Trade and Enterprise Secretary Jonathan Reynolds has outlined a new twin-track approach to UK trade policy, with the Labour government seeking closer ties with the European Union while also seeking new global partnerships further afield.
Writing for the Observer Online, Reynolds hails the UK’s imminent entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a “real victory” for British exporters.
His comments are further confirmation that Keir Starmer’s government will not seek to rejoin the EU or its economic structures. If Britain were to rejoin the EU, it would have to leave the Trans-Pacific Partnership, as having separate free trade agreements is incompatible with membership of Europe’s single market and customs union.
The CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Under the Conservative government, Britain signed a deal to join the CPTPP in July 2023, and the accession process is nearing completion. The bloc will have a combined GDP of More than 12 billion pounds including Great Britain.
Despite Reynolds’ enthusiasm for the CPTPP, economists say Britain’s entry will have little short- or medium-term effect on the country’s trade or GDP, and certainly will not offset its exit from the EU, the single market and the customs union.
Last year, when the Conservatives presented entry into the Trans-Pacific Partnership as a cornerstone of a post-Brexit “world Britain”, the Office for Budget Responsibility said it would add just 0.04% to GDP over the “long term”, which it defined as 15 years of membership.
The spending watchdog also said two separate bilateral deals between Britain and Australia and New Zealand, also hailed as landmark post-Brexit trade agreements, “could boost current GDP levels by a combined 0.1% by 2035.”
In his article, Reynolds makes clear that Labour would also be pushing for closer ties with the EU, outside of its formal economic and trade structures.
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“The EU is not only our closest trading partner, it remains our largest trading partner by a significant margin,” he writes.
“However, we know that thousands of British businesses have stopped exporting to Europe altogether. It’s no secret why. The last government’s adversarial approach to working with the EU resulted in British businesses being buried in red tape. We are changing course – we are working to negotiate the removal of unnecessary border controls while securing mutual recognition of professional qualifications so that British businesses can operate more easily in France, Germany, Italy and elsewhere.
“At the same time, we are seeking high-quality trade agreements that remove barriers with partners around the world, including the Gulf Cooperation Council (GCC) and India. A deal with the GCC alone could increase bilateral trade by 16%, generating an additional £1.6 billion for our economy in the long term.”
