to embrace the opportunities our accession will create and take advantage of this new and expanding consumer base.”
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