Carney was right that ‘middle powers’ need to forge stronger bonds – it’s time to aggressively expand the CPTPP

(The Canadian Press / Alamy)

Greg Hands

@GregHands

One of my first acts as trade minister in 2016 was, under Liam Fox’s leadership, to start our interest in joining CPTPP, as a good way of taking advantage of new opportunities after the EU referendum.

I write this not to relive past glories, but to appeal to the Starmer government, and to the 11 other members of CPTPP, that we must move quickly to expand the agreement, faced as we are with rapidly changing geopolitical realities.

CPTPP is a near-perfect trade agreement for the UK. The 12 countries, led by Japan and the UK, represent around 15 per cent of global GDP. It removes more than 99 per cent of tariffs between the 12 members. It has very liberal rules of origin, which is ideal for a medium to large-sized trade power like the United Kingdom, which depends on global supply chains. With liberal rules of origin, more of this supply chain counts as UK content for the purpose of trade rules. For example, an electric car made in the UK, with a battery made in Japan and tyres made from Malaysian rubber, can be sold as it is to Canada, and the product all counts as UK content. It is ideal for economies which might not in practice be able to source domestically all their needs, like the US, the EU or China might.

The UK was the first new country to join CPTPP, in 2024. But no country has joined since. Costa Rica and Uruguay are in negotiations, but neither of these is going to move the dial on world trade. We really need some of the other large Asian economies to join, all of which have expressed an interest, at one stage or another. These include Korea, Indonesia, Thailand, Philippines, and Taiwan. If these five alone joined, the GDP power of CPTPP would increase a further five per cent. All these economies are fast-growing. We could and should also welcome Ukraine to the bloc, which has also applied.

But the accession process is terribly slow. It is a major disappointment that no further country has joined the agreement since I was in Peru in May 2024. The negotiations with Costa Rica, which is already an OECD country and very nimble when it comes to word trade, started in October 2024, and these are already too long. I sense that the current government wants the agreement to expand, but it will need impetus from the likes of Japan, the UK, Canada and Australia for it to happen. The UK is ideally placed to give that push.

Many of us were struck by Mark Carney’s speech in Davos last month about the role of the “middle powers” in the world. “The question for middle powers like Canada is not whether to adapt to the new reality – we must,” he said. “The question is whether we adapt by simply building higher walls, or whether we can do something more ambitious.”

Carney could just have easily been speaking for the United Kingdom. Both are already members of the CPTPP. In the world of trade, it has become fashionable to talk about three super-powers: the US, China and the EU. But there is a whole other world out there, centred on the free trading nations in CPTPP. And CPTPP nations are bigger believers in free trade than any of the three trading giants. Further, it is not far-fetched to believe that the EU could itself join CPTPP one day. Indeed, former EU trade commissioner Cecilia Malmström and I launched an event to encourage precisely this in 2023.

But we need to crack on with CPTPP expansion, with significant new powers coming on board at an accelerated pace. The time for action is now.

Greg Hands is the former Conservative MP for Chelsea and Fulham, who served as trade minister between 2016 and 2024

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