NHS costs and food standards must be protected if we join the Pacific trade deal
In February the government applied to join the Comprehensive and Progressive agreement for Trans-Pacific Partnership (known as CPTPP) – an 11 nation free trade agreement. The diverse membership stretching from Vietnam to Peru encompasses countries such as Japan with whom we already have bilateral deals, and others like Malaysia with whom we have no ongoing talks.
The Partnership has always been somewhat controversial for many in the UK, not least as having previously included America. As a result, the Partnership is partly built on a US approach to regulations, leading to concerns about, for example, food standards (those infamous chlorinated chickens). Many also suggested that a trade pact centred on the Pacific would bring limited gains.
It falls to the House of Lords’ relatively new International Agreements Committee to assist Parliament’s discussion on the proposed arrangement, and to influence Ministers as they sit down to talks. The report we published today examines the government’s own negotiating objectives, in the light of the existing text and input from a wide range of witnesses.
Our Committee does not reach a conclusion on whether we should or should not join, but rather on whether the government has the right objectives and whether these can be achieved.
Given the CPTPP won’t automatically increase our exports, the government will need to ensure its negotiations achieve all its stated objectives and more
Evidence to us suggested broad business support for membership, though few anticipated any great benefit in the short or medium term. Indeed, the government only expects some 0.08 per cent uplift to GDP over 15 years.
Even this small direct economic impact could be significantly reduced if Malaysia continues to delay ratification – as they have since the agreement went live on 30 December 2018, (three years ago).
That said, other potential future adherents – such as South Korea and Thailand – offer greater potential. However, the two applicants after us were China and Taiwan, raising both economic and strategic questions that the UK government should answer.
Aside from direct boosts to trade, however, is the potential for deeper relations in the region. The ability to be at the table if CPTPP rules evolve in digital trade, or to discuss with members such issues in informal settings, was seen as valuable by many witnesses. We need to see a plan from government as to how they intend to take advantage of such opportunities.
The marginal economic benefits must be set against some clear risks to UK interests within the existing text. In particular, there have been significant concerns expressed about Intellectual Property protections, where CPTPP clauses clash with existing UK law. Accepting these could force the UK out of the European Patent Convention, from which our companies benefit, and also increase costs to the NHS of generic medicines. There are similar concerns over food standards, ISDS and the environment.
If we cannot negotiate safeguards in these areas, then the economic gains from CPTPP accession could disappear entirely. Perhaps the biggest question is the extent to which any of these will be on the table.
Clearly the 11 existing members of CPTPP would like the UK to join and will be willing to smooth our entry to some extent. But it is an existing agreement which is unlikely to change. Exceptions (or “carve-outs”) to the rules will therefore be needed, whether in side-letters or reservation to the agreement. The government hasn’t indicated its assessment of the chances of achieving these – some exist for the founder members but that could be different for a “newbie” member. We expect updates on this crucial issue.
As the UK seeks to grow its trade beyond Europe, our service sector will have a vital role, but that cannot come at the expense of nearer markets. Meanwhile any imports of goods and foodstuffs will need to be of the quality and safety that British consumers expect.
Given the CPTPP itself won’t automatically increase our exports, the government will need to ensure its negotiations achieve all its stated objectives and more – which is what our Committee will examine carefully as the process develops.
Baroness Hayter is a Labour peer and chair of the Lords International Agreements Committee.
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