By Zhang Jingwei Source: Global Times Published: 2018-1-31
As it struggles to prepare for Brexit, the UK is reportedly angling to join the smaller version of the Trans-Pacific Partnership Agreement (TPP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
According to the Financial Times, Britain has conducted informal talks on joining the trade pact. However, its membership will inevitably have to wait until after the TPP has completed its agreed revision and until the relationship between the UK and the EU is settled after Brexit. The UK is still a member of the EU, so it can`t make any trade decisions that violate the "sovereignty" of the entire EU community.
This does not prevent the UK from negotiating with the relevant countries in the CPTPP in advance. Liam Fox, the UK trade minister, has apparently held informal talks with CPTPP member countries such as Australia and New Zealand. As Commonwealth countries, Australia and New Zealand can help the UK to understand the procedure to enter the CPTPP.
However, there are other obstacles for Britain in joining the CPTPP. First, as the UK is not located in the Asia-Pacific region, will the CPTPP have to change its name again? And this time, what will the "comprehensive and progressive" TPP change into?
Second, the 11 member states of the CPTPP actually yearn for the US to come back to the fold so that the pact can really be "comprehensive and progressive." Because of the departure of the US, the weighting of the TPP has shrunk dramatically, dropping from 40 percent of the global economy to 15 percent. The addition of the UK would improve its strength, but by nowhere near the same amount as the US.
Third, the CPTPP, which is dominated and mainly organized by Japan, reached a framework agreement in November. But each member country still needs the approval of its own legislative body, and considering the initial reluctance of Canada, its final participation is also uncertain.
Moreover, if Britain joins, there will be four major trading nations with British cultural traditions - the UK, Canada, Australia and New Zealand - which will be a challenge to Japan`s dominance. Therefore, the UK may not necessarily be welcomed by Japan.
As part of its membership of the TPP, the US had to make some major concessions, and this is why President Donald Trump quit the pact, as he thought it wasn`t a good deal for the US. Japan also had to make concessions in areas such as agriculture and automobiles, so that other member states would join the pact.
Although the UK is less aggressive than it used to be, its economic strength would be second only to that of Japan in the CPTPP. If the UK were to join, it would also have to make trade concessions and that does not appear likely at the moment.
The political situation in the UK has become uncertain because of Brexit. All parties are claiming to represent British interests and denouncing their political opponents. The UK`s participation in the CPTPP does not seem to be about creating a broader trade circle - it seems to be a way of dealing with anxiety about Brexit. Due to its separation from the EU, Britain hopes to make up for the sense of isolation by creating a new trade circle.
In addition, Britain wants to boost bilateral and multilateral trade with other major economies, and it is ready to establish closer trade ties with countries such as China, the US and India.
It is understandable that as it prepares to leave the EU, Britain is eager to find a new open trade window in the global market. But the Brexit negotiations must come first, and settling the future trade relationship with the EU is the top priority for the UK at the moment.
Instead of accepting an arrangement similar to that between Canada and the EU - the Comprehensive Economic and Trade Agreement (CETA) framework, which was finalized by Canada and the EU last year - the government of Prime Minister Theresa May will aim to protect Britain`s status as the leading financial center in Europe.
However, the negotiations between Britain and the EU are not symmetrical. For instance, in December 2017, Japan and the EU reached an agreement in their economic partnership agreement (EPA) negotiations. Even if Britain joins the CPTPP, it can not contend with the free trade mechanism between the EU and Japan.
From this perspective, joining the CPTPP appears to reflect the anxiety of the UK as it leaves the EU, and it may use it as a bargaining chip with the EU to gain more trade benefits from the Brexit negotiations.
The author is a visiting fellow of Chongyang Institute for Financial Studies at Renmin University of China.