Britain's Path to the Pacific Trade Zone: Opportunities and Challenges

Great Britain will become the first European country to join a trade bloc in the Indo-Pacific on Sunday. This step, while symbolically significant, is estimated to offer long-term economic benefits of around two billion pounds sterling. However, these positive effects pale in comparison to the trade losses caused by Brexit in the EU. Kemi Badenoch, former Conservative Trade Minister and current Chair of the Tory Party, describes joining the Pacific bloc as an important post-Brexit trade agreement. She emphasizes that it connects Great Britain with the world's fastest-growing region. The current Trade Minister, Jonathan Reynolds, has also endorsed the agreement. He argues that it will benefit British exporters in the food and drink, automotive, and financial services sectors. However, trade experts warn that the gains from membership in the 'Comprehensive and Progressive Agreement for Trans-Pacific Partnership' are likely to be limited. Great Britain will be the twelfth member of the trade club, which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Badenoch signed the agreement in 2023, with Downing Street highlighting at the time that 99 percent of British exports to CPTPP countries will be tariff-free. Nonetheless, the government estimates that the agreement will only increase the British GDP by 0.08 percent in the long term, compared to the calculated loss of 4 percent of GDP due to Brexit. Conservative officials claim that membership in the CPTPP makes a return to the EU customs union impossible, thereby solidifying the advantages of Brexit. Members of a customs union must join EU trade agreements and cannot conclude their own agreements. Prime Minister Keir Starmer has ruled out a return to the customs union in any case. Douglas Alexander, Trade Minister, describes CPTPP as a hub for dynamic, forward-looking economies committed to free trade worldwide. He is also pursuing trade agreements with India and Gulf states while seeking to reduce trade barriers with the EU. David Henig, a trade expert, sees the CPTPP agreement as a means to simplify supply chains within the bloc, particularly in the automotive sector, and to promote the export of products like whisky. 'It is not harmful and could offer a few opportunities,' he said. Henig noted that Great Britain already had trade agreements with all CPTPP members except Malaysia and Brunei. The government said that it might be easier for British service companies to operate in the Pacific, with 'companies globally managing funds from the United Kingdom and providing services to CPTPP markets on par with domestic companies in key sectors.' Badenoch emphasized, 'The Conservatives have delivered the CPTPP—a trade agreement that brings tremendous benefits to everyone from British farmers to fintech companies and small businesses to the largest manufacturers. Joining a trade bloc, however, is just the beginning.'