Mega-Regional Musical Chairs: CPTPP-UK?

It’s been reported that the U.K. government is evaluating whether it should seek to join the Trans-Pacific Partnership in its quest to shape a post-Brexit trade policy.  This has prompted some interesting questions. Is it even possible for the United Kingdom to join a trade agreement with the word Pacific in it? How exactly would that work? And if it can be done, is it a good idea?

As for whether it’s possible for the United Kingdom to join the TPP, the answer is a simple “yes.”  Once the TPP—or CPTPP, as it may now be known without the United States—enters into force between the 11 remaining original signatories, any accession to the agreement will be governed by the terms of Article 30.4. That provision begins by stating that the agreement is:

…open to accession by: (a) any State or separate customs territory that is a member of APEC; and (b) any other State or separate customs territory as the Parties may agree, that is prepared to comply with the obligations in this Agreement, subject to such terms and conditions as may be agreed between the State or separate customs territory and the Parties, and following approval in accordance with the applicable legal procedures of each Party.

The TPP was intentionally designed to be expanded, and numerous countries expressed interest in eventually acceding to the agreement even before the original members were finished negotiating it. Interest has largely been confined to countries in the Asia-Pacific region, but that’s due mostly to the agreement’s branding, rather than economic reasons. There are some specific procedures laid out for how to negotiate an accession, but the most important thing to know is that anyone can join and the terms of accession must be approved by every member.

Many other multilateral, preferential trade agreements are designed to allow new member to join. But in practice, accessions are very rare, especially for a developed economy. Governments understandably prefer to negotiate new agreements where they can better shape the terms than to join existing ones where they may have to pay a “price of entry” by accepting onerous, one-sided obligations. The TPP accession process is designed similar to WTO accessions, which are much more common than FTA accessions and where each existing member wields veto power that gives it an opportunity to extract concessions.

Indeed, the only substantive criticism of the TPP idea I’ve seen so far from British commentators is that, due to the one-sided nature of the accession process and the country’s limited commercial presence in the region, the United Kingdom would have very little leverage in an accession negotiation. That may not actually be a bad thing, though. I suspect the United Kingdom could benefit economically from a weak negotiating posture in which it has to accept the rules and market access levels demanded by others. This may be especially true in the U.K.’s current situation.

One of the reasons why trade policy has been such a difficult and contentious part of the Brexit process is that the United Kingdom is having to create its own trade policy from scratch in a time when the substance of trade laws is set almost entirely through reciprocal international agreements. The U.K. is faced with a sort of trade policy paradox where it can’t set trade policy unilaterally (since that would prevent it from enjoying the market access other countries provide only through reciprocal agreements) but since it doesn’t have an existing trade policy, it and its potential negotiating partners don’t know what to negotiate about.

For example, if the United States were negotiating an FTA with the U.K. right now, it would want to ensure access for U.S. agricultural products. But no one knows what precise mechanisms or policies the United Kingdom, soon to be free from the EU’s Common Agriculture Policy, is going to use to protect its market yet. So the United States wouldn’t know what specifically to target and the U.K. wouldn’t know what to defend. That doesn’t mean it will be impossible—it is, in fact, a likely scenario within the next five years—but it will be awkward and confusing.

That peculiar dynamic might make it relatively more reasonable for the U.K. to join an existing agreement in which the rules have already been set. The only negotiating work to be done would involve country-specific obligations like tariff schedules, quota management, government procurement and nonconforming measures in services and state-owned enterprises. But the U.K.’s lack of negotiating leverage (combined with uncertainty about its own political sensitivities) would likely lead to higher levels of liberalization and fewer exceptions. This would leave the country with a strict baseline of obligations from which it might eventually craft a less protectionist trade policy.

I doubt there’s much chance the United Kingdom will ultimately follow through with it, but if their goal at the moment is to build an open trade policy, then joining the TPP is a good idea.


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