CPTPP (International Agreements Committee Report)

Lord Bilimoria Excerpts

Tuesday 1st February 2022 Grand Committee

[Lord Bilimoria (CB)]

My Lords, in a speech on 19 November 2021 at the University of Birmingham, where I am proud to be chancellor, His Excellency George Brandis, the Australian high commissioner, announced that in September the US, the UK and Australia had signed the AUKUS trilateral security partnership. He said:

“The Indo-Pacific has become a centre, perhaps the global centre for strategic competition, certainly it is one of the principal global centres of strategic competition today. Prime Minister Johnson has acknowledged that ‘the world is tilting on its economic axis and our trade and relations with the Indo-Pacific region are becoming ever more vital than before’. The United Kingdom Government’s recently released Integrated Review demonstrates that this country recognises the geopolitical and economic centre of gravity is moving to the south and to the east, to the Indo-Pacific region … the momentous trilateral partnership will promote security and prosperity in the region for decades to come. As will other arrangements in the region like, for example the CPTPP (the Comprehensive and Progressive Trans-Pacific Partnership), which Australia hopes the United Kingdom will accede to next year.”


On 21 January this year, the Australia-UK Ministerial Consultations, AUKMIN, took place. There, Australia

“welcomed the progress made by the UK toward its accession to the … CPTPP … as a priority of the CPTPP membership. Both sides looked forward to continuing to work at pace on the accession process, reflecting the importance of advancing the CPTPP’s high-standard rules and promoting free trade and open and competitive markets.”

This country makes up under 1% of the world’s population, yet we are one of the six largest economies in the world. The UK has always been a great trading nation. We are the second or third-largest recipient of inward investment at any time. We are the second-largest services exporter in the world. We punch well above our weight. The reasons for joining the CPTPP are to increase trade and investment opportunities, to diversify trading links and supply chains, to secure the UK’s future place in the world and to advance our long-term interests. It will be an important part of our strategy to place the UK at the centre of a modern, progressive network with dynamic economies and, in that, to live out this global Britain mantra for businesses and investors.

Joining the CPTPP will help us to forge a leadership position in a network of countries and send out a powerful signal to the world. It will also be about championing free trade and liberalisation, fighting protectionism and removing barriers all the time.

In July 2020, Liz Truss, then Secretary of State for International Trade, said:

“But of all the opportunities I’ve seen, I think CPTPP is one of the greatest. It covers 13% of the global economy—if you had the UK that would be 16% … Membership of CPTPP would hitch the UK to the fast-growing Pacific region. It also helps us strengthen our ties with some of our key international allies like Canada, Singapore and Australia … We would be able to accede to this agreement in ways that don’t damage our national sovereignty … What it allows us to do is to be part of a modern, rules-based free trade area.”


There are huge benefits: modern digital trade rules that allow data to flow freely; eliminating tariffs on UK exports more quickly, such as on whisky, down from 165% duties to 0% in Malaysia; and reducing car duty to 0% in Canada by 2022 if we finish the negotiations—two years earlier than through the UK- Canada trade deal. When it comes to market access, the CPTPP provides for the almost complete liberalisation of tariffs among the participants; tariffs are retained in only a few sensitive areas—I can give examples. Here is the good news: it provides a single set of rules of origin, allowing content from all CPTPP countries to be cumulated, meaning that if goods have at least 70% CPTPP content they qualify for preferential tariffs. That is great; that 70% can come from any combination of CPTPP countries.

The agreement covers 11 countries, and I congratulate the noble Baroness, Lady Hayter, and her committee on their report. For completeness, the countries are: Australia, Canada, Japan, Mexico, New Zealand, Singapore, Brunei, Chile, Malaysia, Peru and Vietnam. We formally made our request to join on 1 February 2021, and the Minister for Trade Policy, Penny Mordaunt, said that the Government hoped to have negotiations concluded by the end of 2022. Could the Minister confirm that it is very much the objective to do that? We of course signed the Australia free trade agreement on 16 December 2021.

The committee raised various concerns about food standards, climate regulations, intellectual property and the protection of data, and the Government responded. On personal data, for example, they said that the CPTPP would not affect the current position, which is that

“individuals’ data protection rights are protected and upheld when their data is transferred overseas”.

Could the Minister confirm that?

Could the Minister also confirm that we are making the most of our relationship now, having completed the Australia free trade agreement, which I will come to soon? We already have bilateral agreements with eight of the 11 CPTPP countries—nine if we add New Zealand, which we will hopefully conclude soon. Could he update us on how soon he thinks the New Zealand agreement will be concluded? Then it will be only Malaysia and Brunei that we do not have bilateral free trade agreements with.

With these 11 countries making up 13% of global trade, according to the World Bank, as I said earlier, that amounts to £110 billion of trade for the UK as things stand. That is higher than the amount of trade with China, which is just under £100 billion. This is one of the largest free trade agreements in the world. The first phase of the negotiations, from September to November 2021, covered the UK’s compliance against each of the CPTPP chapters. We have submitted our evidence, which the members are currently reviewing before giving the green light to progress on the second phase. Could the Minister update us on where we are on that?

We will then negotiate market access. There are, of course, political sensitivities that we have to accept around China and Taiwan both announcing that they want to join the CPTPP, and Thailand and South Korea wanting to join as well. China will require significant work to meet CPTPP rules. The good news—I would like the Minister to confirm this—is that this could add momentum to the UK’s accession bid because bids are looked at one after the other and not in parallel.

The CPTPP is key for the success of global Britain. Globally, as I said earlier, the axis is shifting. The world economy is thriving to become greener, more services-orientated and tech-driven. Asia is taking centre stage to become a key export destination of the world. CPTPP members are the fastest-growing economies in the world, with an expanding middle class that has an appetite for British goods, products and services. They respect brand Britain. For the UK to remain globally competitive it must position itself as a trading partner of choice in the region.

Membership of the bloc has potential to deliver new opportunities for British business across many different sectors. The CPTPP could enable UK businesses to make products for all different markets without the need to change processes, parts, suppliers or components. This would be a critical enabler of UK supply chains, allowing companies to import and export components more easily and making investments more competitive. A deal could free up data flows, the lifeblood of the modern economy, for UK business across the Pacific, cutting across the UK service sector.

There is also a chance—a tantalising prospect—that the deal might help UK-US trade. The US helped shape some of the provisions under this trading bloc and, although it is not a member, the decision to rejoin may still be up in the air. Could the Minister acknowledge whether this is the case?

Central to the success of this deal is to make sure that it works for business. It is key that negotiations are not rushed and that the necessary carve-outs are made to protect UK business interests. As president of the CBI, I was personally involved in the rollover of the EU bilateral trade deals of 66 countries; we played a crucial role to help that happen on time. We also played a major role in the Australia-UK free trade agreement, working alongside the UK and Dan Tehan, the Australian Trade Minister, who was the vice-president of the accession committee of the CPTPP, and George Brandis, the high commissioner I mentioned earlier. We also have the New Zealand deal, working with High Commissioner Bede Corry. Now, of course, we have just launched the formal negotiations of the India free trade agreement with the UK.

Businesses must have a seat at the table, particularly as the UK progresses towards more in-depth second phase negotiations with members bilaterally. Could the Minister assure us that business will be around the table? The CBI stands ready to help. The UK will need to think how it uses its existing bilateral deals with individual countries to facilitate the access. Dan Tehan of Australia has said very openly that he will help in every way to try to complete this by the end of this year.

This deal will contribute to the levelling-up agenda as well. For example, the east Midlands alone exports £3.1 billion of goods to these markets. Joining the agreement could further facilitate this trade and contribute to us closing the gap in regional disparities. But this will require supporting more businesses to export, particularly those that are new to it. To this extent the Government’s export strategy is welcome, but superstar exporters—that is, companies that export more than 10 products to more than 10 countries—make up 14% of our exporters. In Germany it is 40%.

The CPTPP is worth £8.4 trillion in GDP. It is a gateway to the Indo-Pacific region, which is going to account for the majority of global economic growth between 2019 and 2050. We are at the front of the queue. Let us make this happen very quickly. To conclude, I quote from George Brandis’s Birmingham speech again. Remember that the term has changed—it is no longer Asia-Pacific; we refer to the Indo-Pacific. George Brandis said in his conclusion:

“The future of the Indo-Pacific will impact all our futures. It will impact the future of Atlantic nations as well as Indo-Pacific Nations because increasingly it will become the fulcrum of world politics.”