U.K. agrees to join Pacific trade pact in post-Brexit deal

The U.K. has agreed to join an Asia-Pacific trade pact that includes Japan, Mexico and Australia the biggest new trade deal Britain has struck since leaving the European Union three years ago.

The British government said Friday that it had clinched an agreement after almost two years of negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.

The government said membership would reduce tariffs on British dairy products and other goods and remove red tape for services, boosting the U.K. economy by 1.8 billion pounds ($2.2 billion Cdn) "in the long run." Britain becomes the 12th country in the trading bloc, and the only one outside the Pacific Rim.

"It's a good day," International Trade Minister Mary Ng said in an interview. "We have always been supportive of the U.K., right from Day 1."

Ng said Canada was the first member of the bloc to push for Britain to be included, though Japan has been facilitating the U.K.'s accession process, and London and Ottawa have sparred over allowing more beef exports to Britain.

"We share values. We have interoperability in many of our sectors. We essentially have collaborated throughout our history," Ng said.

Since the deal launched four years ago, Ng said it has boosted Canadian exports to the bloc by nearly one-fifth, and by as much as 40 per cent in Southeast Asia.

"If you look at countries like Vietnam, it just jumps out at you," she said. "It's a good agreement, but having the United Kingdom in there helps us do something else on the net-zero industries of the future."

Prime Minister Rishi Sunak said the deal "demonstrates the real economic benefits of our post-Brexit freedoms."

"Joining the CPTPP trade bloc puts the U.K. at the center of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join," Sunak said.

The deal comes as the U.K. pursues an "Indo-Pacific tilt" in its economic and foreign policy in response to the region's economic growth, and China's rising influence on the world stage.

The U.K. would be the first member to not touch the Pacific Ocean, aside from the remote Pitcairn Islands, a British overseas territory that sits between New Zealand and South America.

In a statement, theBritish High Commission in Ottawa said joining the bloc"creates opportunities to deepen our trading links across the Asia-Pacific region, providing a range of different opportunities with the different countries."

Could speed talks on bilateral deal

British and Canadian officials said the move should speed up negotiations for a bilateral deal between the two countries, since they've already established common ground on issues such as labour rights and supporting small businesses through the Pacific deal.

The Pacific deal has also sorted out some technical issues, which have reportedly included food-sanitation standards.

Ottawa and London have been operating under an interim trade deal since the U.K. left the European Union, but that post-Brexit deal expires next year.

Trade between Canada and the U.K. was worth more than $41 billionover the 12 months ending last September, according to the High Commission.

A British official familiar with both trade negotiations with Canada, who requested her name be withheld as she is not a spokesperson, said Ottawa has supported London's accession while pushing to benefit from the U.K. joining the group.

"They were the first to put their hand up and support us, and that was really great," she said. "Canada have been tough negotiators, I think that's fair to say, but they've been fair and we're at a place where we're both happy."

She said negotiations for the bilateral deal should conclude in mid-2024.

"We reckon we're about halfway through, which is where we expected to be at this stage," she said. Being part of the larger bloc "will make it easier to move at a faster pace."

Ng agreed, saying the Pacific deal aligns both countries' values around trade.

Cheese sales and Canada

That leaves the bilateral talks up to market-access issues. The U.K. still wants to be able to sell more cheese in Canada's supply-managed dairy sector, which is regularly challenged in trade tribunals.

Britain's membership in the Pacific trade deal will still need to be formally ratified by all members of the bloc. Once that happens, Ng said the Brits can boost Canada's efforts to form closer ties with countries across Asia.

"We really are doing more work to strengthen our relationships with friends and allies who also share our values, like a rules-based international order, and the U.K. is that friend, is that ally," Ng said.

"So having the U.K. in the CPTPP strengthens what Canada is doing in the Indo-Pacific."

Hugh Stephens, a fellow with the Canadian Global Affairs Institute, has argued that Canada would benefit from having Britain in the bloc, because having another advanced economy in the group would incentivize more Asian countries to join it.

Last November, a senior Global Affairs Canada official told MPs "there is still work to be done" for Britain to join, in part because the original signatories saw the U.K. as a test case for letting in the first member after the launch of the original agreement, which "sets the bar" for other applicants.

Assistant deputy minister Paul Thoppil made those comments to the House of Commons committee on Canada-China relations, which on Thursday released a report on relations with Taiwan.

In the report, MPs recommended that the government support Taiwan's bid to join the Pacific trade deal, both to show support for democratic countries and to boost trade with the island, which serves a critical role in technical manufacturing.