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The UK has moved a step closer to joining a major Pacific regional trade bloc as it tries to forge closer trade links with the Asia-Pacific region after its exit from the European Union.
Earlier today, the 11 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, agreed to start negotiations for Britain’s entry into the regional free trade agreement.
Yasutoshi Nishimura, Japan’s minister in charge of TPP negotiations, told reporters that a virtual meeting of the TPP Commission agreed to allow the U.K. to begin the process to join.
Bloomberg calls it a “potential boost for the country’s trade following Brexit”, adding:
Yasutoshi Nishimura said the move would strengthen economic ties between the U.K. and Japan, as well as making the zone covered by the deal equal to the EU in terms of economic size. He spoke to reporters after hosting an online meeting of ministers and officials from the 11 countries who make up the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
“The commencement of an accession process with the United Kingdom and the potential expansion of the CPTPP will send a strong signal to our trading partners around the world of our commitment to support a free, fair, open, effective, inclusive and rules-based trading system,” the ministers said in a joint statement.
CPTPP consists of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam — and was created after president Donald Trump withdrew the US from the Trans-Pacific partnership.
Britain filed a request to join CPTPP at the start of February, saying it hoped to build deeper ties with emerging economies in the Pacific. At the time, International Trade Secretary Liz Truss said membership would mean lower tariffs for car manufacturers and whisky producers, and better access for services providers, boosting employment and prosperity.
As the UK’s trade in goods with EU countries fell by 23 per cent in the first quarter of the year, compared with pre-pandemic levels, there is pressure to strike trade deals elsewhere.
The CPTPP removes 95% of tariffs between its members, but does not create a single market or a customs union, and it does not seek wider political integration.
Becoming a member would accelerate the U.K.’s growth in export trade with faster-expanding Asian economies, according to Bloomberg Intelligence analyst Mike Dennis. The U.K. recorded a trade surplus with CPTPP countries in the first quarter of 2021, he added.
But while joining CPTPP would mean lower tariffs, concerns have been raised about the move.
Back in April, the UK Labour party warned that it could end up being a trade deal with China “by the back door”, as Beijing has signalled that it is seriously considering an application, which the UK might not be able to veto if it joined.
Shadow international trade secretary Emily Thornberry also warned that the UK could end up “as a rule-taker in the CPTPP rather than a rule-maker,” as New Zealand recently launched a public consultation on new accessions to the CPTPP, which said that new members will need to comply with the existing agreement.
The moves comes as the global economy tries to recover from the shock of the pandemic, with world manufacturing growth hitting an 11-year high last month.
That lifted recovery hopes, lifting world and European stock markets to record highs yesterday. The UK’s FTSE 100 reached a three-week high, led by commodity stocks.
In another boost, Australia’s economy has returned to its pre-pandemic size, after growing 1.8% over the first three months of the year and 1.1% over the past 12 months.
Markets have opened higher this morning, with the FTSE 100 up another 25 points or 0.35% at 7105 points.
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