Britain Joins £12 Trillion Indo-Pacific Trade Bloc through New Agreement

LONDON — In a significant move for post-Brexit trade, Kemi Badenoch, the UK’s business and trade secretary, has officially signed a treaty to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a large trade bloc in the Indo-Pacific region.

This trade deal, signed in New Zealand, will now undergo parliamentary scrutiny in the UK, while other CPTPP member countries will also complete their own legislative processes. The UK government has stated that over 99% of its current goods exported to CPTPP countries will soon be eligible for zero tariffs.

The CPTPP is composed of 11 countries, including Canada, Mexico, Japan, Australia, Vietnam, Singapore, and Malaysia. With the UK’s accession, it will become the first European nation to join this bloc, which has a combined GDP of £12 trillion ($15.7 trillion).

The impact of this trade deal on Britain’s growth prospects remains uncertain. According to the government’s own estimates, it is expected to raise long-term GDP by a mere 0.08%, which may not be enough to offset the losses in European trade resulting from Brexit. The UK officially left the European Union on January 31, 2020.

Kemi Badenoch emphasized that by joining the CPTPP, the UK is leveraging its status as an independent trading nation to access an “exciting, growing, forward-looking trade bloc.” She believes that this move will contribute to the growth of the UK economy and support the hundreds of thousands of jobs provided by CPTPP-owned businesses nationwide. Government data from 2019 indicates that one in every 100 workers in Britain is employed by a business based in a CPTPP nation.

Badenoch also highlighted that this trade deal will “open up huge opportunities and unparalleled access to a market of over 500 million people.”

The CPTPP originated from the now-defunct Trans-Pacific Partnership (TPP), which was initially led by the United States but collapsed when former President Donald Trump withdrew US involvement.

Sean McGuire, Europe Director at the Confederation of British Industry, believes that alongside Britain’s outward and strategic global trade agenda, this deal has the potential to drive export-led growth in critical sectors such as services and green tech, while also strengthening supply chains. He sees this as an opportunity for UK firms to explore new trade and investment prospects in some of the world’s most dynamic markets.

—CNBC’s Sumathi Bala contributed to this article.