International Trade: What is the CPTPP, and why could it benefit Traders?

Fiona Parsons Business West
17 December 2024

What is the CPTPP?


The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement comprising 11 member countries across Asia, the Pacific, and the Americas: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Together, these nations represent 13% of global GDP (15% with the UK’s inclusion) and a consumer base of over 500 million people.

Originally signed in 2018, the CPTPP is designed to reduce tariffs on 95% of goods traded between members, facilitate modern rules for services and digital trade, and enhance regulatory cooperation. Unlike the EU, it is not a single market or a customs union, meaning members retain sovereignty over their regulations while committing to trade cooperation.

The UK joined the CPTPP on December 15, 2024.
 

Why join the CPTPP?


Following Brexit, the UK has sought to expand trade relationships outside Europe. The CPTPP is central to this strategy. It provides access to fast-growing economies like Vietnam and Malaysia and solidifies ties with established partners such as Canada, Japan, and Australia.

While the UK already had trade agreements with most CPTPP members, accession ensures long-term certainty in these relationships and introduces new opportunities, such as a first-ever trade agreement with Malaysia. Membership also positions the UK strategically in the Indo-Pacific region, forecasted to drive global economic growth in the coming decades.
 

Key features of the CPTPP for UK businesses

 

  • Tariff reductions: Over 99% of UK goods exports to CPTPP countries will qualify for zero tariffs, benefiting sectors like automotive, dairy, and beverages.
     
  • Flexible Rules of Origin: Businesses can source components from multiple member countries while qualifying for preferential trade terms, supporting diversified supply chains.
     
  • Services and digital trade: Modern provisions enhance market access for UK service providers and establish rules for free data flow and reduced barriers in digital trade.
     
  • Investment protections: Current investment from CPTPP countries is around 9% of total UK inward investment. Being a member will encourage further investment by guaranteeing protections for investors and will support jobs across the UK.  
     
  • A trade deal with Malaysia for the first time: This will give UK businesses much better access to an economy that was worth £330 billion in 2022.
     

Although the immediate economic impact is modest (estimated at a 0.08% GDP boost over 10 years), the potential for long-term growth is significant as more countries, such as South Korea and Thailand, seek to join. Membership strengthens the UK’s influence in shaping global trade rules and aligns with its Indo-Pacific strategic objectives.

Joining the CPTPP underscores the UK’s commitment to global trade cooperation while securing its role in one of the world’s most dynamic regions.

If you are interested in finding out more about CPTPP, we are holding an event on Friday 24 January, 9.30am to 2.00pm where you can identify opportunities for your business.


References:
https://www.gov.uk/government/news/businesses-set-to-benefit-as-uk-concl... 
https://www.gov.uk/government/publications/cptpp-impact-assessment/impac...  
https://www.gov.uk/government/publications/cptpp-benefits-for-the-uk/cpt... 
https://www.britishchambers.org.uk/news/2024/05/asia-pacific-trade-bloc-... 
https://www.bbc.co.uk/news/explainers-55858490 
https://www.deloitte.com/uk/en/services/tax/research/the-uk-in-cptpp-our...