Remainers complain that the CPTPP is no substitute for trade losses caused by Brexit. They are helped in this by doubtful forecasts – doubtful because of their views on the prospects for increased growth, given their favourite forecasters doubtful track records. As Oscar Wilde said, “The truth is seldom pure and never simple.”
The UK Office for Budget Responsibility (OBR) has forecast that joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) would add only 0.08% to the UK’s GDP over the next decade, which is scarcely worth bothering with, especially when compared to its previous estimate that leaving the EU will cost us 4%. Europhiles have gleefully leapt on these figures but they cannot be trusted – the OBR is often asked to provide forecasts for things it doesn’t have the tools to judge. The IMF is no better: in the period 2016-22 it made 28 predictions for the UK economy of which 25 proved too pessimistic when compared with actual outcomes.
Various UK governments spent a decade applying to join the Common Market, their main aim being to catch a ride onto a faster growth path. There was debate about the other benefits too and plenty of opposition to those before membership was granted in 1973. Fifty years on and the Government needs another ride to escape the economic doldrums so has hitched itself to the CPTPP.
However, the Pact doesn’t offer the same side dishes as the EU. Whilst trashing the prospects of growth on the new path, are Remainers in truth bemoaning the loss of other delights on the EU menu? Are they grieving for the less tangible, or quantifiable ‘benefits’? They have always focused their arguments and campaigns on the negative economic effects of Brexit yet the elusive search for peace in a long-troubled Continent has been shattered again, with global consequences. OK, Russia and Ukraine are not (yet) within its realm but its response has been hesitant compared to Britain’s, and of course the US’s. Cooperation does not require political integration and no other trade block demands uniform regulation; mutual recognition agreements (MRAs) are deemed sufficient. But we can still ban hormone-injected beef from Canada.
The 0.08% figure may partly reflect that the UK already had trade agreements with nine of the eleven CPTPP members but there’s a difference in that the zero tariffs are cumulative – all members’ content are exempt from tariffs.
Clothing exports to the EU have dropped considerably since Brexit because ‘rules of origin’ ban products with more than a certain level of content from outside either party, such as Bangladesh. Oil exports to Europe have also dropped a lot but that is due to diminishing production rather than Brexit. Vehicle exports too have fallen, partly because of chip shortages, which affect many countries. (Note that German car exports to China, hitherto its largest export market, are falling as purchasers choose more local products.) Other categories are doing OK or have increased since Brexit so the effect of leaving is actually hard to unpick from several likely causes.
The UK has a (relatively) free trade agreement with the EU, except in services, its main strength. These services include legal, accountancy, insurance, consultancy and others; they already provide Britain with a trade surplus with its new partners, partly because many of them share our language, common law and accountancy standards.
CPTPP Shares of UK Trade with the World, 2019
The Pact is likely to add lots of other members: South Korea has applied, so has China (under present, political circumstances that could take a while), maybe the US will too (it withdrew under Trump’s ‘America First’ approach but its NAFTA partners are both in already) – and how about India? Further applicants include Ecuador, Costa Rica, Uruguay, the Philippines and Taiwan.
Despite its name the Pact doesn’t exclude countries with no Pacific shores, like Britain, so could become truly global (the Comprehensive and Progressive Global Partnership – CPGP?) while the EU struggles with adding Turkey or Russia (let alone Ukraine) to cover most of Europe. Perhaps the EU should join the Pact, though that might weaken its protective trade policies.
The CPTPP contains countries with small to medium economies that are growing comparatively well and, importantly, growing demographically. Japan and the UK are rather different but the largest EU economies (and some of the rest) are also not doing too well, on both counts. The future seems more positive for the CPTPP than the EU but of course economic forecasts are notoriously unreliable, as proven by the IMF, OBR, etc.