The CPTPP: Britain’s geopolitical strategy and beyond

The United Kingdom (UK) successfully signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to become a member on 16th July 2023. Once the ratification process is done, Britain will become the first new member of the agreement. 

There should be strong expectations of the UK among CPTPP members, especially Britain’s closest partners in the agreement, such as Australia, Canada and Japan. They likely expect Britain, which is the second largest economy after Japan among CPTPP countries and liberal economy that stands up for democratic values and the rule of law, to work together with them in protecting a free and open Indo-Pacific region.

For the UK, joining the CPTPP should be seen not just through an economic prism, but primarily as a geostrategic gain. In the Integrated Review of 2021, His Majesty’s (HM) Government set accession to the CPTPP as an important pillar of achieving its Indo-Pacific ‘tilt’. And yes, through the CPTPP, Britain will enhance its economic diplomacy in the region. But it is important to note that HM Government clarified its Indo-Pacific approach as maintaining a free and open region ‘where a regional balance of power ensures no single power dominates’. This approach is closely aligned with that of the UK’s major allies and partners in the region – notably the United States (US), Australia and Japan – and Britain’s further aligning of its geopolitical strategy with them will likely become the foundation of its position in the CPTPP.

With or without China? Conflicting interests for the UK

After the UK officially joins, the People’s Republic of China (PRC) is one of the first countries in the queue for consideration regarding membership. However, the contours of the UK’s Indo-Pacific strategy would infer that Britain would not be able to accept the PRC joining the agreement. Indeed, there is a paradox between the expected economic gains of the agreement, and its geostrategic significance.

HM Government expects that ‘the more CPTPP expands, the greater the benefits to the UK.’ This is because potential economic gains from joining are currently modest. The fundamental reason is that geographical proximity matters for trade. Second, the UK already has bilateral trade deals with nine of the CPTPP’s 11 members (Brunei and Malaysia are excluded here). And third, the UK’s major trade partners in the CPTPP – Japan, Canada, Singapore and Australia – account for almost 80% of its trade with all current CPTPP members. In this context, and when viewing the UK’s accession through a purely economic lens, the PRC’s membership would be beneficial for the UK. The PRC accounts for around 5.6% of the UK’s good exports, with all other current applicants accounting for 8.7% combined. However, it is unlikely the PRC will be able to meet the stringent requirements for membership, and as alluded to above, Chinese membership would not adhere to Britain’s Indo-Pacific strategy.

Recognising high hurdles for China

It is arguably too hard for the PRC to satisfy CPTPP accession requirements, which request each aspirant to accept ‘all of existing CPTPP rules’. The UK’s accession set a high standard, as it agreed to CPTPP rules with very limited exceptions. 

There are many challenging areas for the PRC to accept due to its socialist-market economy, such as rules on digital trade, state-owned enterprises (SOEs), labour rights, government procurement, and intellectual property right protections and enforcement. The current Chinese policy and regulatory regime are fundamentally different from the CPTPP rules in these areas. For example, the CPTPP’s digital trade chapter strictly prohibits data localisation requirements while Chinese data sovereignty policy sets data localisation requirements as a prerequisite to do business in the country. The SOEs chapter was made to discipline the PRC’s state-dominated economy and lack of transparency around its SOEs. 

Recognising the hurdles that the PRC would face, it would be wise for CPTPP members to strictly apply CPTPP accession rules based on the high standard that Britain’s accession has set.

Although some observe that the Chinese government tries to use accession to the CPTPP as political leverage for its domestic reforms, it seems unrealistic that the PRC will reform its economic system to accommodate CPTPP rules.

In addition to accepting all CPTPP rules, making high-level market access commitments, especially in the areas of services and investment, will be an additional hurdle for the PRC. CPTPP members would likely demand the PRC undergo a high degree of market liberalisation in accession negotiations. Given the PRC is maintaining or introducing protective measures in these areas, accepting a high degree of liberalisation requests seems unfeasible for the PRC.

Coherence and transparency are key for the accession process

Taiwan’s accession, which would suit the UK both geopolitically and economically, is fraught with political sensitivities related to the PRC. The fact that the PRC made its application just one day before Taiwan’s makes the accession process more complicated. In theory, the accession process of Taiwan can take place in parallel with that of the PRC (and others). If Taiwan could meet all requirements to become a member according to CPTPP rules, it could join the agreement regardless of whether the PRC is permitted to or not. But permitting Taiwan’s accession before the PRC seems to be politically difficult as the PRC has expressed a deep concern over Taiwan’s accession.

Recognising the hurdles that the PRC would face, it would be wise for CPTPP members to strictly apply CPTPP accession rules based on the high standard that Britain’s accession has set. The accession process should be coherent and transparent so that any country, including the PRC, cannot make complaints. As the first acceding country, the UK should demonstrate how strictly it protects and adheres to the CPTPP’s fundamental principles of market-oriented rules and free trade during the accession process in a constructive way.

The role of the UK as a strong supporter of free and open world trade order

The UK joining the CPTPP is consequential for the agreement. It shows that any country outside the Pacific Rim could join the agreement as long as it shares the CPTPP’s liberal economic norms and accepts accession requirements. Indeed, potential members include Costa Rica, Ecuador, Uruguay and Ukraine.

Although HM Government has a strong geostrategic intention of using the CPTPP to further its Indo-Pacific ‘tilt’, it should go beyond the Indo-Pacific in seeking long-term political goals. It is highly unlikely that the US rejoins the agreement in the foreseeable future. Whether the Biden administration retains its power or not, it is unlikely the US’s labour centric trade policy will change. 

The world is facing a volatile geopolitical landscape underpinned by the intensifying US-PRC rivalry, Russia’s war against Ukraine, the Israel-Hamas conflict and the PRC’s expansionism in the South China Sea, while climate challenges continue to mount. Governments, including CPTPP members, are shifting from the neo-liberal approach to the neo-realist approach, strengthening the ties between economic policy and security.

The CPTPP will face challenges of maintaining liberal economic norms if countries go further towards managed trade. The primary role of the UK in the CPTPP should be to maintain free and open trade in the Indo-Pacific and beyond to navigate the world of intensifying geopolitical competition.

Dr Minako Morita-Jaeger a Senior research fellow in International Trade of University of Sussex Business School