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RULES OF ORIGIN BENEFITS
Sam Lowe, Partner at Flint Global said that exporters could benefit from CPTPP membership even when trading with countries where there is a bilateral FTA.
To benefit from preferential tariffs, exporters must demonstrate a product as a sufficient proportion of “locally” sourced parts.
Rules of origin under rolled-over post-Brexit free trade agreements with Japan, Mexico and Canada, for instance, allow exporters to count EU inputs as “local”.
However, under CPTPP, inputs from CPTPP members can usually be considered local, giving exporters another option if it is beneficial.
“The practical benefit for UK exporters here is optionality,” Lowe said.
SECTORAL IMPACT
Britain has agreed on a quota on beef imports, but did not agree to lower food standards, under which hormone-treated beef is banned.
Tariffs on palm oil from Malaysia will be liberalised, and Britain also agreed on tariff reductions on bananas, rice and crab sticks following requests from Peru, Vietnam and Singapore respectively.
Britain highlighted that 99 per cent of exports to CPTPP would be eligible for zero tariffs, including for on cheese, cars, chocolate, machinery, gin and whisky.
The phased elimination of Malaysia’s 165 per cent tariff on whisky was welcomed by Mark Kent, Chief Executive of the Scottish Whisky Association, who added that “the UK’s accession to CPTPP will open up new opportunities for Scotch Whisky and other UK products in key markets in the region”.
GEOPOLITICAL FACTORS
While the long-term benefit for Britain’s economy is set to be modest, Britain has other reasons for joining the bloc.
Minako Morita-Jaeger, a policy research fellow at the UK Trade Policy Observatory, said Britain’s accession was a “big geopolitical strategy gain with a small economic gain”.
China has applied to join CPTPP, and Morita-Jaeger cited Britain’s pivot towards the Indo-Pacific, where it has highlighted China as an “epoch-defining challenge.”
“The CPTPP could enable the UK to enhance strategic ties with like-minded countries to protect a free and open Indo-Pacific region,” Morita-Jaeger said.
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