The Welsh economy is set to grow as UK joins major trade group

The UK has today [15 December] officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a fully-fledged member, potentially boosting the Welsh economy by £110 million in the long run. 

CPTPP is a major trade bloc whose members – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and now the UK – have a combined GDP of £12 trillion.

From today businesses across Wales will face lower tariffs and less red tape selling to economies across three continents, with Wales’ machinery, medicines and pharmaceutical sectors in particular set to benefit, helping to support the Government’s ‘Plan for Change’ by boosting household wages by £1 billion every year and delivering on one of the five missions of kickstarting economic growth.

Business and Trade Secretary Jonathan Reynolds said: 

Britain is uniquely placed to take advantage of exciting new markets, while strengthening existing relationships. Today’s news is further proof that the UK is a wonderful place to do business, with an open, outward looking economy driving the growth people can feel in their communities.

Agreements like this boost trade and create opportunities for UK companies abroad. This is a proven way to support jobs, raise wages, and drive investment across the country which is key to this Government’s mission to deliver economic growth.

Our Trade Strategy, published next year, will finally put in place a long-term, strategic plan for international trade that helps businesses and consumers and, ultimately, grows the economy.

Welsh Secretary Jo Stevens said:

This UK Government is ensuring the best possible trade deals for growing the Welsh economy and putting money into people’s pockets. Today’s deal means Welsh businesses will have better access to 11 major economies in the Indo-Pacific, including Australia, Canada and Vietnam. 

Welsh businesses will see less red tape and lower tariffs when exporting to these countries, boosting the Welsh economy and helping to deliver sustained growth.

CPTPP is designed to expand over time, further growing the economic and strategic benefits of the agreement. Costa Rica was recently announced as the next country to go through the process of joining, and other economies such as Indonesia  – the largest economy in Southeast Asia, with a GDP of over £1 trillion and home to around 280 million people in 2023 – are queuing up to join.

Pontyclun-based company Concrete Canvas produce a flexible, concrete fabric that hardens on hydration to form a thin, durable, waterproof and lower carbon concrete layer or – concrete on a roll. Their materials are exported to all CPTPP markets, with these exports accounting for more than 40% of its annual turnover. They will now make savings of 20% on exports to Malaysia thanks to the UK’s membership of CPTPP.

Darren Hughes, International Business Development Manager at Concrete Canvas Ltd. commented:

The CPTPP region is already hugely important to our business as we export to every CPTPP member.

Thanks to the UK becoming a member, we’ll find it cheaper to export thanks to tariff reductions, in particular with Malaysia, with whom we now have a Free Trade Agreement for the very first time.

Those tariff reductions will let companies like Concrete Canvas be more competitive in those markets, and free up capital to invest in new products and better operations.

Welsh services firms could also find it easier to export their services to CPTPP countries, with firms allowed to manage funds across the world from the UK and provide services to CPTPP markets on a level playing field with domestic firms in key sectors. Welsh companies already exported over £6.8 billion worth of services according to latest figures.

Sectors like automotive and food and drink will be able to benefit from CPTPP membership, including through modern “rules of origin” provisions which allow goods to qualify for lower tariffs when built from parts from CPTPP countries then exported to a CPTPP country. For example, a UK car engine manufacturer using components from other CPTPP countries could more easily qualify for lower tariffs when exporting the final engine within CPTPP. 

Prices on consumer goods could also fall if savings are passed on by importers, with tariffs removed on items like fruit juices from Peru and vacuum cleaners from Malaysia. Through CPTPP, the UK now has free trade deals with Malaysia and Brunei for the first time, economies with a combined GDP of over £330 billion last year.

CEO of HSBC UK Ian Stuart said: 

Being part of the CPTPP signals that the UK is open for business with some of the world’s most exciting growth markets. Since the announcement of the UK’s accession in July 2023, we have seen an increase in payments between the CPTPP markets and the UK, and we expect this growth to continue.

As the world’s leading trade bank, with deep roots across many CPTPP countries, we are well-positioned to connect UK businesses with growth opportunities in markets such as Japan, Singapore, New Zealand, Vietnam, Malaysia, and Australia.

Chairman and CEO of Chivas Brothers, Jean-Etienne Gourgues: 

At a time of increasing barriers to trade globally, the UK’s accession to the CPTPP is welcome news for Chivas Brothers Scotch whisky business. 

Improved access to markets in dynamic regions like South East Asia and Latin America in a trading bloc which covers almost a fifth of the total value of Scotch whisky exports should help boost our £1 billion annual exports.” 

CPTPP’s entry into force comes as the UK Government edges closer to securing trade deals with partners such as the Gulf Cooperation Council, India, Switzerland and South Korea. These form one half of the UK Government’s twin-track approach to trade which seeks to reset our relationship with the EU at the same time as striking new trade deals. Easing trade restrictions will help boost the 196,000 jobs in Wales that are already supported by exports.