CPTPP: Conclusion of Negotiations

Statement

The following Statement was made in the House of Commons on Monday 17 April.

I am delighted to announce that since we first launched consultations in 2018, and after nearly two years of talks, the UK has substantially concluded negotiations to accede to the CPTPP. We will become the first country to join since the original partnership was founded. I am also pleased to tell the House that we are delivering on our post-Brexit agenda for a modern, free-trading global Britain, and that this agreement represents the future of global trade. Our negotiators have spent 21 months working painstakingly, and often through the night, to secure the best deal for the UK, and that is what they have done. This is an outstanding deal for our country, giving access to a fast-growing economic bloc that will allow us to sell our goods and services without giving up control of our laws.

Before I continue my Statement, let me thank former Secretaries of State for International Trade. I thank my right honourable friend the Member for North Somerset (Dr Fox), who developed this strategy and without whom today would not have been possible. I thank my right honourable friend the Member for South West Norfolk (Elizabeth Truss), who first appointed me as Trade Secretary, and who launched the negotiations and ensured throughout her tenure that this was a deal that would be delivered. I thank the present Minister of State, Foreign, Commonwealth and Development Office, my right honourable friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), for her support and invaluable advice. I also thank my current and former Trade Ministers.

I am told that Their Excellencies the Japanese and Vietnamese ambassadors are with us today. It should not go without saying that both countries were extremely supportive of our accession. I thank the ambassadors and their countries, and the various negotiators and working groups, for everything that they did to help the UK to accede today.

The CPTPP will act as a gateway to the Indo-Pacific, one of the most dynamic and fastest-growing regions on Earth. The Indo-Pacific is expected to account for the majority of global growth by 2050. The CPTPP will grow nearly 40% faster than the EU over the next three decades, and membership of the bloc will enhance access to a market of more than 500 million consumers for the UK’s goods and services. That is why I described the CPTPP as representing the future of global trade. The brilliant terms that we have secured mean that British businesses will be able to target these dynamic economies, which will account for 15% of global GDP once the UK has joined. As the partnership grows, so will its role in shaping the rules of global trade. This alliance will help us to confront growing protectionism and unfair trading practices, putting us in a stronger position to withstand global shocks.

British businesses will enjoy new opportunities as part of the CPTPP. For instance, 99% of current UK goods exports to its members will be eligible for tariff-free trade, new tariff reductions with countries such as Mexico and Canada will boost export opportunities, and a new free trade deal with Malaysia will open up a £330 billion economy to the UK.

We will benefit from reduced red tape and simplified customs procedures across the bloc, and from modern rules of origin that offer British businesses new export opportunities and could help support UK efforts to diversify critical supply chains. We have all seen what can happen to supply chains when economic shocks happen. This global flexibility with like-minded partners will help British firms to become more resilient and protect economic security. For supply chains, this partnership is the future of global trade.

As a Minister who represents a rural constituency, I understand the concerns farmers may have about trade agreements because they have told me about them many times, so I know that Members representing agricultural communities will be delighted with the opportunities the CPTPP presents. I would like to put on record my thanks to the president of the National Farmers’ Union, Minette Batters, for recognising the opportunity to, as she puts it,

‘get more fantastic British food on plates overseas’.

As the world’s demand for meat and dairy changes, having better access to growing and dynamic economies in other parts of the globe will protect British farmers and food producers into the future.

Our farmers will benefit from increased market access on these products, including through tariff-free exports to Mexico for beef, pork and poultry and new zero-tariff access to Canada’s butter and cream market, which we did not have under our existing EU rollover agreement. Our cheesemakers will have new market access to additional shared quotas, equating to about 7.5 times the amount we currently export to Canada, and our distillers will benefit from the elimination of tariffs of around 80% on UK whisky to Malaysia within 10 years. So for food and drinks exports, the partnership represents the future of global trade.

The UK is already a services superpower. Our digital, financial and legal services, among many others, are the envy of the world. This world-leading agreement will help them to grow further still. In future, a British firm will be able to operate on a par with a Vietnamese one without setting up a Hanoi branch. British firms will face less red tape in doing trade and business travel will become smoother and easier. For the modern services and tech economy, the partnership represents the future of global trade.

As you will know, Madam Deputy Speaker, no trade agreement comes without a quid pro quo, but we have taken our time to get this deal right for the UK and we never compromise on food quality or animal welfare standards. Joining CPTPP is no different. We will not have to change our standards to join, including on chlorine- washed chicken and hormone-fed beef, as many detractors would like to have the British public believe. We have also made sure that our high environment and labour standards are protected, so the CPTPP agreement includes comprehensive chapters for environmental protections, anti-corruption and improving workers’ rights. We have secured appropriate protections for the UK producers, reducing import tariffs in a manner proportionate to the market access we have received, and maintaining protections where needed.

Membership will enable us to shape the future of the agreement, including its future membership, and it will increase our influence and that of the wider bloc in setting the rules of the global economy. The CPTPP shows how sovereign countries can uphold high standards without being subject to foreign court rulings or membership fees.

Parliament will rightly want ample opportunity to scrutinise this deal before ratification. My Department will follow the process set out in the Constitutional Reform and Governance Act 2010. Parliament will also have the opportunity to scrutinise any implementing legislation, as was the case with the recent Trade (Australia and New Zealand) Act 2023. The people of this country have voted for the future of global trade, not the past. On goods, on services, on supply chains, on growth and on rules-based trade without ceding sovereignty or losing control of our borders, this agreement lives up to that instruction. We are securing a place for the UK in the future of global trade, and I commend this Statement to the House.”

My Lords, the Government’s record on trade is quite dreadful. UK exports are projected to fall by 6.6% this year, which is over £51 billion lost to the UK economy according to the OBR. The failure to deliver the India trade deal or the US trade deal promised by the end of last year is a significant issue, so it is important to scrutinise what exactly Ministers have agreed to in these talks. The Government have a history of lauding trade deals one minute and then criticising them the next.

As we all know, CPTPP is made up of 11 countries—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—but we also know that other countries, including China, have applied to join or expressed an interest in doing so. We are all aware of the developing situation in relation to Taiwan. It is inconceivable that there would not be economic consequences should tensions continue to escalate in the way some fear they might. Can the Minister let the House know, as far as he is able today, whether our involvement with CPTPP might affect the UK’s response? What is the UK’s position on the application of China to be part of CPTPP?

The UK will be the first new member since the bloc was established in 2018, and the first European member. The Government say that CPTPP membership brings a range of benefits, including lowering trade barriers to a dynamic region. Accession also forms part of the Government’s Indo-Pacific tilt set out in the integrated review. However, the UK already has bilateral agreements with nine of the 11 CPTPP members.

Over the year to September 2022, the UK exported £60.6 billion of goods and services to the CPTPP countries, which is 7.8% of the UK total, and imported £50.2 billion, or 5.9%, so the economic benefits appear at this stage to be relatively small. In fact, the Government’s own assessment tells us that the long-run increase in GDP will be 0.08%. Can the Minister confirm that the figure of 0.08% is correct?

As part of the Spring Budget, the OBR forecast that, in 2023, UK exports are set to fall by 6.6%. That is a hit of over £51 billion to the UK economy. Can the Minister explain why this has happened? The Prime Minister wants us all to be better at maths, so can the Minister lead by example and tell us what proportion of that loss he thinks this deal is going to replace?

My Lords, I thank the Minister for being approachable and proactive in communicating. I also thank his office for its openness and willingness to engage. I am sure that will continue, so if he could indicate what the timeframe will be with regard to the legal text being ready, and when we expect the treaty ratification process to commence, that would be enormously helpful.

These Benches believe passionately in free, fair, open and sustainable trade, so we welcome any reductions in tariffs for our exporters and moves towards reducing non-tariff barriers in new markets. As the International Agreements Committee and others have remarked, this will be the first agreement the UK enters into in which we will knowingly increase net emissions. What is the update from the Government with regard to the climate component of this accession? The Government do not provide much clear information with regard to emissions.

As the noble Baroness said, the UK already has trade agreements in place with most CPTPP members. This agreement absorbs the new ones that the UK has signed with Japan, Australia and New Zealand. Are there carve- outs in this agreement that we will be able to understand clearly when we receive the text?

With regard to the omissions in the Australia and New Zealand agreements on protecting geographical indicated foods, for those agreements, UK GI foods—some of the most cherished brands and produce in this country—will be protected only if Australia and New Zealand sign an EU trade agreement so we can protect them through the TCA. What is the protection for UK geographical indicated produce?

The Trade Secretary was getting into a bit of a tangle over the issue of modelling and the figures on Monday, so it is worth reminding the House that the Government’s scoping paper stated that the net benefit to the UK over 15 years of accession would be a mere £120 million per year to the UK economy. The trade writer for the FT said that, in decibel terms, this was

I thank the noble Lord, Lord Purvis, and the noble Baroness, Lady Chapman, for their questions and comments. I am only sad that I have to inject an element of enthusiasm into this Chamber for what is one of the greatest trade deals this country has struck in many decades, probably in my short lifetime. We have joined a £9 trillion group and there is no common army, there is no flag, there is no currency; there is only a common group of nations, liberal-minded in their economic outlook, which want to work together for mutual recognition, not for harmonisation. I will quote, if I may, William Seward—Abraham Lincoln’s Secretary of State, if noble Lords are not sure who he was—who said that

“the Pacific Ocean, its shores, its islands, and the vast regions beyond, will become the chief theatre of events in the World’s great Hereafter”.

I am extremely proud of the work that the Secretary of State and our department have done. I thank her, our chief negotiator Crawford Falconer and Graham Zebedee for the incredible number of hours they put in, and the previous Secretaries of State, who embarked upon this post-Brexit vision of Britain, to turn what could be called “Ocean’s 11” into “Ocean’s 12” with our accession, I hope, over the coming year.

I also thank the businesses that have participated, which will see the benefits of being able to export their goods more easily to these key countries, where the rules of origin benefits will be significant in terms of managing supply chains; where business mobility will be written into law; and where there will be protections for our industries and the agricultural community in this country, which will allow them access to markets that previously they were unable to access. These now include our free trade opportunities with Malaysia, where we did not have a comprehensive trade deal. We have the opportunity over the coming year or so as accession takes place to have a full trade deal with this nation that has a GDP of just under $400 billion. Vietnam, one of the countries of the CPTPP, is forecast to grow faster than any other major country on earth, I read today, between now and 2050. I was grateful to the noble Lord, Lord Purvis, for his statistical analysis.

The FT did.

I am glad that the noble Lord was quoting the FT. I am happy to discuss this further, but it is important that we have an impact assessment of all our FTAs and that we have a proper discussion in this House about the review of trade agreements. So I am comfortable with continuing my personal commitment—or whatever the expression should be—to what we term the “Grimstone principles”, which noble Lords will be aware of. These give adequate time for committees and so on in this House to make sure that they have proper scrutiny. I am comfortable with confirming that, and I hope it is welcomed by the House. I very much look forward to having a full and frank debate on the points to ensure that we have indeed signed up to a deal that this House, this Government and this country support. It will bring benefits to us and the other nations of the CPTPP.

My Lords, the Minister is obviously younger than I thought, because he does not remember the great agreement we signed when we joined the European Union in 1973. But I am delighted that he reinforced that the Grimstone principles will be adhered to and that we will have months, rather than days, to scrutinise this agreement. On behalf of the International Agreements Committee, I thank him for that.

I want to raise the question he mentioned of standards, particularly food standards, which are of enormous importance to consumers. Not only are they important in themselves, but any divergence of them from the rules that we keep for importing or exporting food to and from the European Union would be really difficult for manufacturers and importers. Can the Minister reassure us that nothing in any change to standards will impact either on our consumers or, indeed, on our ability to trade with our near neighbours in the European Union?

I am grateful to the noble Baroness for her comments and for her continued support, through the process of scrutiny, of this very important treaty. I look forward to working with her and her committee’s members closely over the coming months. On food standards, it is very important for me to repeat my point that nothing in the CPTPP lowers our food standards. All food and drink products imported into the UK will have to meet the same standards on the day before the CPTPP comes into force as they will the day after. The whole point about this is that we control our borders and the standards of goods and services sold to our consumers.

I too can quote from people who have been observing the situation. In a statement published on the National Farmers’ Union website, its president, Minette Batters, was pleased that the Government

“continues to maintain its commitment to our food safety standards”.

Questions were raised as to whether the CPTPP will lead to exports of food at lower standards, such as hormone-fed beef and chlorinated chicken. No: again, nothing in this treaty lowers our food standards. As I say, the standards we have the day before this treaty comes into force and the day after are exactly the same.

My Lords, the Minister asked for a bit more enthusiasm for the CPTPP. As one who has spoken in debates in this House and in Grand Committee in favour of the agreement that has now been concluded, I do not think I qualify as lacking enthusiasm, but does the Minister not recognise that you get more enthusiasm by quoting figures that are valid, reliable and solid? For example, he quoted trade with Vietnam. That is very valuable indeed, but we have a free trade area agreement with Vietnam already, so can he say what CPTPP membership will add to what we already have? When he talked about trillions of trade in that area, that is of course true, but those are not all benefits to the United Kingdom. Enthusiasm will come if there is solid reason for it.

On China, will he answer two questions? At what point in time does our view on an agreement between the CPTPP and China—and indeed Taiwan; both have applied —become valid? At what point do we have an equal say? Presumably not now, because we are not yet a CPTPP member. Presumably not just when we ratify it—will all members have to ratify it before we have a say in China’s relationship? It would be really helpful to have this; I asked the question in earlier debates and I am sorry to say that his predecessor never wished to reply to it.

I am grateful to the noble Lord for raising these points. He asks what the benefits are. As I have stated, the free trade agreement with Malaysia is in itself a worthy goal. We in this Chamber would be delighted—and I as a Minister, and the Department for Business and Trade, would be very comfortable—if all we had was a free trade agreement with Malaysia, where there are tariffs of up to 80% on some of the spirits we export. It is one of the largest consumers of Scotch whisky in Asia.

Secondarily, and more importantly, he mentioned Vietnam. The tariffs we have under our current agreements with Vietnam, on exports of pork, chocolate, engines and medicines, for example, are going to end far more quickly, so there is a speeding up of the process: if we already have a parallel agreement there is, in many instances, a speeding up of our access to those markets. It also highlights the importance of other areas, such as professional qualification recognition, which is so important; how services function; and the very important rules of origin. For all of us who believe in a renewed UK automotive sector, it is exactly these broad rules of origin that will allow us to make a success of this trading region.

The final point, which is often missed because we rightly look at the detail and the statistics, is that there are powerful personal, emotional and philosophical elements to joining this relationship. It gives us great sway over the future of global trade. It makes us relevant in a core area, in terms of our long-term national defence. It brings us closer together with other nations and it acts as a beacon to our exporters in this country—frankly, we could do with more of the companies in this great nation of ours exporting. I look forward to the opportunity this debate brings to give us a truly world view, rather than one that focuses simply on our locality, and put fire in the heart of our nation’s exporters to take our products and services to the rest of the world.

I congratulate and thank my noble friend the Minister for enlivening this Eeyore-ish mood with some Tigger-ish enthusiasm. The benefits of CPTPP seem to be obvious to the lengthy list of countries which have formally applied for or are mulling membership—a list which includes Thailand, Taiwan, South Korea, the Philippines, Costa Rica, Ecuador, Colombia and Uruguay. Of course, I understand that my noble friend is bound by diplomatic protocol, but will he take this opportunity to express some optimism about the prospect of the United States joining that list? CPTPP was to a large degree negotiated not just by senior members of this Administration but by President Biden himself. American accession to that pact would allow an improvement in the terms of trade between our countries, bound together as we already are by language, law, custom, kinship, habit and history.

I am always grateful to my noble friend for his eloquence. He is a very difficult act to follow, even though his question is so true to my heart. I am afraid I will not be drawn into suggesting who should potentially be admitted into the CPTPP because we are not yet members, but as I said, I am delighted that this entire organisation acts as beacon of free trade around the world. We want more countries to see the world through the lens of us and our aligned partners. I very much support, conceptually, many of my noble friend’s comments and I thank him for his support in this House and for continually making sure that the torch of free trade is held high in this place.

My Lords, the Minister complained earlier of having been insufficiently appreciated for this Statement, but I am more than happy to congratulate him for including in his answer the comments of one of Abraham Lincoln’s most distinguished Cabinet members.

I want to ask a brief question about Vietnam which has, in part, been asked already by the noble Lord opposite. The Statement refers to Vietnam particularly with regard to legal and other services. Can the Minister explain in more detail what else the Government are expecting to get out of enhanced arrangements and trade with Vietnam, in addition to the arrangement we already have?

I am grateful to the noble Viscount. I was not asking for praise for myself or enthusiasm for my own actions, but enthusiasm for the actions of the Secretary of State, the department and this Government in pursuing this noble free-trade policy, which will ultimately enrich us all and make us safer.

The noble Viscount asks very sensible questions about the specificity of our relationship with Vietnam regarding the CPTPP. As I have said, the CPTPP contains a large number of chapters that will allow us more effectively to achieve market access for our goods, and with greater haste. In my view, that is in itself a very positive point. I have touched on some of the other aspects that apply broadly to the CPTPP, and I am happy to repeat the statistic I was sent this morning, although I cannot guarantee its legitimacy. Maybe I should declare an interest, to some extent: I have personal financial shareholdings in companies that invest in these countries, although I am not involved in them directly, as noble Lords can imagine. Vietnam is forecast to grow faster than any major country on earth between now and 2050. I would have thought any arrangement that allows us access to a market of that dynamic nature must be a positive for this country.

If we consider our long-term security and the importance of diversifying our supply chain and looking at how our supplying countries interact with us, I cannot think of any more powerful ally than Vietnam in this instance. I look forward to visiting that nation and seeing if we can encourage investment from there into the UK.

My Lords, I have an interest to declare, in that my noble friend the Minister is actually my son-in-law. I have been advised that, on that basis, I can call him my noble kinsman. I am not sure that he actually is my noble kinsman but on the other hand, it is rather useful shorthand for declaring my interest when getting up to ask him a question. First, I congratulate my noble kinsman on the role he has played in achieving our signing of this treaty, which is going to make a massive difference. May I ask about the rather minimal increase to trade of 0.08%? I just wonder what assumptions were made when this forecast was produced. Does my noble friend recognise that many recent economic forecasts have applied on the basis of “garbage in, garbage out”?

I thank my noble kinsman for his intervention; this is the first time we have spoken in this way. I asked the House of Lords Library whether there were any other pairings of son-in-law and father-in-law, and I have not received a response; maybe the Library was too alarmed by our own prospects. But my noble kinsman raises a good point about the statistical analysis of the value of this trade deal to the UK. I wish to avoid getting drawn into complex statistical discussions in this important but short opening debate, but I am happy to do so in the future, and there will be further impact assessments.

It is difficult to forecast the ramifications of a trade arrangement. In fact, what has been produced is not a forecast; it is a static model. It is not for me to lecture Peers in this House on how that functions but as the name implies, it is a static model rather than a positive forecast of how trade can be increased on account of this deal. All I will say is that New Zealand signed a free trade deal with China, and its model projected $3 billion a year of additional trade activity; I think within five years, it was over $30 billion a year. So it is not simply a question of looking at one static model; we must look at a more effective impact assessment in the future and make our own forecasts. As I say, it is not simply about trade data; it is also about the influence we will have in this region and the philosophical endeavour we embark on to encourage free trade around the world.

The Minister has been clear that he is not going to express a view on particular countries joining, but will he at least be clear that the Government will view Taiwan’s application as a valid one not subject to any veto from China?

I thank the noble Lord for his point, and I thank all noble Lords who have raised similar questions about countries potentially joining the CPTPP. As he will understand, it would be totally inappropriate for me to comment on that, since we have not even joined. I say again that I encourage all countries that fulfil the liberal free trade obligations and criteria to look to the CPTPP as a beacon of free trade and economic prosperity. However, I would not like to comment at this stage.

The Minister has reeled off some really impressive growth figures, and I am sure he would acknowledge that one of the main drivers of that growth is the proximity of many of those countries to China. I would like him to comment on the observation that with or without China’s accession to this treaty, our accession to it subtly changes, whether implicitly or explicitly, our relationship with China. Also, what advice is his department giving to businesses when they are sourcing large proportions of their supply chain in China?

I am grateful to the noble Lord, Lord Fox, for his interventions. There may be some confusion; there is not a preclusion of doing business with China now that we are acceding to join the CPTPP. This is an enhanced trade agreement that will allow us, as my namesake Prime Minister said, to have our cake and eat it in the relationships that we can have with all Asian countries. As for the advice we are giving to businesses, the Department for Business and Trade employs many hundreds of people around the world and in this country, as well as many hundreds of export champions, to encourage businesses to export to these countries. There is no length to which we should not go in order to assist our businesses and to signpost them. The very fact that we are having this debate on this important free trade accession will, I hope, raise the salience of exporting, as I have mentioned in earlier comments. I do not necessarily see enough businesses in this country taking the risk, challenge or opportunity of exporting. I hope that, if we raise the salience of exporting, that in itself will help, as people see the opportunities that are presented to them.

My Lords, my understanding is that this agreement will lead to the removal of all tariffs on Malaysian palm oil. Can the Minister confirm that and explain how that is compatible with the UK’s COP 26, and indeed COP 15, obligations to reverse forest loss and degradation? Why have the Government not gone towards an approach, as happened with EFTA and Indonesia, where improved market access is tied to sustainability and improved environmental conditions?

I am grateful to the noble Baroness for raising that point. It is clearly important to raise palm oil, and I am sure it will come up in later debates. However, I believe—I am happy to write to the noble Baroness to confirm—from memory that sustainable palm oil imports into this country have risen from about 16% in 2010 to nearly 80% now. The reforestation of Malaysia and its pledges to ensure that it runs sustainable palm oil production have been very much wrought into the discussions we have had with it. All members of the CPTPP are parties to the Paris climate accord, and there is an environmental chapter.

In other areas which were covered earlier in this debate by noble Lords, such as animal welfare, we would like to think that we have actually informed the debate, particularly with countries such as New Zealand and Australia. In both those countries, we have now seen whole new swathes of legislation around animal rights that may even bring their standards to a level higher than our own. That is the sort of concept around the engagement of these treaty negotiations that yields common benefit for all.

My Lords, I share the enthusiasm of the Minister for trying to replace some of the exports lost through Brexit, and I listened to what he said about static targets. However, the Minister for Trade, Kemi Badenoch, said she could not stand the estimate of 0.08% because it was based on “stale” figures from 2014. If that is true, could the Minister explain why his department is using figures that are 10 years old?

I am very grateful to the noble Baroness for raising this point. Clearly, there will be a lot of discussion around how to measure, if we can, the benefits of a free trade agreement. As I believe I mentioned—I apologise for not being clear enough—these figures are static modelling figures rather than forecasts, so they rely on significant quantities of historic data. It is often a difficult position to be a government Minister at the Dispatch Box when you are reliant entirely upon government figures which do not necessarily chime with the mood music. However, it is important to look at all the different statistics that will give us the information we need to have a sensible debate. This is not a forecast; this is a static model. The forecast, I believe, will be extremely positive, as will the impact assessments. I reiterate again: the experience of New Zealand in simply one of its trade deals was 10 times greater than any model that it had created. That is the sort of statistical analysis I look forward to seeing.