THE TTALK QUOTES


On Global Trade & Investment
Published Three Times a Week (with occasional bonus quotes) by
The Global Business Dialogue, Inc.
Washington, DC  20006
No.45 of 2020
THURSDAY, JUNE 18, 2020

Click HERE for yesterday quote from USTR Robert Lighthizer
(from his Foreign Affairs article)
TRADE, GEOGRAPHY, AND TPP

"It is perhaps a slight stretch of the definition of Pacific, I would agree, [but] ..."

"The UK intends to pursue accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a key part of our trade negotiations program."

The Rt Hon Elizabeth Truss, MP
et al.
June 17, 2020
CONTEXT
Yesterday was a big day in trade. One way or another, every day is, but right now yesterday looms especially large. In Washington, USTR Robert Lighthizer testified before the two main trade committees of Congress, the House Ways and Means Committee and the Senate Finance Committee, and there is plenty of fodder there for later entries. 0ur focus today, though, is the news from across the pond and the wide Pacific, where the UK is now engaged in new trade negotiations with both Australia and New Zealand. Beyond that, as today’s featured quotes declare, the British government is also in the process of pursuing membership in the new TPP, the Comprehensive and Progressive Trans-Pacific Partnership or CPTPP.

As the UK Secretary of State for International Trade, Liz Truss has responsibility for all of these initiatives. We have done something a little different in today’s featured quotes by joining two separate statements, but they seem to fit. The first is from Ms. Truss’s interview with The Sydney Morning Herald. The second is the start of a short paper her department published yesterday on the UK’s aim of joining CPTPP.

The paper by the Department of International Trade (DIT) naturally takes note of the significant trade the UK already has with the eleven countries currently in CPTPP, noting, for example, that “In 2019, we [the UK] did more than £110 billion of trade with countries in this free-trade area.”  The paper also notes the existing trade agreements between the UK and individual CPTPP countries as well as the recently initiated negotiations with Japan, Australia, and New Zealand. It further points out that, while today CPTPP countries account for some 13 percent of global GDP, that figure would swell to 16 percent if the UK becomes a member.

As for why the UK is interested in joining CPTPP, the DIT paper highlights three objectives. The first is securing opportunities that will help the UK recover from the damage caused by the coronavirus. The second is “to help diversify our trading links and supply chains.” And the third objective is:

[ T]o help us secure our future place in the world and advance our longer term interests. CPTPP membership is an important part of our strategy to place the UK at the centre of a modern progressive network of free trade agreements with dynamic economies. 

Further on the authors of the DIT paper write:

Accession [to CPTPP] would help us realize our ambition to have 80 percent of UK trade covered by free trade agreements in the next three years … .
COMMENT
We are talking here about negotiations and goals. So, the emphasis is very much on the future, as it should be. We have no reason to doubt that the goals set out the DIT paper will, for the most part, be achieved, but nothing is certain. Just as games have to be played, these negotiations have to be conducted, and there will be challenges. We shall try to follow developments as best we can. We shall conclude here with four short observations. 

The first is a rather light-hearted one, which has to do with the oddities of who sells what to whom. In announcing the UK’s negotiations with Australia yesterday, Boris Johnson , after praising the Australian wine the UK imports, noted that among Britain’s exports to Australia are boomerangs.

Second and somewhat more problematic for the UK is the fact that the existing FTAs listed in the paper – those with Canada, Chile, Mexico, Peru, Singapore and Vietnam – are agreements between those countries and the EU. When this year comes to a close, they will no longer apply to the UK. UK membership in CPTPP would, we assume, obviate the need for separate replacement agreements, and, with luck, all parties will see such an arrangement as beneficial. Alternatively, one or more CPTPP members may be tempted to think that the UK needs a deal more than it does and so may demand more for such an agreement than Her Majesty’s Government is willing to pay.

Third is China. Speculation that China would join TPP or then CPTPP used to be quite common, and, in a sense, the likelihood of such a development increased after President Trump pulled the U.S. out of TPP in January 2017. But a lot has happened in the last three years, and our guess is that, with or without the UK inside the CPTPP tent, China would be not be welcome now. But that could change.

Fourth and finally, at least to our way of seeing things, there is a point of convergence between the UK’s stated goals and something Ambassador Lighthizer said in his recent Foreign Affairs article. Certainly, it is the case that some of the references to protectionism in the UK paper – fairly or not – are aimed in part at the United States. Yet, a key comment in the Lighthizer article is the flip side of the UK’s aspirations as stated in their paper on CPTPP. In talking about the WTO, Ambassador Lighthizer wrote:

Like many international organizations, the WTO has strayed from its original mission. Designed as a forum for negotiating trade rules, it has become chiefly a litigation society.

With apologies for adding a personal note, when your editor began working in trade policy, trade liberalization was pursued in the GATT, the predecessor to the WTO. Today, as the UK goal of “80 percent of UK trade covered by free trade agreements in the next three years” makes clear, liberalization is sought in other forums.
SOURCES AND LINKS
Australia-UK Trade takes you to an article from yesterday's (June 17) Sydney Morning Herald with comments from the UK's trade minister, Liz Truss. This was the source of the first of today's two featured quotes.

The UK and the CPTPP is a link to a short paper by the UK Department for International Trade, dated June 17, and titled "An update on the UK's posiotion on accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This was the source for the second of today's two featured quotes.

Making Trade Work for Workers is a link to Ambassador Robert Lighthizer's article in the current issues (July/August 2020) of Foreign Affairs.

An Announcement from the Prime Minister is a link to a video of Boris Johnson’s announcement of the start of trade talks between the UK and Australia. 
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