Businesses hail trade deals as boost for UK

Business groups have hailed the UK’s membership of an Indo-Pacific trade bloc as a boost despite analysis showing a meagre growth bump from the deal over the long term. Business and trade secretary Kemi Badenoch formally signed a treaty in New Zealand for the UK to join the CPTPP, originally agreed in 2018 between eleven countries.

Membership strips back trade barriers and comes amid a push from the government to forge stronger trade ties with the region. The deal was hailed as a “great achievement” by lobby group The City UK, which said the pact will deliver a boost to the UK’s financial and professional services sector.

The bloc has swelled to a scale of £12 trillion but analysis given to the government suggests the deal will boost UK exports by just £1.7 billion, imports to the UK by £1.6 billion and GDP by £1.8 billion in the long term. The UK has bilateral trading terms with nine of the eleven members – so Malaysia and Brunei will be of “particular interest,” noted William Bain, head of policy at the British Chamber of Commerce.

The UK is also set to pursue a new trade deal with Turkey in an effort to deepen relations with the country, the government has announced. Negotiations on an updated free trade agreement are expected to begin in 2024 after the two countries agreed there was scope to improve the existing deal.

Britain‘s trade with Turkey was worth £23.5 billion in 2022, but heavily favoured Turkey with the UK importing £6.5 billion more than it exported, according to government figures. The current settlement, which was rolled over after Brexit, is restricted to trade in goods. UK negotiators will attempt to expand the relationship to cover digital trade and services, reflecting Britain’s status as a predominantly service economy.

Business and trade secretary Kemi Badenoch said: “Turkey is an important trading partner for the UK. This deal is the latest example of how we are using our status as an independent trading nation post-Brexit to negotiate deals that are tailored to the UK’s economic strengths.

Turkish exports to the UK include vehicles, clothes and electric machinery, while the UK sells power generators and metals to Turkey. Exports minister Lord Offord has discussed other potential trade opportunities with Turkey.

Meanwhile, trade talks with the US are still to make much progress. Foreign minister James Cleverly talked down hopes of a UK-US trade deal during a recent visit to Washington DC. Speaking there, Cleverly, said the government was not “prioritising” a free trade agreement (FTA) but aiming for “real economic coordination” with the superpower.

His comments came at a press conference held with US secretary of state Anthony Blinken. Cleverly told reporters: “I know FTAs are often used as a shorthand for closer economic partnerships. We are not prioritising an FTA with the US because there are many areas where we can work more closely, more collaboratively, have real economic coordination that does not require the traditional kind of tariff-reducing elements of an FTA.” Blinken was also asked about concerns allies might feel the US’s Inflation Reduction Act is “protectionist” – the 2022 federal legislative package aims to cut rising prices by reducing the deficit and investing in domestic energy production and clean energy.

Blinken responded that the law marked a “historic commitment” to tackling climate issues, and housed an intent to work with international players to “build the strongest possible collective infrastructure, supply chains, and ecosystem to produce (new) technologies. These are profound benefits for many of our partners around the world,” he said.

Negotiations on an FTA with the US began back in May 2020, but the House of Commons says there is no current deal and “an agreement is not expected soon”. (The writer is our foreign correspondent based in the UK)