Wales and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

The UK Government said accession could boost the Welsh economy by £53million  and could particularly benefit Welsh machinery manufacturers. It says that more than 450 businesses in Wales exported over £900m worth of goods to CPTPP countries in 2021. They will now face “less red tape and better opportunities”, according to Secretary of State for Wales, David TC Davies, who added: 

These growing markets will help businesses in Wales increase export opportunities and boost the global appetite for Welsh goods and services. 

The British Foreign Policy Group suggests CPTPP’s cross-border data sharing requirements could “conflict” with the UK’s EU data adequacy decision, a concern of the Welsh Government considered by two Senedd committees.

Halen Môn says there is “huge potential” for trade. The company already exports to Japan and Singapore but “can see opportunities in Australia too”.

Other trade in goods terms include:

• 99% of UK exports are eligible for tariff-free trade; and
• UK manufacturers can count components made in CPTPP states as home-made in order to benefit from preferential trading arrangements (rules of origin) but this can have mixed results across sectors.

In March, Fair Trade Wales signed a joint letter calling on the UK Government to halt its accession on a number of grounds, including “significant negative environmental and climate impacts”.

The UK Government predicts small increases in domestic emissions and fossil fuel consumption, attributed mostly to increased economic activity. It notes that the impact on air pollution, biodiversity, land and water use is uncertain, as are the environmental impacts for partner countries.

It promises to uphold food, environment and animal welfare standards for domestic production but there are no equivalent safeguards for imports. This means that products made to a lower standard, for example, by using pesticides or chemicals that are banned in the UK, could enter the UK market.

The UK also agreed to remove tariffs on palm oil imports, on Malaysia’s request. As a result, environmental groups, like Friends of the Earth, have raised concerns for the UK’s stance on deforestation and biodiversity. In a joint statement the UK and Malaysia describe how they’ll cooperate on conservation and sustainable supply chains.

Public Health Wales’s health impact assessment has found that, while CPTPP’s economic benefits could lead to health and wellbeing improvements for some, those on low incomes are more likely to experience potential negative impacts. This was only the second health impact assessment to be carried out globally on a trade deal.  

CPTPP’s dispute settlement includes a controversial aspect of trade deals, known as “ISDS” (investor-state dispute settlement). ISDS allows companies to take legal action against states if their policies diminish or negatively affect company profits. Public Health Wales says this could place a “regulatory chill” on new public health laws.

Chatham House says that the real value to the UK is “strategic” as it shifts towards the Indo-Pacific. However, as the British Foreign Policy Group explains, “alignment with one trading bloc can limit alignment with others”. The Welsh Government is concerned that CPTPP membership could harm trade with the EU and other trading partners. 57% of Wales’s goods exports go to the EU, worth around £12bn, compared with 6.1% to CPTPP states, worth around £1.3bn.  

What of UK-US trade? According to Kemi Badenoch, Business and Trade Secretary, the chances of a long-coveted UK-US trade deal are “very low”. Welsh exports to the US drive Wales’s non-EU export values. In 2022, the US became the highest value market for Welsh products, accounting for £3.4 billion (16.5%) of exports.

What about China? Trade expert Sam Lowe thinks the UK could provide cover for CPTPP members to veto China’s accession. Seven CPTPP members are also members of the world’s largest regional trade deal with China, the Regional Comprehensive Economic Partnership (RCEP).