15 January 2018

Could the UK Join the TPP?

By Li Jie Sheng

Earlier this month, as uncertainty lingers over the exact nature of Brexit, U.K. Secretary of State Liam Fox announced that the United Kingdom could join the Trans-Pacific Partnership (TPP). This announcement is a significant move, coming after the foreign secretary’s comments that the U.K. is returning “East of Suez” and an announcement that more British military assets would be deploying to the region. The TPP comment thus appears to seal the economic presence of Britain in Asia as it attempts to leave the European Union.

The remaining 11 members of the TPP are trying to revive the agreement after the Trump administration withdrew the United States in early 2017. With the inclusion of the U.K., the world’s fifth-largest economy and a member of key multilateral organizations and economic forums, the TPP can possibly materialize into a proper trans-regional trade pact that could spur economic growth for both the Asia-Pacific and the United Kingdom. It would certainly affirm that the open market, rule-based international order will remain after the chaos from the Brexit referendum and the inward-looking policies of the Trump administration.

However, none of those prospects are straightforward. First, the U.K. isn’t a member of the Asia-Pacific rim or, more specifically, the Asia Pacific Economic Cooperation (APEC) bloc. Although TPP membership is not exclusively for countries within the geographical Asia-Pacific zone, it won’t be easy for the U.K. to immediately enter any economic agreement without geographical position or a prior introduction. The U.K. may have strong economic and trading relations with Asia-Pacific zones such as the Association for Southeast Asian Nations(ASEAN), but this does not immediately qualify the U.K. as a TPP signatory.

Second, and more importantly, even if the U.K. somehow enters this trading pact, its trading size will never match that of the United States, which the former seeks replace. Various proponents of the TPP, such as Singapore, were counting on the United States as signatory because of its economic and trading size. The inclusion of the U.K. in the place of the United States might in fact dilute the economic effect of this trade agreement. On a related note, the U.K. might upset its relations with the United States if it entered the same trading pact that the Trump administration vehemently opposed and withdrew from.

Third, in entering the TPP, the U.K., like other TPP members, would have to grapple with the implications of China’s exclusion from the trading pact. China, despite being an enormous trading house and the world’s largest economic power, was deliberately excluded from the TPP as part of the Obama administration’s refocus toward the Asia-Pacific. The United States is now no longer involved with the agreement, but other TPP proponents such as Japan might not be in favour of including China. In terms of security, the U.K. might also not wish to include China, especially after worries over Chinese intrusion into British infrastructure through the Hinkley Point investment. However, the U.K. itself is aiming for a separate trade agreement with China and might not wish to risk souring economic relations with Beijing by joining the TPP.

With regards to China, the U.K. may approach the country in a more amicable way than the United States has. After all, London continues to support the Chinese Belt and Road Initiative and is a member of the Chinese-led Asian Infrastructure Investment Bank (AIIB). China undoubtedly has interfered in European security and economics; however, it does conform to some global standards and is a leading partner in development issues. British participation in the TPP thus may in fact draw China closer toward the international, ruled-based system instead of attempting to disrupt it.

The U.K. might even persuade India, a leading British aid recipient, to join the TPP and assist with that country’s economic progress.

The U.K. will have to overcome these roadblocks in order to join the TPP and London might not, in the end, attempt to, or be accepted into the TPP. It might instead negotiate direct free trade agreements (FTAs) with ASEAN or Asian Commonwealth member states. If not, the U.K. can still forge bilateral trade agreements with individual Asia-Pacific countries — there are for example, suggestions of FTAs with Indonesia, Singapore, and South Korea.

The UK has sometime — after March, 29 2019 — before it can legally pursue any bilateral, regional, or multilateral FTA. On paper, it looks enticing to join a multilateral agreement like the TPP. In practice, the U.K. will have to overcome several economic and political difficulties before it could join.

Li Jie Sheng is a research analyst with interests in Southeast Asian political economy, wider global political economy, multilateral organisations and international development.

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