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London’s 2022 CPTPP accession hopes fade

Borderlex | 29 September 2022

London’s 2022 CPTPP accession hopes fade

by Chris Horseman

Hopes that the United Kingdom will complete its accession to the Comprehensive and Progressive Agreement on Trans-Pacific Partnership by the end of this year are fading, amid indications that the accession talks are progressing less smoothly than had initially been hoped.

The next major negotiating round, scheduled for the first week of October, is thought unlikely to deliver any real impetus towards the goal of wrapping up the talks by the end of December.

Negotiations are being hampered by a combination of factors. These include emerging uncertainties among the CPTPP members themselves as to exactly how to extend their existing arrangements to cover new applicants.

But the discussions thus far have also revealed problems with the scale of the market access offers which the UK has offered to member countries.

“There is general dissatisfaction with the UK’s offer on market access, especially around agricultural market access,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore.

“It’s seen as underwhelming – too many gaps, too many exceptions, and too long a time horizon [for phasing out tariffs],” she added.

Many CPTPP members also believe that the UK government has under-estimated the scale of the challenge of acceding to the 11-nation bloc.

“The British originally though that, as a G7 country, they’d simply be welcomed in,” said a source familiar with the talks.

“But that gloss has now come off. There’s a lot of pressure on the UK now – they have to get down to brass tacks.”

‘Serious problems’ with UK agriculture market access offer

The UK has invested a great deal of political capital in its drive to accede to the trans-Pacific trade bloc.

London has presented the accession bid as being emblematic of its desire to leave behind the EU’s sphere of trade influence, and to associate itself with the dynamic and open economies of the Asia-Pacific region.

But a feature of the CPTPP market access schedules is a commitment to eliminate tariffs on all but a handful of sensitive products. In some cases, tariff rate quotas are used as an interim mechanism for achieving a full phasing-out of tariffs.

The details of the UK’s market access offer to the CPTPP member countries remain confidential. But it is clear that on agriculture in particular, the UK offer has been viewed by the other participants as underwhelming.

Canada is said by one insider to have “a serious problem” with the UK’s current offer, with Mexico also putting pressure on London to go further.

UK walks political tightrope

The British government is very conscious of the political backlash which has followed its agreement to eliminate all tariffs on imports from Australia and New Zealand as part of the bilateral FTAs which it negotiated with those countries.

It would prefer not to be quite so generous in offering market access to other major regional agricultural exporters such as Canada, Mexico, Chile or Vietnam.

But CPTPP members have inevitably viewed the deals with Australia and New Zealand as benchmarks for their own market access agreements with the UK – and they will not readily settle for any deal which is substantially less ambitious.

Australia and New Zealand have both largely eliminated agricultural market access as a factor in the CPTPP negotiations by having done their own bilateral deals with the UK last year.

But the Canada and Mexico are currently negotiating revisions to their existing bilateral trade agreements with the UK, and the market access provisions of the UK’s CPTPP membership, in tandem.

A tactical weakness for the UK is that the country is seeking to agree terms for acceding to an existing agreement, rather than negotiating a new deal from scratch. This means that current members’ market access commitments are fixed and not up for discussion.

“It’s not a negotiation, it’s an accession. This is a one-sided process,” said Elms.

“The question is, what is the speed and intensity with which you [the UK] are going to give us things? You already know what we gave you – and that’s not changing.”

Fears over ‘dilution’ of existing CPTPP agriculture quotas

But as the negotiations have intensified, tensions have also become evident among the existing CPTPP members over the status of the existing TRQs within the trans-Pacific agreement.

Many of these quotas are open to all members of the bloc – and agricultural exporter countries are anxious that their existing benefits should not be undermined by a new member country joining the list of eligible suppliers.

For its part, the UK will be aiming to make use of TRQs for products like cheese and pigmeat especially, and it is seeking clarity on what tonnages are potentially available to UK exporters.

“Parties should increase quota and safeguard volumes to account for UK trade flows,” said a farm sector representative from one of the CPTPP members affected.

“New CPTPP parties shouldn’t result in the [originally] negotiated market access outcomes being diluted.”

The prospect of further market openings for sensitive agricultural products is not one which countries like Canada or Japan are relishing.

But CPTPP members have made it clear that, in their view, the onus is on the UK to resolve this dilemma by making a generous market access offer of its own.

Digital, state enterprises, competition – and Northern Ireland

Beyond agriculture, complex negotiations are also continuing in a number of other sectors covered by the CPTPP agreement, notably digital trade, state-owned enterprises and competition.

The Northern Ireland protocol is also causing problems in the negotiations.

The region is effectively part of the EU’s single market, and insiders say that UK negotiators are struggling to explain to CPTPP partners the exact terms on which goods which are imported into the UK on preferential terms could be sold on the Northern Irish market.

Precedent for future CPTPP accessions

The institutional robustness of the trans-Pacific bloc itself is being tested by the negotiations with the UK. CPTPP only came into being at the start of 2019, and it is yet to enlarge beyond its 11 founder members.

Underpinning the nervousness on the part of CPTPP members is a desire to ensure that the UK accession establishes good precedents for future accessions.

This is especially the case given that regional giant China and its neighbour Taiwan are currently next in the queue to join the bloc, along with Ecuador and Costa Rica

In addition, South Korea, Thailand and the Philippines have all expressed interest in joining.

“The CPTPP members wanted to have a model accession process with the UK – smooth, fast and efficient,” said Elms. “But if these talks go into next year, how long can you keep other people waiting?”

A further complicating factor is that the fact that three of the bloc’s 11 members – namely Chile, Malaysia and Brunei – have yet to ratify the agreement. This is despite the fact that they signed the original agreement, along with the other eight members, as far back as March 2018.

The negotiations are being conducted on the basis that the three ‘signatory’ countries are permitted to participate in the negotiations.But they have no powers to veto any country’s accession as long as they are not full members.

The governments of Malaysia and Chile are thus both taking urgent steps to complete CPTPP ratification this autumn, with the upcoming UK accession serving as a clear incentive to ensure that the two countries’ interests are protected.

Brunei is expected to act in tandem with Malaysia, given the close economic ties between the two countries.

The UK accession will be discussed in depth at a ‘summit’ meeting of ministers from the 11 countries in Singapore in mid-October.

The negotiations continue in the meantime, and a conclusion to the talks in mid-2023 is now seen as the most probable outcome.

But the timetable is viewed as depending primarily on whether, and at what point, the UK comes forward with the more generous market access proposal for which the CPTPP members are waiting.

 source: Borderlex