Let’s talk about CPTPP
As Britain begins to enact a global trade policy, it is important that we consider the implications of the Comprehensive and Progressive Trans-Pacific Partnership on domestic policy space, argues Robert Bates
Today is the fourth anniversary of the Brexit referendum. We've been through quite a bit since then: a crooked parliament, a couple of general elections, new political parties (with varying degrees of success), and a barrage of twitter conspiracy theories from the mind of Carole Cadwalladr. Yet despite all this, one fact has remained constant; leaving the European Union is a huge first step towards rejuvenating British democracy.
This does not mean, however, that come the end of the transition period, Brexiteers should simply bank this victory and retire to Ithaca. Improvement should be continually pushed for. Extradition treaties should be revisited and rebalanced, the ECHR should be given the same treatment as the ECJ and discarded, the utility of the Supreme Court assessed, the House of Lords overhauled, and electoral reform given a proper airing.
Amidst this milieu, it is important that the Comprehensive and Progressive Trans-Pacific Partnership, to which this government wishes to accede, is given appropriate scrutiny. A notable facet of the reaction to Liz Truss' announcement last week was the relative silence from many on the 'Leave' side of the Brexit argument. As the debate progresses, those with concerns about the implications for British policy freedom, must speak out.
It is right to note that the CPTPP spans a part of the world that is one of the most economically exciting. The Pacific's economy is immeasurably more important to Britain's future prosperity than the stagnant Eurozone, and many of its members are the ideal trading partners for a 'Global Britain'. But actually signing up to the deal itself may be a stretch too far. The UK has already agreed, or is negotiating, a trade deal with the largest members of CPTPP. The relative merits of subsuming ourselves into a larger entity may offer little when stacked against the costs.
For starters, the UK would not be 'negotiating' a trade deal in the same way we are currently negotiating with the United States or Japan. Instead, we would be joining a club with pre-written rules, over which we have had no say and that were written in a different global context. Indeed, similar to TTIP, we must not forget the closed-door nature of the talks and the smell of cronyism that accompanied them.
The deal's 'negative list' approach to services will bring significant pressure to bear on the UK government to undertake healthcare liberalisation. Whilst this is a feature of all trade discussions, the UK has a much stronger hand to play when conducting bilateral trade talks. The nature of a multilateral forum brings with it significant pressure to not 'opt-out' of certain sectors, and doing so would require the UK to make significant concessions elsewhere.
Rather than see the deal as it currently stands, we should seek to anticipate the future trajectory of it. Within its membership base are a variety of self-assertive cleavages: ASEAN member states, RCEP member states, Pacific Alliance member states, BRI beneficiaries, BRI-sceptics, and an array of positions towards the US. For many of the existing 11 members, the CPTPP is secondary to other trade considerations and as a result its final form will be shaped by those trade agreements of which Britain is not a member. The CPTPP's future undercurrents cannot be predicted at this stage. For instance, even in the midst of the Covid-19 crisis, there is a lot of noise about Chinese membership – a move that would completely mutate the bloc.
The Investor-State-Dispute- Settlement mechanism may be dismissively seen as the bogeyman for paranoid trade unions, but the fact of the matter is that, across the world, countries are rejecting treaties that include such provisions. They are an heirloom of a different, globalising era, that placed the concerns of corporations above all else. The most obvious manifestation of this are the instances of elected governments being hauled in front of courts to defend legislation in the face of agitated CEOs. Further still, the 'regulatory chill' that it can induce is an invisible infringement into policy space of which future governments may wish to make use.
Brazil, Indonesia, and many others have led the way in rejecting ISDS mechanisms. The renegotiation of International Investment Agreements is being undertaken apace and is seen as the future of investment treaties. An independent UK should be placing itself at the forefront of this trend, seeking to imbue its trade policy with the values that its future trade partners are keen on, and that will foster more significant investment flows in the long-run.
Throwing our weight behind CPTPP would be an unwavering commitment to the model of trade that it presents. It would forfeit the idea that so many Brexiteers found exciting, that a 'Global Britain' would use its clout in the world to actually help shape the rules of world trade.
Bilateralism and the series of committees, negotiating rounds, and technical interfaces between regulators that it mandates, are a stronger avenue through which to impress this influence. The regulation of financial services, biotech, and AI are just several areas where the UK has the capacity to work with like minded partners to establish international standards, rather than just fall in line behind someone else's.
Similarly, the non-committal approach to SMEs and e-commerce, should not be seen as best practice. Britain should strive for more in its FTAs. Language that goes beyond 'best endeavours' to help SMEs, and that includes stronger Chapters on e-commerce would not only be good for small business, but good for Britain's influence on global trade.
It is through bilateralism that smaller UK companies can benefit from free trade agreements, whilst the main benefactors of multilateral deals are the bigger players. The CPTPP's rules of origin provisions would reduce the opportunities for small manufacturers to partake in the supply chains of larger UK-based exporters. The reshoring of manufacturing capacity would not be as great because large companies would have less stringent restrictions on where they must source their component parts.
There are clearly other more significant discussions to be had at this point in time, but as we celebrate the anniversary of Brexit, let's consider whether joining CPTPP really is the best move. During the Brexit debate, it was correctly pointed out that 'no deal is better than a bad deal'. Given the UK cannot change the CPTPP, let's assess whether it is a good deal, or whether a sovereign United Kingdom can instead serve its interests more astutely through a bilateral trade policy.
