Many of my fellow Brexiteers will be overjoyed at the news that Britain is joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). With the deal expected to be signed off tonight, this would make the UK the first non-founding member – and first non-Indo-Pacific nation – to join a trade agreement covering a $10 trillion market and 15 per cent of global trade.
The CPTPP is what many Eurosceptics always wished the European Union could be. As Daniel Hannan pointed out when Britain applied for membership in 2021, this is “a trade agreement rather than state-in-the-making”. Membership is based on mutual recognition of standards, not harmonisation. There is no common parliament with overriding sovereignty, no free movement, no budgetary contributions, or a common flag and currency. This is solely about trade.
Just as importantly, the lack of a common customs union means that whilst the partnership eases trade between members, it does not prevent them from signing other, deeper agreements with other countries. Those 60-odd deals copied and pasted by Liz Truss are not for the chop. Joining is expected to benefit Britain to the tune of £1.8 billion annually once it has been up and running a decade or so.
This is a win against all those disdainful Europhiles who said that an independent Britain would be too weak and unimportant to run its own trade policy. In fact, the benefits of joining the CPTPP are somewhat diluted by the fact that of its 11 existing members – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam – we already have agreements with each except for Malaysia and Brunei.
The suggestion that joining the CPTPP ‘locks in’ Brexit should also be taken with a pinch of salt. Labour may have stood on a platform of rejoining the EU’s customs union in 2019 – something that would require quitting the CPTPP. But following Keir Starmer’s Damascene conversion to Brexit, that is almost certainly off the agenda. And anyway: the CPTPP includes a withdrawal provision requiring only six months’ notice. Suggesting any Labour leader wouldn’t quit as it would make Justin Trudeau cry also relies on Tories forgetting the anguish Brexit caused in many European capitals.
Nonetheless, joining an agreement of 500 million-odd people is nothing to be sniffed at. For those who believe leaving the EU was about embarking on ‘Global Britain’ – an opportunity to lift our sights from Brussels’ navel-gazing and focus on a renewed international role bestowed on us by our history, language, trade patterns, and cultural links – this is, therefore, a triumph. That is especially as the geopolitical benefits of joining are, if anything, greater than the economic ones.
The UK and China applied for CPTPP membership within six months of each other in 2021. Our accession provides us with a veto on other members joining the agreement – providing, in essence, cover for nations like Japan who wish to exclude China from the partnership without causing undue stress to their threatening neighbour. Selling more cars to Malaysia is a bonus to what serves as a useful counterpart to our AUKUS wrangling.
This is also a personal triumph for Rishi Sunak. Yes, the work on getting us to join the CPTPP has been going on for years – Britain first expressed interest, we have had four Prime Ministers, four International Trade Secretaries, and a lot of job-swapping between Greg Hands and Conor Burns – and that it has handed landed in the laps of Sunak and Kemi Badenoch relied on them holding the parcel when the music stops. It is something one associates with Liz Truss the buccaneer, not Rishi Sunak the technocrat.
But Sunak shares his predecessor’s interest in trade – he’s just a tad more sotto voce about it. Crucially, however, CPTPP members were reportedly spooked by the prospect of a Northern Ireland Protocol Bill-induced trade war with the EU. Sunak’s agreement of the Windsor Framework thus burnished his credentials as a man you can do business with. This agreement adds to his chumminess with Ursula von der Leyen, Emmanuel Macron, and Joe Biden as evidence of his growing international reputation – and in a way that pleases most wings of Tory opinion.
However, it would be remiss of me if I did not strike one or two notes of caution. As regular readers will know, I am a ‘Global Britain’ sceptic. Why bother with an Indo-Pacific tilt when our only contribution to a war with China would be to send two aircraft carriers to be rapidly sunk? Neither the Leave campaign nor Brexit voters prioritised trade deals – and reheated neoliberalism with a Palmerstonian sheen is the opposite of what many Brexiteers want.
There is also the question of whether CPTPP is running against the spirit of the age – and whether Britain has missed the free-trade boat. Undoubtedly, it’ll do our trade deficit no bad thing if we can flog a few more whiskeys to Japanese businessmen. But the idea that joining CPTPP will be a springboard to a trade agreement with the United States looks like a fantasy in a world where the Washington consensus has gone the way of the Dodo.
For three decades after the fall of the Berlin Wall, the presumption in Western capitals was towards ever-greater globalisation and trade liberalisation. In so doing, it allowed a Chinese cuckoo to grow in a free trade nest. Since Donald Trump first descended his golden elevator in 2015, America has woken up to the challenge posed by the state-directed industrial policies and naked aggression of its Pacific challenger. Hence why Trump pulled the United States out of the negotiations for what would become the CPTPP in 2017, and why Biden, despite the best hopes of British policymakers, is unlikely to take them back in.
If anything, the President has doubled down on the economic nationalism of his predecessor. Through last year’s Chips Act and Inflation Reduction Act, Biden is pouring more than $400 billion into subsidising the reshoring of manufacturing and industrial development. Protectionism is back.
Jeremy Hunt complains that this behaviour is just not cricket – whilst planning something on a much smaller scale himself. There is every sign that Britain is going to be left behind in the scramble for subsidies. Facing the prospect of imminent deindustrialisation as investment is dragged across the Atlantic, the EU’s response has been to say that if you can’t beat them, join them. Relaxing state-aid restrictions for national industries and projects like the Green Industrial Plan and Horizon Europe encourage more industrial spending on a continental scale.
Between all this, signing up for the CPTPP seems less of a bold new step into a post-Brexit future, and more of a huddling for warmth with fellow medium-sized economies against the three great industrial superpowers. Those crowing to Labour that Brexit is now impossible to reverse neglect the fact that Starmer and co are more attentive to these trends than they are.
Rachel Reeves aims to copy Biden’s public-private investment scheme, using government support to encourage a green-tinged economic revival. Whether such a scheme is possible in a Britain with anemic growth, a hapless state, and a withered bank balance is another matter. Hunt may have nabbed Starmer’s ‘Great British Energy’ in the Budget. But if our plan for competing with the clunking fists of Washington, Beijing, and Brussels is to shake a bit of cash out of pension funds and pledge to speed up planning permission, we will be left behind.
‘Global Britain’ was always a flawed agenda. Whatever Asia’s future growth prospects, making Britain a beacon for free-trade relied upon a healthy dose of nostalgia, and a great deal of wishful thinking. Unfortunately for Sunak, he seems set to be left banging the drum for free trade just as the rest of the world is changing its tune.