UK agrees to join Trans-Pacific Free Trade Area (CPTPP)

The UK has completed negotiations to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), one of the largest free trade areas in the world. CPTPP includes of 11 countries spanning the Indo-Pacific region that includes some of the fastest growing economies in the world. Other countries including China, Taiwan and several South American countries have applied to join the group. Other Asian countries such as South Korea and Thailand have also expressed interest in joining CPTPP.

The agreement is expected to be signed later this year subject to legal review of the Accession Protocol text and scrutiny from Government commissions as well as legal reviews from other CPTPP members. The agreement would then need to be ratified by all 12 countries.

Key features include:

·         Tariff reductions and tariff elimination will benefit more than 99% of UK exports to CPTPP members

·         Accelerated tariff reductions for some export sectors such as automotive, food and whisky

·         Increased access to some CPTPP markets such as Malaysia and Vietnam

·         Changes to rules of origin: cumulation possible between CPTPP members and simplification of the origin rules in external trade.

The deal will affect UK tariffs, with tariff reductions in some sectors likely subject to protection measures for some UK sectors.

The agreement will also allow opportunities to diversify supply chains through the loosening of ‘rules of origin’. This would potentially allow some manufacturers focussed on Asian and South American markets to import component parts of their product tariff free and then export that product tariff free, significantly reducing the cost of those products and their production.

The government also claims that CPTPP membership will prevent the UK from rejoining key EU institutions.

Most criticism of the deal have focused on possible impacts on the environment due to deregulation and on negative comparisons to EU membership. The UK has agreed to scrap tariffs on palm oil as a condition for entry into the CPTPP deal, for example.

Way forward

4 Eyes Ltd will be able to assist your company with classification, origin and import or export requirements for EU and CPTPP optimisation. Please call us if you would like to discuss the issues raised.