council secretary Kemi Badenoch has said the UK’s entry into a major Indo-Pacific trade bloc is “about tomorrow’s growth potential” as she downplayed estimates suggesting the deal would boost the economy by just 0.08%.
The UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was formally confirmed in a telephone conversation between Ms Badenoch and counterparts of the group in the early hours of Friday.
It represents Britain’s biggest trade deal since leaving the EU, cutting tariffs on British exporters to a group of countries that – with Britain’s membership – will have a total gross domestic product (GDP) of £11 trillion. account for 15% of the global GDPBritish officials said.
It’s not about what it does today, but about the growth potential of tomorrow
Critics say the impact will be limited, with official estimates suggesting it will only add £1.8bn a year to the economy after 10 years, amounting to less than 1% of UK GDP.
But Ms Badenoch noted that the forecast was based on 2014 figures and highlighted the future potential of the deal.
She told BBC Radio 4’s Today programme: “Think of it as buying a start-up. It’s not about what it does today, but about the growth potential of tomorrow.
“And the CPTPP countries currently have over 500 million people, and we are starting a trading relationship with them that will last many decades into the future and bring a lot of growth to the UK.”
It was put to the cabinet minister that the CPTPP would not offset losses from leaving the EU, with the Office for Budget Responsibility suggesting that Brexit would reduce the UK’s long-term potential economic growth by around 4%.
Ms Badenoch replied that the CPTPP complements the UK’s free trade agreement with the EU, adding: “We’ve left the EU so we need to look at what we need to do to grow that UK economy and not just keep talking about a vote from seven years ago.”
Britain is the first new member and the first European country to join the bloc – comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – since its inception in 2018.
It follows nearly two years of negotiations, culminating in intense talks in Vietnam earlier this month when representatives of the 11 existing members agreed to the UK joining.
While Britain already has trade deals with the CPTPP members apart from Malaysia and Brunei, officials said it would deepen the existing arrangements, with 99% of British goods exported to the bloc now eligible for zero tariffs.
Ms Badenoch, an outspoken Brexiteer, told Sky News: “The bilateral trade deals are different to the multilateral trade deal, you create synergies.
“It is the first time in about 50 years that we have joined a block like this. There is power in numbers.”
Work said it was essential to ensure that UK consumer safety, food safety, data protection and environmental protection safeguards were not compromised as a result of the agreement.
The UK’s main exports to the region, including cheese, cars, chocolate, machinery, gin and whiskey, will benefit, while officials said the services sector would enjoy less red tape and better market access.
They added that vital British sectors, including agriculture and the NHS, will be protected, while animal welfare and food safety standards will be maintained.
The Conservative government’s track record of getting good trade deals is abysmal
Reduced tariffs on Malaysian palm oil, a product blamed for widespread deforestation, have raised concerns about increased wildlife destruction.
But Ms Badenoch said: “Moving the rate from 2% to 0% is not what will cause deforestation. And actually, the standards set by this government, by the Ministry of the Environment, will dictate what comes into the country.
“But because we are in the trading bloc, we also have more influence on sustainability.”
The deal represents a continuation of the post-Brexit policy “tilt” towards the Indo-Pacific region initiated by Boris Johnson.
Former Prime Minister Liz Truss tweeted: “As a Trade Sec, I submitted our application to join #CPTPP two years ago. I am delighted that negotiations have been completed, giving the UK access to some of the world’s fastest growing economies: #GlobalBritain in action and an important counterbalance to those who seek to undermine our values.”
In a video posted to social media promoting the pact, Mr Sunak said: “It’s a great opportunity for UK companies to trade with new markets on the international scene and a huge boost to the growth of our economy at home, creating lots of jobs.”
The CBI hailed the agreement as a “milestone” for UK industry, reinforcing the UK’s commitment “to building partnerships in an increasingly fragmented world”.
Labor said while the agreement represented “encouraging” progress, it needed to see the details.
Shadow Trade Secretary Nick Thomas-Symonds said: “The Conservative government’s track record of getting good trade deals is abysmal.
“Other countries that have joined CPTPP schemes have provided important safeguards and support for their producers; it is vital that ministers state whether they intend to do the same.
Liberal Democrat trade spokeswoman Sarah Green said: “This Conservative government is responsible for a number of shocking trade deals that give the UK no economic advantage.
“The Conservatives have wreaked havoc on the UK economy with stagnant GDP and this announcement won’t repair even a fraction of their damage.”