By Klavs Valters
2018 is shaping up to be a defining year for the relationship between the United Kingdom and the European Union. After making sufficient progress in the first phase of negotiations, talks will now begin on the trade arrangements after the UK leaves the EU. Even though the UK cannot agree on any trade arrangements outside of the EU before it leaves the trading bloc, it is already looking for potential trading partnerships around the globe. One of them is the Trans-Pacific Partnership (TPP).
The TPP (currently changed to Comprehensive and Progressive Agreement for Trans-Pacific Partnership) is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The agreement was originally signed in February 2016, but is currently renegotiated after the United States withdrew from the agreement. The UK joining would effectively help to revive it.
The agreement cuts over 18,000 tariffs between the member countries and represents around 40% of the world’s economic output. The aim of the deal is to develop economic ties between member countries, cut tariffs, and boost economic growth.
The UK has held informal talks to join the TPP in a bid to start trade agreements after it leaves the EU. The proposal, developed by UK Secretary of State for International Trade Liam Fox, would make the UK the first member of the TPP that does not border the Pacific Ocean. “With these kind of plurilateral relationships, there doesn’t have to be any geographical restriction”, Greg Hands, the UK’s Trade Minister, stated.
A spokeswoman from the Department for International Trade said: “We have set up 14 trade working groups across 21 countries to explore the best ways of progressing our trade and investment relationships across the world. It is early days, but as our trade policy minister has pointed out, we are not excluding future talks on plurilateral relationships.”
It is worth pointing out that the combined spending from the 11 TPP nations makes up less than 8% of the UK’s export market, with Japan (the largest economy within the TPP) taking around 1.6% of UK exports, while Germany alone accounts for 11%.
However, it is unlikely any deals will be agreed to before the TPP itself has been renegotiated and the UK formally leaves the EU.
Next: UK Trade vs The World
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