CPTPP, Week in London column

Week in London: CPTPP here we come!

It is becoming increasingly clear Britain’s holy grail is CPTPP accession.

Sequencing a packed DIT agenda to allow stronger focus on CPTPP

The government has the resources it needs to deliver on its ambitious trade negotiations programme for the coming years – but it is nevertheless likely to miss a key target of having 80% of UK trade covered by free trade agreements by the end of this year.

These were among the messages offered by a team of senior officials from the Department for International Trade at a hearing this week of the House of Commons’ Public Accounts Committee.

The testimony offered by the DIT team – led by its top official, Permanent Secretary James Bowler – provided some interesting insights into the functional operations of the UK’s trade negotiations team.

“The DIT operation has grown substantially since the department was formed in 2016,” said Amanda Brooks, director general of trade negotiations at DIT.

“We now have 600 people directly supporting trade negotiations. That’s a considerably larger number than many other countries – and it reflects the scale of the programme that we are delivering.”

31% year-on-year increase in DIT’s trade negotiations budget

Bowler revealed that DIT had spent some £58.8m on trade negotiations in the 2020-21 financial year, and had budgeted for a spend of £77m in 2021-22 – an increase of 31%.

The Public Accounts Committee was following up on a critical report published by the UK National Audit Office last month which claimed that the government may be showing undue haste in its push to secure new post-Brexit free trade agreements.

But at the hearing on Wednesday (19 January), Brooks denied that the department was proceeding without due care and consideration.

“We are thinking really carefully about the prioritisation and the sequencing of the negotiations to make sure that we can proceed effectively,” she said.

“It’s not just about my team’s capacity, but also those of other departments. We have teams that meet two to three times each week across government to compare notes on the different negotiations at their different stages.”

Masterminding the UK’s CPTPP accession moves

Crawford Falconer, the former New Zealand official who is now the UK’s Chief Trade Negotiation Adviser, told the committee that for the UK’s ongoing accession to the Comprehensive and Progressive Agreement on Trans-Pacific Partnership – a key UK priority in 2022 – the government had “planned the sequencing very carefully”.

The FTAs negotiated last year with Australia and New Zealand “should not be seen transactionally,” Falconer explained.

These deals, he said, “were calculated to be strategically important because if we wanted to get into CPTPP, we didn’t want to negotiate ‘de novo’ with the totality of the membership at once. So with Australia and New Zealand, the important thing was to reach a satisfactory deal where we could maximise our leverage as the UK – and then get the best CPTPP deal we could with that.”

Falconer said the rationale behind the UK’s push to renegotiate the UK’s inherited rollover agreement with Japan, which was concluded last year, was much the same. “That means that the rest of CPTPP becomes much more manageable.”

Negotiations are set to commence soon to upgrade the UK’s existing rollover FTAs with two further CPTPP members – Canada and Mexico – while accession discussions with CPTPP as a collective are also under way.

Brooks revealed that a DIT negotiating team had worked each day last week from midnight to 3am UK time on the CPTPP dossier – a negative side-effect of conducting virtual trade negotiations with trade partners in Indo-Pacific time zones.

UK’s 80% FTA target unlikely to be met by end-2022

But MPs on the Committee were keen to quiz Bowler on a key government trade commitment – namely to have at least 80% of UK trade covered by trade agreements by the end of 2022.

Bowler’s reply was diplomatic, but in the negative.

“I think we will get to 80% – but the timing was, and is, challenging,” he said.

At present around 64% of UK trade is covered by FTAs – and of the trade partners not currently covered, only the US would be large enough to lift the UK close to the 80% level. But as Bowler regretfully noted, the US “is not currently negotiating with anyone”.

Geopolitical benefits to UK from CPTPP accession, says think tank report

The UK strategy of pursuing accession to the Comprehensive and Progressive Agreement on Trans-Pacific Partnership has received enthusiastic endorsement in a new report published by the UK Centre for Policy Studies – a right-of-centre think tank which is close to Boris Johnson’s government.

As well as the economic benefits of developing closer trade links with a dynamic and fast-developing region, accession to CPTPP would also deliver substantial geopolitical benefits for the UK, the report claims.

And the UK, once confirmed as a member country, might be well placed to help integrate other regional economies into the Asia-Pacific trade group.

“The UK should not only join CPTPP at the earliest opportunity, but champion its expansion to create a coalition of advanced economies, for example by using its strong bilateral relationships with Japan and South Korea to help smooth the latter’s accession into CPTPP,” says the report, whose principal author is Anthony Mangnall, a Conservative MP who sits on the House of Commons International Trade Committee.

China’s CPTPP accession ‘unlikely to succeed’

China also looms large in the CPS report – primarily as a problem to which CPTPP membership could be a solution.

This is despite the fact that China is currently one of five declared applicants to become part of CPTPP, along with the UK, Taiwan, South Korea and Ecuador.

“While China has applied to join CPTPP, its lower standards, poor human rights record and confrontational approach to foreign policy (especially towards some of the existing members) make it unlikely that its application will be successful,” the report claims.

And British membership of CPTPP could help diversify UK supply chains “in particular by helping to unlock greater extraction of critical minerals and rare earths” – a development which will “help reduce our collective reliance on China for vital components within the supply chain”.

Rather than viewing membership of CPTPP as a goal in itself, CPS advocates that UK should see accession to the agreement as “a starting point from which to build new ‘CPTPP+ partnerships’, via arrangements such as Digital Economy Partnerships”.

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