Pacific Money | Economy | East Asia

The UK Wants to Join CPTPP. That’s Good News for Japan.

Britain’s interest in the group will help strengthen trade relations with Japan.

By Yukari Easton for
The UK Wants to Join CPTPP. That’s Good News for Japan.

Flags of Britain and Japan are displayed as money traders leave their seats at a foreign exchange dealing company in Tokyo, Sept. 19, 2014.

Credit: AP Photo/Shizuo Kambayashi

The June 17 announcement of the U.K.’s intention to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was one of the more positive pieces of recent news, coming just a week after the U.K. and Japan commenced their free trade negotiations.

Japan accounts for nearly half of CPTPP GDP and became a strong driving force in concluding an America-free agreement after President Donald Trump withdrew from the grouping. The U.K.’s entry into the CPTPP would be a welcome development, with the possibility of further expanding the bloc and making it more attractive to other prospective members.

The British, for their part, are keen to deepen trading relationships after their withdrawal from the European Union. Specifically, U.K. Trade Secretary Elizabeth Truss described Britain’s relationship with Japan as “absolutely critical.” Clearly, stronger Japanese ties would be a positive development for a post-Brexit U.K., which needs to rework its future trading agreements with the rest of the world. Given that Japan is already Britain’s 11th largest trading partner, and Japan is Britain’s 12th largest, closer ties not only make sense, but should also be achievable.

The earlier incarnation of the Trans-Pacific Partnership (TPP) was originally envisaged as an economic pillar supporting former President Barack Obama’s “pivot to Asia.” In the view of the Obama administration, the TPP was intended to be a “cornerstone of peace and stability in the region” – but U.S. participation was scrapped by Trump on his third day in office.

With the United States having shunned the dream of a trading bloc that would have accounted for 40 percent of world trade, it was Japan that took the lead in making the TPP a reality, even compromising its positions in hitherto sacrosanct areas such as agriculture. In 2019 Japan concluded an FTA with the United States independent of the TPP, but has kept the door open for the U.S. to potentially join the bloc in the future. The original grand TPP vision of including other neighbors, particularly China and South Korea, endures.

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What would closer trade ties between Japan and the U.K. deliver? For Japan, there is no illusion that the U.K. would, in any way, replace the importance of the U.S. After all, the United States is Japan’s only ally in defense and the United Kingdom’s interests in the Asia-Pacific region are somewhat different from those of the United States. Nevertheless, the U.K. is comfortable company for Japan to court. There have been minimal trading frictions or diplomatic tensions in modern times. Japan is unflinchingly supportive of the U.K. joining the CPTPP and has pledged that it will “spare no efforts” in this endeavor. Stronger trade ties would boost the Japanese economy while making the United Kingdom and Japan closer still in terms of their diplomatic relations.

Despite Japan’s positive views toward the U.K.’s CPTPP participation, Brexit has been a concern. The commencement of bilateral talks provides much needed reassurance.

The British approach to trade is pragmatic. While joining the CPTPP, given that it represents 13 percent of world GDP, would be optimal, bilateral talks with Japan and, indeed, with other CPTPP members, provide alternate routes toward free trade in the event that an all-encompassing CPTPP arrangement for the U.K. cannot be concluded.

Although trade agreements are often time-consuming to achieve, with naysayers pointing to the EU-Japan Economic Partnership Agreement (EPA) negotiations lasting six years, Japan and the U.K. already start from a position of close alignment, meaning that progress could be swift. Other CPTPP members have already indicated their enthusiasm to progress deals with the British without delay. Indeed, Australian Trade Minister Simon Birmingham stated last week that an Anglo-Australian trade deal might even be achievable by the end of 2020.

While the United Kingdom formally left the EU on January 31, it enjoys transitional arrangements with the EU that include trade through to the end of 2020. Some have suggested that these arrangements could be extended, in line with the provisions of the EU withdrawal treaty. Such speculation is, however, naïve and ignores a British realpolitik that precludes a government, elected in a landslide victory under the mantra of “Get Brexit Done” being able to instigate any such extension. Given the certainty of the U.K. and EU transitional arrangements ending on December 31, the pressure is therefore on for London to rapidly conclude a free trade agreement with the EU, as well as with its non-EU trading partners. Progress in trade talks outside of Europe can only strengthen the British hand in its negotiations with the EU.

The logic of closer Anglo-Japanese trade ties, either through a bilateral arrangement or under the CPTPP, is clear. Such an achievement would represent a clear economic and diplomatic win for both nations. With political will on both sides to maintain the current momentum, such a deal is well within reach.

Yukari Easton is a researcher and a 2014-2015 ACE-Nikaido Fellow at the East Asian Studies Center at University of Southern California whose research focus is upon international relations, diplomacy, and security issues in the Asia-Pacific region.  Previously, she worked for ten years in international banking in Europe and Asia.