U.K. Signed CPTPP

• 03 Apr 2023

For Prelims: CPTPP, Brexit, FTA, Indo-Pacific.

For Mains: International Treaties & Agreements

Why in News?

Recently, the U.K. Signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Prime Minister of U.K cited the agreement's success as an example of "post-Brexit freedoms". The agreement will now need to be ratified by Westminster and each of the CPTPP countries.

What is CPTPP?

• About:
  • The CPTPP is a Free trade agreement (FTA) between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.
  • The CPTPP was signed by the 11 countries on 8 March 2018 in Santiago, Chile.

• Background:
  • In 2005, a trade agreement between a small group of Pacific Rim countries comprising Brunei, Chile, New Zealand, and Singapore led to the formation of Trans Pacific Partnership (TPP) consisting of 12 nation-states.
  • After the withdrawal of the US, the remaining eleven signatories, known as the TPP-11, continued talks and their efforts led to the formation of CPTPP.
• Significance:
  • CPTPP removes 99% of tariffs on goods and services, just like the original TPP did, all the member countries have agreed to cut down on wildlife trafficking. That helps elephants, rhinoceroses, and marine species the most.
  • It prevents environmental abuses, such as unsustainable logging and fishing. Countries that don't comply will face trade penalties.

Note: All 11 countries of CPTPP are also members of the Asia-Pacific Economic Cooperation (APEC).

What is Brexit?

• About:
  • Brexit refers to the U.K.'s decision to leave the European Union (EU). The country formally left the EU in January 2020, after a referendum in 2016.
• Impact of Brexit on the U.K.:
  • The impact of Brexit on the U.K. has been significant. Some of the impacts of Brexit include:
    • Changes in trade policies and tariffs with the EU and other countries.
    • Reduced access to the EU market for U.K. businesses.
    • Increased regulatory burden on U.K. businesses trading with the EU.

What are the Benefits of the CPTPP for the U.K.?

• More than 99% of British exports, including key markets such as cheese, cars, chocolate, machinery, gin, and whisky, will have zero tariffs.
• The deal is expected to add GBP 1.8 billion (USD 2.2 billion) annually to the U.K. economy in the long run, a modest boost of 0.08% to GDP.
• The CPTPP is a "gateway" to the Indo-Pacific region, which is expected to account for a majority (54%) of global economic growth in the future.
• As a CPTPP member, the U.K. will have a veto on whether China joins the treaty. U.K. firms will not need to establish a local office or be resident to provide services and will be able to operate on a par with firms in host countries.

What is India's stand on CPTPP?

• India did not join CPTPP as it seeks to place greater labor and environmental standards on its other partners and CPTPP draft includes narrowly detailed qualifications on standards for investment protection, provisions to protect the host state’s right to regulate, and the imposition of detailed transparency requirements.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Q. With reference to the ‘Trans-Pacific Partnership’, consider the following statements: (2016)

1. It is an agreement among all the Pacific Rim countries except China and Russia.
2. It is a strategic alliance for the purpose of maritime security only.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Ans: (d)

Source: TH