The UK’s Relationship with the Pacific Alliance (International Relations Committee Report)

Lord Bilimoria Excerpts

Monday 1st February 2021 Grand Committee

[Lord Bilimoria (CB) [V]]

My Lords, I congratulate the noble Lord, Lord Howell, and the report The UK’s Relationship with the Pacific Alliance. It is so timely—it is serendipity—that it has been announced that we are about to join the CPTPP just when this debate is taking place. I would like to focus on that.

As president of the CBI, I can say that our members are very supportive of the UK’s intention to join the CPTPP, to improve access to the fast-growth Asia Pacific region and also the ASEAN trading bloc. UK trade with CPTPP members accounts for £110 billion, which is more than our trade with China. As we have left the European Union, many UK companies are looking to expand their trade focus beyond Europe, to capitalise on emerging opportunities and to diversify risk exposure. Of course, that does not take away from the fact that as things stand, the European Union is our largest trading partner, making up around 45% of our trade. In that sense, while trade with the Asia-Pacific region cannot replace current trade with the UK’s biggest trading partner, the European Union, it does represent a clear and stable focal point for business development across many sectors.

UK accession to the CPTPP would be a clear display of intent that the UK will continue to back the international rules-based trading order. Geopolitically, the CPTPP bloc represents the coming together of countries aligned on the merits of free trade and, while this does not seem to be a commercial issue, many businesses agree that joining the CPTPP could be an important step for the UK to signal that, after leaving the European Union, it remains and intends to continue to remain an open and outward-looking economy.

Of course, we also have the Regional Comprehensive Economic Partnership—RCEP—which has also been announced. This is another positive development towards free and open global trade, but it also marks a wake-up call. As we spent four and a half years negotiating Brexit with the EU, Asia was continuing on the path to economic integration. Now we have secured a tariff-free, duty-free and quota-free deal with the European Union, we must make sure we are not left behind. In that context, the RCEP was signed on 15 November between 10 ASEAN countries and South Korea, China, Japan, Australia and New Zealand. It is the world’s largest trading bloc, making up a whopping 24% of global GDP.

India dropped out of the negotiations. We must not ignore India, because if you talk to Indian diplomats, they will not talk about Asia-Pacific, they will talk about Indo-Pacific, and it is the Indo-Pacific region that we need to focus on. I congratulate Policy Exchange, which has just produced a report on working towards a new UK strategy in the Indo-Pacific region. It is serendipity, again, that my friend Dean Godson—now the noble Lord, Lord Godson—was introduced today in the House of Lords and I congratulate him.

The CPTPP is an agreement between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—making up 13% of global GDP. It means greater market access, promoting private investment, regulatory reform—this is all fantastic news—common standards and very good duty reduction as well. The Policy Exchange report talks about the Indo-Pacific region being resilient and adaptable. It makes some fantastic recommendations: an Indo-Pacific charter; an Indo-Pacific sub-committee; a special envoy for the Indo-Pacific, to promulgate a standalone Indo-Pacific strategy; a prosperity agenda; a security agenda; a strategic reliance initiative; a financial technology platform; a free and open internet initiative; space technology—India is now an emerging space power; and last, but not least, defence and security. It is very important that we move forward, for example, with greater exercises between the UK and Indian armed forces, and greater co-operation. This is a partnership of the future, and I have a huge amount of optimism looking ahead.