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The UK has taken one step closer to joining a major Pacific regional trade bloc as it attempts to forge closer trade ties with the Asia-Pacific region after exiting the European Union.
Earlier today, the 11 members of the Comprehensive and progressive trans-Pacific partnership agreement, or CPTPP, has agreed to start negotiations for Britain’s entry into the regional free trade agreement.
Yasutoshi Nishimura, the Japanese minister responsible for the TPP negotiations, told reporters that a virtual meeting of the TPP Commission had agreed to allow the UK to begin the accession process.
Bloomberg calls this a “potential boost to the country’s trade after Brexit,” adding:
Yasutoshi Nishimura said the move would strengthen economic ties between the UK and Japan, while making the area covered by the agreement equal to the EU in terms of economic size. He spoke to reporters after hosting an online meeting of ministers and officials from the 11 countries that make up the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership.
“The start of a membership process with the UK and the potential expansion of the CPTPP will send a strong signal to our trading partners around the world of our commitment to supporting free, fair, open, efficient, inclusive and rules-based. system, ”the ministers said in a joint statement.
CPTPP includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – and has been created after President Donald Trump withdrew the United States from the Trans-Pacific Partnership.
Britain applied for membership in the CPTPP in early February, saying it hoped to forge closer ties with emerging Pacific economies. At the time, International Trade Secretary Liz Truss said membership would mean lower prices for automakers and whiskey producers, and better access for service providers, which would boost jobs and prosperity.
As UK merchandise trade with EU countries fell 23% in the first quarter of the year, from pre-pandemic levels, there is pressure to secure trade deals elsewhere .
The CPTPP removes 95% of tariffs between its members, but does not create a single market or customs union, and does not seek wider political integration.
Becoming a member would accelerate the growth of UK export trade with Asian economies expanding faster, according to Mike Dennis, Analyst at Bloomberg Intelligence. The UK recorded a trade surplus with CPTPP countries in the first quarter of 2021, he added.
But although joining the CPTPP would mean lower rates, concerns have been expressed about the move.
Back in April, the British Labor Party has warned that it could end up being a trade deal with China “through the back door”, like Beijing has signaled that it is seriously considering a candidacy, which the UK may not be able to veto if it adheres to.
Shadow Secretary for International Trade Emily Thornberry also warned that the UK could become “a rule-maker in the CPTPP rather than a legislator”, as New Zealand recently launched a public consultation on new CPTPP memberships, who said new members will have to comply with the existing agreement.
The move comes as the global economy tries to recover from the shock of the pandemic, with global manufacturing growth peaking in 11 years last month.
This raised hopes of a recovery, taking global and European stock markets to record highs yesterday. The UK’s FTSE 100 hit a three-week high, led by commodity stocks.
Another boost, the Australian economy has returned to its pre-pandemic size, after growing 1.8% in the first three months of the year and 1.1% in the last 12 months .
Markets opened higher this morning, with the FTSE 100 up 25 points or 0.35% to 7105 points.
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