New trading preferences between the UK and eight countries (New Zealand, Japan, Peru, Chile, Malaysia, Brunei, Singapore and Vietnam) in Asia-Pacific came into effect on Sunday December 15, with Australia coming on stream on Christmas Eve.
By the end of this year, only Canada and Mexico among the other eleven states in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be yet to ratify the UK’s Accession Protocol to the bloc.
Ratification in Canada may have to await the other side of that country’s upcoming electoral cycle in 2025. The UK continues to trade with Mexico and Canada on the basis of the continuity trade agreements reached as a result of UK exit from the EU. CPTPP entry means that for the first time, the UK will have preferential trading terms in goods with Malaysia and Brunei.
With UK entry, CPTPP will cover 15% of global GDP growth. Asia-Pacific is the global region expected to be driving global goods trade growth of 3% in 2025, according to recent forecasts by the WTO.
It is a growing bloc, with Trade Ministers having discussed in Vancouver in early December whether to accept Costa Rica as the next candidate country for entry.
Indonesia, the chair of the ASEAN group of countries, Thailand, Taiwan, and China have also made applications to join. Although the USA is unlikely to rejoin the bloc having resiled from the Agreement in 2017, there are significant voices formerly at the European Commission who have called for a closer relationship on tariffs and rules of origin between the EU and CPTPP.
CPTPP is a modern agreement, covering trade in services as well as goods, and with zero or low tariff across the vast majority of commodity sectors. Tariff rate quotas apply in terms of commodities such as meat, fish, dairy products. Schedules from each state were negotiated with the UK.
It also allows for diagonal cumulation between the parties, meaning that inputs from any CPTPP state may be imported into the UK, made into a finished good here, and exported to a CPTPP state while preserving the preferential tariff arrangements.
This presents opportunities for companies to reorder some of their sourcing or supply chains by including textiles, intermediate goods, components or ingredients from CPTPP countries in manufacturing supply chains, while being able to export their goods in the zone with zero or low tariffs.
Traders have the choice when they export to or import from CPTPP states (with the exception for now of Canada and Mexico) of either using the preferences from this Agreement or from those of the continuing bilateral agreements between the UK and nine of the eleven CPTPP states (excluding Malaysia and Brunei).
This provides further flexibilities for traders in choosing the terms from the two parallel forms of trade agreement with these Asia-Pacific states which suit them best.
CPTPP also contains relatively flexible rules on business mobility, which is important in international commerce, and provides good market access in services.
Flows of data, the lifeblood of international trade in the 2020s, are generous, predictable and efficient under the terms of the agreement. The agreement contains good levels of legal protection on intellectual property and over existing geographical indicators on products such as foods and whisky.
The UK’s participation in the bloc also means it has a say in how its rules can develop in future, and the opportunity to prioritise areas such as liberalisation on services, digital trade, and energy for future growth, as well as who can enter the Agreement.
For the best advice on how to enhance your trade, use the new preferences and get your export documentation right, ensure you speak with the expert team at Aberdeen and Grampian Chamber of Commerce, working closely with the British Chambers of Commerce.
With the major EXPO being held in Japan in 2025, now is an excellent opportunity to enhance your customer base and go for export growth of iconic Scottish products and our cutting-edge financial, business, professional, travel and creative services in Asia-Pacific.