While large monopoly capitalists push their views on nations and international organisations manned by unelected bureaucrats ignore the wishes of taxpayers, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) is a quiet and democratically sound trade bloc empowering small and medium businesses.
UK’s accession into the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) this week will be a highlight post Brexit, the CPTPP having already developed a strong reputation for being a liberal and flexible trade bloc. The bloc was created with small and medium-size businesses in mind, in a bid to expand their export markets. The guiding principles of the CPTPP mean Indian companies could benefit in areas where they hold an advantage.
The CPTPP has no capital city, no parliament, no central bank, no single currency and even more importantly, no wish to impose a political union or demand vast sums of money from its members to fund an administrative apparatus of unelected bureaucrats.
While large monopoly capitalists push their views on nations and international organisations manned by unelected bureaucrats ignore the wishes of taxpayers, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) is a quiet and democratically sound trade bloc empowering small and medium businesses.
The CPTPP was founded in 2018 and comprises 11 members in 5 continents: Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. South Korea and Taiwan, Philippines and Thailand, Costa Rica, Ecuador and Uruguay have all previously declared their intention to join.
The trade bloc is one of the world’s most significant free trade areas when measured by the combined economies of the member states. The UK joining the partnership would take the trade bloc’s GDP to £12 trillion. We have reliable data from 2021 when the 11 members in the partnership accounted for 12% of the world economy. If the UK, the world’s sixth largest economy, had been a member in 2021 the figure would have been 15.4%. That would bring it close to the size of the European Union, which accounted for 17.8% of global GDP in 2021.
The Indo-Pacific region is predicted to account for two-thirds of the global middle class by 2030 and for more than half of the global economy by 2040. The fast-expanding middle class is bringing roaring demand for consumer goods and services. Meanwhile, according to the credit rating agency S&P Global, the European Union’s share of the world economy has fallen from over a quarter to around 18% since the turn of the millennium.
Since Brexit, the UK has signed three new trade deals—with Australia, New Zealand and a free trade agreement over digital free trade with Singapore. Joining the CPTPP would mean UK businesses could now sell nearly all of their goods without tariffs to 500 million customers, according to the Department of Business and Trade. The pound has surged to become the best performing currency of this quarter of 2023, having gained 2.5% against the dollar. CPTPP will now account for 16% of global GDP, same as that of the European Union and is predicted to account for a quarter of the world economy by 2050. The application to join the bloc was first put forward by the short-lived British Prime Minister and champion of free trade, Liz Truss, when Trade Secretary two years ago and negotiated under a highly capable and dynamic trade minister Kemi Badenoch. This is a key moment for India as we await the eighth round of discussions over our own impending FTA with the UK.
The removal of tariffs and quotas will make it cheaper and easier to export goods including in digital services, giving better access to markets on all sides of the world. CPTPP is known to be less restrictive, allowing for member states to adopt discretionary measures. For example, unlike the European Union’s rigid and unrelenting commitment to GDPR regulations, CPTPP takes a more liberal approach, by keeping more data-sharing decisions within the remit of individual member states.
That said, it has so far shown resistance in one key aspect: China’s bid for membership. The fact that Communist China is kept out of the bloc is surely a good policy, reason why India should join. As the West becomes increasingly worried about its dependence on authoritarian regimes and keen to disassociate from China’s economic power, a deeper engagement with the rapidly growing Indo-Pacific region not only makes economic sense but should now be a key part of foreign policy.
Ravi Kumar Kandamath is an independent public affairs consultant working in the London-New Delhi-Washington DC axis arkassociatesuk@gmail.com
Reference: Collins, David A., The UK’s Accession to the Comprehensive Progressive Trans-Pacific Partnership (CPTPP): Legal Obligations and Political Economy (November 1, 2022). International Trade Law and Regulation 2023:1, Available at SSRN: https://ssrn.com/abstract=4267069