What is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)? What impact will Britain joining the CPTPP have?

Ministers claim the arrangement is a boost for the economy, but experts aren’t so sure.

Britain has signed up to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an arrangement Rishi Sunak has claimed will deliver a £1.8 billion boost to the economy.

Privately however, ministers are not as optimistic about the agreement. The business secretary Kemi Badenoch admitted the UK’s benefits depend how businesses "utilise the agreement".But what is the CPTPP and what does it mean?

What is the CPTPP?

Business Secretary Kemi Badenoch during a visit to Auckland for the signing of membership to CPTPP. Picture: Zahn Trotter/Department for Business & Trade/PA Wire

The CPTPP is a free-trade agreement between 11 countries around the Pacific Rim: Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan. Its members account for about 13 per cent of the world's income and the UK has become the first European country to join.

What does it do?

Membership of the CPTPP relaxes restrictions on trade between members and slashes tariffs on goods, and allows greater access to each other’s markets. Some areas are protected, such as as Japan's rice farming industry, but generally it makes it easier to trade within the bloc.

It also eases the “rules of origin”, meaning only 70 per cent of components need to come from participating countries, reducing the cost of exporting UK items such as machinery or medicines.

Membership also means UK companies get the same treatment as domestic firms when they put money into projects in another member state.

However, unlike the European Union, the CPTPP is neither a single market nor a customs union, so countries are not required to have identical regulations and standards.

Why has Britain joined and what impact will it have?

The UK Government hopes that by joining the group, UK exports will be boosted by cutting tariffs on goods such as dairy and meat products, cars, gin and whisky.

However, the UK already had deals with most of the countries in the CPTPP, with just Brunei and Malaysia the countries it did not have an agreement with. Therefore even the UK Government’s own analysis predicts a boost of just 0.08 per cent to GDP over the next ten years.

To put this into perspective, the independent forecasters think Brexit has reduced the UK’s growth by 4 per cent.

What does the UK Government say?

Ms Badenoch has admitted the agreement will not immediately deliver a big boost to the economy, insisting it was for businesses to make the most of it.

Dismissing the Government’s own forecasters’ predictions, she claimed it was “a scoping assessment”, and “a very broad brush sort of static modelling”.

Ms Badenoch added: “If we don’t use it, then it’ll become a self-fulfilling prophecy – this is a forecast that is only as good as the way that we utilise it. One of the things that we need to remember is that there are 11 countries in there who are making up about 500 million people.

“That’s so, so much potential, that’s where the middle class is coming from.

“You look at the countries that are queuing up – the US was going to join until they had a change of administration. They’re not doing free trade agreements any more, but we are. This is global Britain, the world is our oyster, we’re not isolated, we’re not insular.”