The UK, CPTPP, and Latin America: What now?

The UK, CPTPP, and Latin America: what now?

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The United Kingdom is now a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP. On 16 July, the UK officially signed a deal to join the bloc. Its addition is now subject to ratification, both by the UK parliament and the other members, after which it will come into force.

CPTPP, which the UK joins as its first non-founder and first European member, now comprises 12 countries including Japan, Canada, Australia, Vietnam and Malaysia.

In total, including the UK, CPTPP’s economies account for around 15% of global GDP. It is therefore among the world’s largest free trade agreements, comparable in GDP to the European Union and around half that of the United States-Mexico-Canada Agreement (USMCA).

The Latin American nations of Mexico, Chile and Peru are founding members, with Costa Rica, Ecuador, and Uruguay also having submitted formal applications to join. The UK currently has trade agreements in place with all of those, minus Uruguay, either directly or via regional agreements such as those with the Andean countries and Central America.

In spite of its pre-existing, post-Brexit agreements with the region, the UK’s trade with Latin America has remained low, at just 2-3% of British imports and exports in 2022. Little by little, though, that tide may be starting to turn. That 2-3% level already represents a 45% boost on the previous year – a surely unsustainable but positive shift. British Foreign Secretary James Cleverly, during a visit to Chile in May, called for greater ambition in the relationship, and acknowledged the work needed to increase trade and investment between Latin America and its “oldest friend,” the UK.

Plaudits of the CPTPP deal suggest that it should contribute to that growth. It rationalises the varied terms of existing deals, simplifying trading arrangements. In some cases, deepening of commercial relationships may offer avenues for easier or increased flows. That includes top UK exports to Latin America: goods like scotch whiskey and dairy products, and services such as infrastructural and financial services expertise.

Still, the British government’s own figures have estimated just a 0.08% boost to UK GDP over the next decade, with the greatest immediate benefits found outside of Latin America, in new and unprecedented free trade arrangements with Malaysia and, to a smaller degree, Brunei Darussalam.

Benefits may present themselves more readily, then, in longer-term strategic positioning and CPTPP’s potential future expansion, in which the UK, from within, could play a decisive role. The bloc already comprises several dynamic, fast-growing economies, and the UK’s membership’s demonstration and expansion of CPTPP’s global weight could boost the ambitions of others – with already-interested parties including Thailand, the Philippines and South Korea.

Enthusiasm for joining the deal in Latin America is a mixed bag, subject both to change and challenge. Costa Rica’s Rodrigo Chaves announced his country’s intention to join the CPTPP in July 2022, just a few months after starting his term as president. The Central American country is now also at an advanced stage in the process of joining the Pacific Alliance, making apparent its aspiration to be part of such free trading arrangements. Ecuador’s Guillermo Lasso’s hopes were similar, but the cold water of a curtailed impeachment process and coming snap election, in which neither he nor his party are standing, may delay proceedings there. Progress on Uruguay’s application is complicated by its membership of Mercosur, and the Lacalle Pou administration’s ambitions to strike deals outside of that union have ruffled the feathers of other members.

Perhaps emblematic of the impact of such pushbacks is the case of Colombia: although the country requested permission to join CPTPP in 2018, after subsequent changes in government little to no further progress has been made, and Gustavo Petro’s administration has plainly placed its focus elsewhere.

Also in the strategic equation are the applications of both China and Taiwan to join CPTPP. In the delicate balance the UK and wider international community have maintained in relations with China and Taiwan, CPTPP represents an additional potential point of tension – illustratively, the two submitted their applications less than a week apart.

Within the bloc, there remains no consensus on that issue. In Latin America, China is the largest trading partner of CPTPP members Chile and Peru, and South America as a whole; and second-place in Latin America and the Caribbean, with Mexico’s enormous, privileged trade volume with the United States making up a great deal of that difference. China and Taiwan have lobbied the Latin American contingent for their support, with Chile’s Gabriel Boric openly backing China’s bid. The UK thus far remains non-committal, in alignment with other members including Japan and Australia. Whether that causes strain on the bloc in future remains to be seen.

Freddy Nevison-Andrews

Freddy joined Canning House in 2019, and became Press & Communications Manager in 2022. He will be completing an MSc in Globalisation and Latin American Development at the UCL Institute of the Americas in August 2023.