Goodbye Europe, Hello Trans-Pacific Partnership?
The Brexit transition must conclude by December 2020, according to Michel Barnier – the EU official spearheading Brexit talks. The UK is not intent on sitting idly by while global trading partnerships are forged. Several informal discussions have been held about reinvigorating the seemingly moribund TPP (Trans-Pacific Partnership). After the UK exits the EU, it will likely look West and East for new trade partnerships. These include deals with Canada and the US, and Asian countries. The latter is particularly notable.
UK Looks East for New Trade Agreements
The Department for International Trade headed by Liam Fox is considering making the United Kingdom an official member of the TPP. This bold endeavour would effectively make Britain the first non-Asian and/or non-Pacific country to join the pact. In January 2017, President Donald J. Trump effectively removed the US from the TPP, rendering Barack Obama’s signature attempt at multinational trade policies null and void.
There are currently 11 members of the TPP, including Mexico, Australia, and Japan, all of whom agreed to reinvigorate the partnership with a new deal known as the Comprehensive & Progressive Agreement for Transpacific Partnership. Liam Fox has been hard at work attempting to win over Asian business agreements. Other high-ranking government officials such as Greg Hands have indicated that there are no restrictions on Britain’s potential trade deals. Given that there are no geographical limitations on the TPP, Britain is seriously considering expanding its sphere of influence deeper into Asia-Pacific.
When Will the Revised TPP Coming to Effect?
Before any of this can get underway, a Brexit deal would have to be finalized, and the TPP would have to be revitalized. As it stands, UK trade deals with the 11 countries in the TPP are rather limited. Most British trade takes place with European Union member countries and the United States. Consider that in 2016, the total value of all goods exported to Japan – the largest economy in the Trans Pacific Partnership – accounted for just 1.6% of UK exports. Viewed in totality, the value of trade for all 11 countries made up a smidgen less than 8% of UK exports for the year. The UK service exports to the US amounted to £16.6 billion, while exports to Japan amounted to just £1.7 billion in 2016.
It is unknown when the Trans-Pacific Partnership (TPP) will sign on to a new deal, given that there are concerns from Canada. The TPP was initially seen as a way to integrate countries in the region. Now it is being perceived as an agreement that can incorporate European countries across the board. In late 2017, UK officials were in discussions with New Zealand, Australia and other countries to join the TPP, and there appears to be a degree of excitement about having a G-7 country in the mix.
Liberals Nix the Idea
Not everybody in the UK is satisfied with the current proposals to join the 11-country trade agreement. Labour believes that the government should focus on restoring relations with the EU, and building bridges to the UK’s most important trading bloc. Liberal Democrat Tim Farron summed it up best when he said: ‘… these people want us to leave a market on our doorstep and join in a different, smaller one on the other side of the world. It’s all pie-in-the-sky thinking.’
What are your thoughts on Britain leaving the European Union and joining the Trans-Pacific Partnership? Will this be good or bad for international relations, UK influence, and the domestic economy?
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.