Atlanta/Hong Kong (CNN) Britain has reached an agreement to join a major free trade bloc in the Pacific region.
The country will become the first new member, and the first in Europe, to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) since came into force in 2018.
Although the government called the deal “the biggest trade deal since brexittheir own estimates show that joining the CPTPP will increase UK economic output by less than 0.1% over the long term, or over about 15 years.
“We are at heart an open, free-trade nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms,” British Prime Minister Rishi Sunak said. Friday.
The bloc is home to more than half a billion people and will be worth 15% of global GDP once the UK joins, Sunak’s office said.
The CPTPP is a free trade agreement with 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. It succeeded the Trans-Pacific Partnership after the United States retired under former President Donald Trump in 2017.
The UK deal comes almost two years after talks began to join the pact.
Joining the CPTPP is unlikely to be transformative for the UK economy. Britain already has trade agreements with nine of the current 11 members.
The agreement will not offset the impact on GDP of leaving the European Union either. The UK’s Office for Budgetary Responsibility, which produces economic forecasts for the government, expects Brexit to cut Britain’s output by 4% over 15 years compared to staying in the bloc.
Becoming a member of CPTPP means that over 99% of UK exports to the other 11 countries will now be eligible for duty free trade. That includes major exports such as cheese, automobiles, chocolate, machinery, gin, and whiskey.
In the year to September 2022, the UK exported £60.5 billion ($75 billion) worth of goods to CPTPP countries, Sunak’s office said in a statement. statement.
Dairy producers, for example, shipped £23.9 million ($29.6 million) worth of products like cheese and butter to Canada, Chile, Japan and Mexico last year, and were willing to “benefit from lower tariffs,” added.
The agreement also aims to reduce red tape for UK companies, who will no longer have to set up local offices or be residents of pact member countries to provide services there.
Services accounted for a large part (43%) of total UK trade with CPTPP members last year, according to Sunak’s office.
“As part of CPTPP, the UK is now in a unique position in the global economy to seize opportunities for new jobs, growth and innovation,” Sunak said.
Several companies expressed their support for the deal in the government statement, including the global bank standard charter (SCBFF) and liquor maker Pernod Ricard (PDF).
Joining the pact “is a great opportunity for our Scotch whiskey business,” said Anishka Jelicich, Pernod Ricard’s UK director of public affairs.
“Five of our top 20 export markets are members of CPTPP. We expect tariff cuts and smoother access to some of the world’s fastest growing economies to increase exports and secure jobs and investment in the UK, with sales reaching will double in some markets.”
However, the UK Business and Trade Commission criticized the deal.
“When it comes to trade, distance matters. Not only will joining this bloc not replace the trade we’ve lost with our nearest neighbors, but stretching supply chains makes a mockery of our climate commitments and will undermine environmental standards and food in the UK. Caroline Lucas, an MP and member of the Commission, said in a statement.
— Olesya Dmitracova and Hanna Ziady contributed to this report.