British trade minister Liam Fox has indicated the UK would be interested in joining the Trans-Pacific Partnership (TPP) trade pact after the country quits the European Union in March 2019.
Fox’s comments follow a report in the Financial Times that the UK had begun informal talks about joining the bloc in a bid to boost post-Brexit exports. The UK is not allowed to make trade deals before it formally leaves the EU.
Timeline for Trade ties
Trade minister Greg Hands told the newspaper there was no geographical restriction on Britain joining trade groups.
Nothing is excluded in all of this. With these kind of plurilateral relationships, there doesn’t have to be any geographical restriction.
However, In an interview with Reuters Fox said TPP needed to be finalised before the UK would be able to confirm its interest.
We don’t know what the success of the TPP is going to yet look like, because it isn’t yet negotiated. So it would be a little bit premature for us to be wanting to sign up to something that we’re not sure what the final details will look like.
However, we have said that we want to be an open outward looking country, and therefore it would be foolish for us to rule out any particular outcomes for the future. So we’ll keep an open mind, and we’ll want to talk to our global trading partners.
If the UK were to join the TPP it would be the only member from Europe, with the 11 others — Canada, Australia, Chile, New Zealand, Brunei, Singapore, Japan, Malaysia, Mexico, Peru, and Vietnam — all in the Americas, Asia, or Australasia and bordering the Pacific Ocean or the South China Sea.
These 11 counties account for more than $10tn in economic output, 13 percent of the global total, and include nearly 500m people.
When it comes to international trade however, the most important thing is to be geographically close the country or region you want to trade with — The so-called iron law of trade models says that trade between two countries approximately halves as distance between them doubles.
After US president Donald Trump decided to withdraw from the pact the bloc was renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the remaining members pressed on towards an agreement.
3 Things That Will Change the World Today
The 11 TPP members currently account for about eight percent of British exports, with Japan the biggest single destination for UK goods and services taking 1.6 percent of UK exports worth some $13.3bn per year.
Here’s how much the UK trades with the Trans Pacific-Partnership countries each year
In comparison, Germany takes 11 percent of UK exports.
The UK must also consider why the US chose to withdraw: questions over whether TPP could result in US jobs being “offshored” to lower-wage economies such as Vietnam.
In joining the TPP the UK would run into many of the issues that it sought to escape by leaving the EU — sovereignty over decisions on regulation and consumer protection which are then made by an unaccountable tribunal.