The following Answer to an Urgent Question was given in the House
of Commons on Tuesday 18 July.
“The Secretary of State for Business and Trade signed the
accession protocol to the comprehensive and progressive agreement
for trans-Pacific partnership on Sunday 16 July in Auckland. The
UK will be the first new member since CPTPP was created. With the
UK as a member, CPTPP will have a combined GDP of £12 trillion
and will account for 15% of global GDP. Accession to the
agreement sends a powerful signal that the UK is using our
post-Brexit freedoms to boost our economy. It will secure our
place as the second largest economy in a trade grouping dedicated
to free and rules-based trade. It gives us a seat at the table in
setting standards for the global economy.
The agreement is a gateway to the wider Indo-Pacific, which is
set to account for the majority of global growth and around half
of the world’s middle-class consumers in the decades to come.
That will bring new opportunities for British businesses abroad
and will support jobs at home. More than 99% of current UK goods
exports to CPTPP countries will be eligible for zero tariffs. The
UK’s world-leading services firms will benefit from modern rules,
ensuring non-discriminatory treatment and greater transparency.
That will make it easier for them to provide services to
consumers in other CPTPP countries.
In an historic first, joining CPTPP will mean that the UK and
Malaysia are in a free trade agreement together for the first
time. That will give businesses better access to a market worth
£330 billion. Manufacturers of key UK exports will be able to
make the most of tariff reductions to that thriving market.
Tariffs of around 80% on whisky will be eliminated within 10
years, and tariffs of 30% on cars will be eliminated within seven
years. Joining CPTPP marks a key step in the development of the
UK’s independent trade policy. Our status as an independent
trading nation is putting the UK in an enviable position.
Membership of that agreement will be a welcome addition to our
bilateral free-trade agreements with more than 70 countries. I
pay tribute to the many officials and Ministers who have worked
on this deal over the past two years, some of whom are in the
Chamber today.”
12.03pm
(Lab)
My Lords, while we will always welcome improved trade
relationships, the political capital invested by the Government
in this announcement seems disproportionate to the potential
economic impact. The deal will increase the UK’s GDP by 0.08%
after 15 years. Since the Government were not able to negotiate
the terms of the UK’s membership, I will ask the Minister two
questions. Will it lead to the lowering of food standards or of
our intellectual property protection standards? China applied to
join CPTPP in September 2021—what assurances on economics and
security have Ministers asked for from existing CPTPP members in
relation to China’s membership?
The Parliamentary Under-Secretary of State, Department for
Business and Trade and Scotland Office () (Con)
Noble Lords, it is a momentous occasion to be able to talk in
this House about the signing of the CPTPP. This is a tongue
twister, but we are all going to have to get our mouths around it
because we are going to hear a lot more about this in the future.
This is a massive region of 11 countries in the Indo-Pacific,
which account, together with the UK, for 15% of world trade
GDP.
We know that this trade deal originally had the US in it, and
Donald Trump took the US out. That created a gap. For those of us
who play the game of rugby football, you always go for the gap.
The UK has taken that gap and got into this deal, which, to come
to the specifics of the question, will in no way impact on our
food standards and regulatory standards.
On the matter of China, China is not a member of this group.
China has expressed some interest, but there are other interested
countries such as Costa Rica, Ecuador, Uruguay, the Philippines
and Korea that are in line before China. So, as far as we are
concerned, at the moment we are not commenting on China’s
accession. China has expressed an interest but, on the exact
question, there will be no reduction of food standards and
general regulation through this deal.
(LD)
My Lords, I very warmly welcome the 0.08% estimated growth over
15 years of this momentous agreement. But, with regard to China,
it is more than simply expressing an interest; it is seeking to
commence the accession process. If that happens, we will be bound
to share data with China under part of the CPTPP common data
provisions. That will mean that we will no longer have data
adequacy with the European Union. We currently have a trade
deficit in goods with China of £43 billion. Would it not make
more sense to have eased trade with Europe rather than more trade
deficit with China?
(Con)
Some 45% of our trade in the world is with the EU. In fact, if
you take Europe as now being 34 countries—if you take the likes
of Norway, Switzerland, Israel et cetera—it is pushing 50% of our
trade, whereas China is £100 billion, which is more like 10%. So
we are very clear that our primary market is with Europe and the
first deal we did on Brexit was a free trade agreement with
Europe. So we have free trade with Europe, as we stand, and that
will continue to be our dominant market. This is the bonus that
we get from going to international markets that we could not get
access to before. If we were inside the EU, we could not have
signed this deal, just as we could not have signed a deal with
India. When you have 28 people wanting 28 different things, it is
difficult to negotiate, is it not? Here we have a deal with the
CPTPP which we would not have access to otherwise and I think we
should celebrate.
As to the number on GDP, we are talking about a £2 billion impact
on trade, which is a big, big number. It will go all around the
UK, not just to London and the south-east. I can give you a
breakdown of the numbers in every region, if the noble Lord needs
it. The fact is that it will be a dynamic deal. This is going to
be the fastest-growing consumer sector in the world. It is going
to have a big increase in GDP. As the Secretary of State said at
the press conference, it is up to us now. It is up to the UK now
to maximise the benefits of this deal and I am very convinced
that we will get great trading opportunities out of it.
Lord Swire (Con)
My Lords, the slightly negative terms introduced by some noble
Lords on this is regrettable. Some of the countries within this
grouping have very fast-growing economies and represent huge
potential for British exporters, so I really do believe that we
should welcome this move. We want to see many more trade deals of
this sort. I think it is the largest trade deal since we have
come out of the EU, but certainly there will be many British
exporters up and down this country who would perhaps express
warmer feelings towards this than some noble Lords have so far
done today.
(Con)
I thank the noble Lord for that. In fact, the Department for
Business and Trade, being ahead of the game as always, is already
thinking about how to get utilisation of this trade deal done, to
get through to all the regions and nations of the United Kingdom,
to make sure in particular that all of our SME community has
access to this deal—for example, Malaysia is a country we have
never had a trade deal with before, and we now have tariff-free
trade with Malaysia. A particular focus of mine, as the export
Minister, will be to increase the level of access to our SMEs,
because these are real companies, employing real people in real
places,
(Lab)
My Lords, does the Minister not agree that there is a
geostrategic aspect to this agreement? By almost every
measure—investment and everything—the UK has more involvement in
that region than any other EU country. We also run global
shipping from the UK. In that sense, there is a geostrategic
aspect, which is to be welcomed. Does the Minister agree?
(Con)
The noble Lord will be able to comment much more on the
geopolitical aspect than I can, because I come to this looking at
it very much as a trade deal. When I was introduced to the deal,
I looked at the map and could see that we were nowhere near the
Indo-Pacific. The fact that we have come into that deal must
surely be because we have such extensive reach in the region, and
therefore in addition to trade there will be a knock-on effect
for our geopolitical security, I am sure.
(LD)
My Lords, the nature of the CPTPP is that the countries that are
trading with each other have to police the new trade that results
from that agreement. Can the Minister tell your Lordships how the
Government will set up the process of monitoring and ensuring
that the trade we have with this new group is truly free?
(Con)
The whole idea of the CPTPP deal is precisely to do with free
trade and fair trade. That will be very closely monitored within
the group. The benefit to our importers and exporters will be
considerable, particularly around some of the rules of origin. We
will now be in a position to accept goods coming in from these 11
countries, bring them into our supply chains and then export
thereafter. The benefits are significant and, in the meantime,
fair trade will be monitored, as it always would be.
(Con)
My Lords, does my noble friend agree that the impact assessment
may significantly understate the potential economic benefits, for
two good reasons? First, there is increasingly a worldwide
digital economy and CPTPP has world-leading digital provisions
within the agreement. Secondly, we are predominantly a services
economy and those services are likely to grow more rapidly in the
member countries. Can he further confirm that we will be full
members of CPTPP and therefore able to exercise a view, with
others, on the membership of any other country, including
China?
(Con)
I thank my noble friend and will take his last point first. Yes,
we have just joined the club and the first thing you do when you
join a club is not necessarily to comment on its existing or
incoming members. We will get to that in due course, I am sure,
but when we are fully ratified we will absolutely have a fair
voice at the table on the membership. I thank him for raising
digital and services because in my new job I am looking carefully
at where and how our trade is conducted. There is an obsession
with manufactured goods to the EU, but the fastest-growing part
of our economy is digital services to non-EU countries. Our
economy is moving rapidly to be two-thirds services versus
one-third goods. Having a deal in this region, which has a very
young and well-educated middle class, all fully digital, will
provide a great opportunity to access this market, particularly
for our SMEs.
(Lab)
My Lords, on the point of membership of this partnership, has the
Minister considered the effect of trade with Taiwan in relation
to this and relationships with China? What is the percentage of
trade currently undertaken with Taiwan, and will the Government
protect the future of that trade?
(Con)
Taiwan is an important trading partner of the United Kingdom.
Taiwan has expressed some interest in the CPTPP but, again, it is
not currently in the queue. As I said before, we will take our
membership; we will then have a fair voice at the table and
consider those matters when they arise.
