Why Britain’s Pacific trade deal is about more than just trade

Why Britain’s Pacific trade deal is about more than just trade
Опубликовано: Friday, 31 March 2023 05:02

UK seeks influence in a region increasingly dominated by China.

LONDON — The U.K.’s accession to an 11-strong Pacific trade pact is about much more than just whisky tariffs and beef imports. It’s about post-Brexit Britain’s place in a 21st century dominated by the rise of China.

Formally announced in the early hours of Friday morning, Britain’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is being touted as the U.K.’s biggest trade achievement since leaving the EU in January 2020.

But experts and government officials say the diplomatic benefits of U.K. membership are likely to far outweigh the economic upsides of joining the £9 trillion GDP Pacific trading bloc. London already has free-trade deals with nine of its 11 members, and the U.K. government’s own studies state CPTPP membership will not compensate for the post-Brexit fall in trade with its closest neighbor, the EU.

Indeed, the move can be seen as just the latest piece in Britain’s 21st century foreign policy jigsaw, as set out in the government’s 2021 Integrated Review which — along with its March 2023 refresh — emphasized that the world’s center of gravity was shifting toward the Indo-Pacific.

The strategy states that a “stronger and enduring” engagement with the Indo-Pacific region should become “a permanent pillar of the U.K.’s international policy.”

The shift in focus has already seen the U.K. become part of two major defense partnerships with Pacific allies — AUKUS, a three-way nuclear security alliance with the U.S. and Australia, and the Global Combat Air Programme to develop a sixth-generation fighter jet with Japan and Italy. Britain and France have meanwhile agreed to coordinate deployments of aircraft carriers in the Indo-Pacific to step up European maritime presence in the region.

Britain has also secured “dialogue partner” status with the 10-strong Association of Southeast Asian Nations (ASEAN); joined a U.S.-led group boosting economic ties with Pacific island nations; and created a new Singapore-based arm of its development finance agency, British International Investment.

The overarching aim is to increase British and Western influence in a region where a newly muscular China is working hard to assert itself.

Asked about CPTPP accession at a POLITICO event last month, Business and Trade Secretary Kemi Badenoch confirmed that in addition to economic benefits, the deal was about “making sure that many of those countries who are looking towards the future do it in a way that works well for the U.K. as opposed to, perhaps, China.”

“This government has already made significant steps in making this analysis a foreign policy reality,” a Foreign Office official said Thursday. “There will be more and more connections built ... with this dynamic and increasingly important part of the world.”

‘Hot potato’

A central benefit of Britain’s CPTPP membership will be the power to veto or support other countries’ applications to join the bloc, which require a unanimous decision.

Crucially, applications have already been submitted by both China and Taiwan, and will be assessed amid mounting concerns about peace in the region. Chinese President Xi Jinping has stressed the theme of war preparedness in four separate speeches this month, accusing Western countries of a policy of “encirclement and suppression” against China.

Trade ministers from New Zealand, Malaysia, Canada, Australia, Chile, Brunei and Japan following the signing of the rebranded 11-nation Pacific trade pact Comprehensive and Progressive Agreement for Trans-Pacific Partnership in 2018 | Claudio Reyes/AFP via Getty Images

Deciding on the Chinese and Taiwanese applications is “politically a real hot potato,” said George Magnus, an economist and associate at the University of Oxford’s China Centre. “Britain’s influence will matter quite a lot as people weigh that decision. I don’t think any of the countries will be politically comfortable to reject China and accept Taiwan.”

Indeed, one of the main reasons why leading CPTPP members such as Japan were so supportive of Britain’s accession was to find a way to deal with China’s application, said Sam Lowe, a trade expert and partner at Flint Global.

“Members were quite keen on the U.K. being first [to join], and there being a quite vigorous and rigorous accession process with minimum flexibility offered, to set a high benchmark that potential future members will have to clear — potentially one that is too high for China to clear,” he said.

Lowe predicts Britain will find a way either to block China’s application or to kick it into the long grass, offering cover to other CPTPP members such as Australia and Japan, which would have been “quite exposed” to Beijing’s retaliation, given their close proximity, had they taken the initiative.

In the longer term, the U.K. will likely be able to help shape the pact’s further expansion, with countries such as Colombia, Indonesia, the Philippines, South Korea and Thailand all considered potential Pacific bloc members.

Britain will have a unique chance among Western countries to do so, being the only European nation in the bloc and given the absence of other Pacific nations such as the U.S.

“We will be in a geographic table where the United States and China are absent, and where others like France can’t join that table as independent countries,” Magnus said, suggesting membership will give the U.K. both a “privileged position” and a role as a “useful intermediary.”

More broadly, CPTPP is also emerging as a “glimmer of light in trade diplomacy” following long-standing blockages at the World Trade Organization, which has been unable to replace retiring judges to its top appeal body after the Donald Trump-led U.S. administration blocked appointments, Magnus added.

“CPTPP is an important trade agreement in an important part of the world where it’s possible to use diplomacy and statecraft, which are two things the Brits are still quite good at,” he said.

“They can try to influence not just the direction of standards and protocols in international trade, but use it as a platform on which try to seek greater political influence in this crucial part of the world in which global supply chains are in flux.”

For a nation still searching for its role in a post-Brexit world, influence is a prized possession indeed.

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