The UK has recently become the first European country to join the Indo-Pacific trade bloc, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

• In 2023, the CPTPP parties and the UK signed the accession protocol, enabling the UK to join the trade bloc.

About CPTPP

• The CPTPP is a free trade agreement between Japan, Malaysia, Vietnam, Australia, Singapore, Brunei, New Zealand, Canada, Mexico, Peru, Chile and the UK.
• It is one of the biggest trading blocs in the world, worth 15% of global GDP once the UK joins.
• Background: In 2005, aTrans-Pacific Partnership (TPP) with 12 Nations was formed with a trade agreement  between a small group of Pacific Rim countries comprising Brunei, Chile, New Zealand, and Singapore.
  • The United States withdrew from the original TPP in 2017, after which the agreement was rebranded as the CPTPP.
  • The UK is the first European country to join the agreement, and the largest economy after Japan.
  • Except for the UK, the remaining 11 member nations of CPTPP are also members of the Asia-Pacific Economic Cooperation (APEC).
• Strategic Significance: Objectives:
  • Promote free trade by reducing tariffs across member nations.
  • Strengthen economic integration and cooperation in the Asia-Pacific region.
• Trade Features
• • Unlike the EU, the CPTPP does not create a single market or require regulatory harmonization.
  • Allows flexibility with “rules of origin,” enabling companies to decide how to apply these trade provisions.
• Global Influence: Member nations collectively account for 15% of global trade, providing strategic leverage in international trade dynamics.

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Implications for Britain

• This marks Britain’s largest trade deal since its departure from the European Union (Brexit) which reinforces a strategic pivot towards global partnerships post-Brexit.
• It establishes Britain’s first trade agreements with Malaysia and Brunei.
• Britain can now influence decisions on future CPTPP applicants like China, Taiwan, Costa Rica, and Indonesia.
  • This strategic move complements Britain’s goal of building global trade ties and increasing influence in the Indo-Pacific region.

India’ s concerns regarding CPTPP

• Impact on Domestic Industries: India’s labor and environmental standards may not align with the stringent requirements of the CPTPP, potentially putting domestic industries at a disadvantage.
• Regulatory Hurdles: Compliance with stricter regulations could increase costs for Indian businesses and hinder their competitiveness.
• Impact on Generic Drug Industry: India’s generic drug industry, a global leader, could face challenges due to stronger IPR protections in the CPTPP.
• Data Localization Concerns: The agreement’s provisions on data flow and localization could impact India’s data protection policies and digital sovereignty.
• Agricultural Products: India’s sensitive agricultural sectors, such as dairy and sugar, could face limited market access due to tariff barriers and non-tariff measures.
• Manufacturing Sectors: Certain manufacturing sectors might not benefit significantly from the agreement, as they may not be competitive enough to exploit new market opportunities.
• Increased Competition: Smaller Indian businesses, especially MSMEs, could face intense competition from larger, more established foreign firms.
• Supply Chain Disruptions: The agreement’s rules of origin could complicate supply chains for MSMEs, increasing costs and reducing their competitiveness.

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Potential Benefits for India to Join CPTPP

• Access to diverse global markets: India should actively consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which can expand India’s access to diverse global markets.
• Leverage MSME Export Potential: With 40% of India’s exports driven by the MSME sector, trade agreements like RCEP and CPTPP could provide a significant boost to this sector by opening up new markets.
• Maximize ‘China Plus One’ Opportunities: India must strategically position itself to capitalize on the ‘China Plus One’ strategy, which seeks to diversify global supply chains away from China.
  • Other nations like Vietnam, Indonesia, Malaysia, Turkey, and Mexico have outpaced India in benefiting from this trend. Proactive policies are needed to attract investments and industries moving out of China.

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