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The North East and the CPTPP

 

On Monday February 1, Secretary of State for International Trade Liz Truss confirmed that the UK has made a formal application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The CPTPP is a multi-national Free Trade Agreement currently with 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Much has been made of the UK Government’s desire to boost trade with the rest of the world as we begin life outside of the European Union, and the application to join the CPTPP is one of the most significant steps so far.

The CPTPP is not a trade bloc like the European Union and does not include the levels of integration and cooperation at both the economic and political levels that membership of the EU requires. The CPTPP is a Free Trade Agreement and therefore covers the areas that are common in agreements of this type; market access, reduced tariff schedules, commitments on food, labour, environment and animal welfare standards as well as chapters on investment, procurement, intellectual property and dispute settlement. With British membership, the agreement would encapsulate around 1/6 of global GDP, a similar level of global trade and somewhere in the region of half a billion people. The agreement currently eliminates 95% of tariffs on goods traded between members, with aims to increase that level to 99% over time.

The UK already has bilateral Free Trade Agreements with 8 of the 11 members, and negotiations with 2 of the others (Australia and New Zealand) ongoing, but CPTPP membership would aim to improve on the terms within these Free Trade Agreements. Unfortunately, there has not yet been any economic scoping assessment made by the government to see exactly what the impact may be.

The North East’s relationship with the CPTPP countries is substantial. As a region, our exports to the CPTPP member countries (excluding Brunei where data is not available) in 2019 valued £1.03 billion or approximately 7.7% of all North East exports. In the same year, our region imported significantly more than it exported to the member states, with total imports from the listed countries valuing £1.69 billion or 11.62% of goods imported into the North East.

Nationally, 7.78% of British exports in 2019 were sent to CPTPP members states, almost exactly the same as the figure in the North East. The North East does however import almost twice as much, as a percentage, from CPTPP countries (11.62%) than Britain as a whole (5.95%) suggesting that any benefits of the group that reduce the cost of bringing goods into the UK from CPTPP nations may have a disproportionately positive impact for our region.

Japan is the North East’s largest economic partner among the CPTPP group. In 2019, the North East imported £1.02 billion worth of goods from Japan, 7.0% of the region’s total value, and exported £370 million worth of goods, 2.8% of the total value of North East exports. A full list of the relationship between the UK and CPTPP members (excluding Brunei) can be found below.

Nation

Export value (% of all North East exports)

Import value (% of all North East imports

Australia

£234 million - (1.76%)

£77 million - (0.53%)

Canada

£72 million - (0.54%)

£153 million - (1.05%)

Chile

£55 million - (0.42%)

£10 million - (0.07%)

Japan

£372 million - (2.80%)

£1.02 billion - (7.00%)

Malaysia

£46 million - (0.34%)

£46 million - (0.32%)

Mexico

£87 million - (0.65%)

£75 million - (0.51%)

New Zealand

£40 million - (0.30%)

£17 million - (0.12%)

Peru

£8 million - (0.06%)

£3 million - (0.02%)

Singapore

£96 million - (0.72%)

£50 million - (0.35%)

Vietnam

£22 million - (0.17%)

£236 million - (1.63%)

Total

£1.03 billion – (7.7%)

£1.69bn - (11.62%)