Written By Valerie Hughes, Andrei Mesesan and Darrel Pearson
On March 31, 2023, the United Kingdom announced the conclusion of negotiations on the accession of the United Kingdom to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), representing a "first" since the multilateral trade agreement entered into force in December 2018. The accession will come into force once it is ratified by all CPTPP members, which is expected to take about 18 months.
In addition to signaling a shared commitment to reduce trade barriers, the United Kingdom's accession provides a precedent for others who have applied to join, namely, China, Costa Rica, Ecuador, Taiwan, and Uruguay. The United Kingdom will be the third G7 country (after Canada and Japan) to join the CPTPP.
Canada’s Minister of International Trade, Export Promotion, Small Business and Economic Development, Mary Ng, announced that the United Kingdom's accession would benefit Canada as it “would provide further trade and investment opportunities for both countries...”. However, Canadian industry reaction in the agricultural field has been mixed, ranging from a positive response in respect of trade in grains and sugars, to disappointment from beef and pork producers about the failure to secure viable access to the U.K. market for their products, to expectations of vigilance by the Canadian Government in monitoring U.K. dairy imports from dairy farmers. Beef and pork producers plan to lobby opposition Members of Parliament to oppose United Kingdom accession if changes are not made.
What is the CPTPP?
The CPTPP is a trade agreement between Canada, Japan, Australia, Mexico, New Zealand, Chile, Peru, Vietnam, Malaysia, Singapore, Brunei1 and, once ratified, the United Kingdom. The agreement is designed to reduce trade barriers and facilitate trade by, for example, providing for tariff elimination across a number of sectors (including agriculture, fish and seafood, forest products, industrial goods and consumer products).
As we previously reported in our blog, Canada Seeks Input on New Members for the CPTPP Agreement, the CPTPP includes chapters on textile and apparel goods, services (including financial services), investment, intellectual property protection, anti-dumping, subsidies and safeguards, competition policy, electronic commerce, customs and border procedures, labour rights and obligations, environmental governance, sanitary measures for the protection of human health, technical barriers such as standards and conformity assessment measures, small and medium-sized enterprises, and state-owned enterprises.
Government Touts Benefits for Canadians
In a joint ministerial statement, the Accession Working Group chaired by Japan and tasked with overseeing the negotiations, confirmed that the United Kingdom has provided “…commercially meaningful market access offers of the highest standards on goods, services, investment, financial services, government procurement, state-owned enterprises and temporary entry for business persons”.
Canada was the first CPTPP member to support the United Kingdom’s accession application. Details of the deal have yet to be released but the Canadian government has signaled that Canadians will benefit in several respects, including from enhanced market access to the United Kingdom for Canadian goods, expanded export opportunities for Canadian service suppliers, government procurement opportunities in excess of those provided by the World Trade Organization's Agreement on Government Procurement, and investment protection including the right for foreign investors to challenge certain discriminatory actions by the U.K. government before an international tribunal.
Some Agricultural Industries Disappointed Accession Will Not Improve Market Access to the United Kingdom
The Canadian government's optimism about the United Kingdom accession is not shared by Canadian beef producers. They have expressed concern over the current lack of equality in trade opportunities between Canada and the United Kingdom and are disappointed that the imbalance was not rectified in the CPTPP negotiations with the United Kingdom.
Under the Canada-United Kingdom Trade Continuity Agreement (Canada-U.K. TCA), an interim agreement designed to provide "stability and predictability" for businesses engaged in Canadian-U.K. trade following the United Kingdom's departure from the EU and consequent elimination from the Canada/EU Comprehensive Economic and Trade Agreement, British beef can enter Canada duty free in unlimited quantities, but Canadian beef has duty free access to the United Kingdom only within the limits of an annual quota (2708 tonnes fresh and 1161 tonnes frozen). Canadian beef producers hoping to gain meaningful access to the U.K. market through the United Kingdom accession to the CPTPP will instead see Canada having to share duty-free access of a limited annual quota with Brunei, Chile, Malaysia, Mexico and Peru. The total shared quota for all six countries increases over 10 years to a maximum of 13,000 tonnes.
The Canadian Cattle Association (CCA) describes the beef trade situation as “fundamentally unjust” and noted that “other members of the CPTPP have achieved unlimited beef access in their bilateral agreements with the United Kingdom.” The CCA also expressed frustration with the continuing lack of progress in securing United Kingdom acceptance of Canada's meat hygiene system, despite it being widely accepted around the world.
Canadian Pork Council Chair René Roy maintains that the United Kingdom is not following trade rules and is blocking entry of Canadian pork by imposing non-tariff barriers. Roy refers to "deliberate misleading statements" by the United Kingdom about the use of growth hormones in Canadian pork and wants the Canadian government to defend Canada’s food inspection system more aggressively.
The Canadian Agri-Food Trade Alliance (CAFTA) released a statement expressing disappointment that the United Kingdom accession to the CPTPP did not addressed many of the “tariff barriers that limit Canada’s market access for important Canadian agri-food exports to the United Kingdom such as beef and pork”. At the same time, CAFTA noted that it was “encouraged by the United Kingdom’s adherence to language facilitating the trade of products of agriculture biotechnology (i.e., grains and sugars).”
For its part, the Dairy Farmers of Canada expects strict adherence to Canadian food and safety standards for U.K. dairy products entering Canada, as well as enforcement with respect to the volume of U.K. imports entering Canada. According to the Canadian government, the annual CPTPP tariff rate quotas (established annual volumes for which CPTPP country products enter duty free) for dairy products will not be increased in the light of the UUnited Kingdoms accession. However, the United Kingdom will acquire benefits beyond those in the existing Canada-U.K. TCA in respect of dairy products. For example, as a CPTPP member, the United Kingdom will secure opportunities to export cheese to Canada duty free, something the United Kingdom has been keen to do—for which the aggregate duty-free quota for CPTPP members will eventually rise to 16,500 metric tonnes annually.
Will Market Access Improvements be Achieved Under the New Canada/United Kingdom Bilateral Trade Agreement?
Negotiations to conclude a new, comprehensive Canada/U.K. free trade agreement to replace the interim TCA were launched in March 2022 and are due to conclude by April 2024. The Canadian beef industry has made it clear that it wants the "main obstacle" to the U.K. market—acceptance of Canada’s meat hygiene system—to be addressed in the bilateral deal.
Whom Does This Impact?
- Businesses that export/import goods or services to/from the United Kingdom.
- Businesses that trade in beef or pork or supply managed goods such as dairy or poultry.
- Businesses that would like to enhance export opportunities to new and existing markets in the United Kingdom and gain preferential access.
- The United Kingdom announced the conclusion of negotiations relating to its accession to the CPTPP. The accession will come into force once it is ratified by all CPTPP members, which is expected to take about 18 months.
- Canadian beef and pork producers have expressed concern over the current lack of equality in trade opportunities between Canada and the United Kingdom and are disappointed that the imbalance was not rectified in the CPTPP negotiations with the United Kingdom.
- The United Kingdom will secure benefits beyond those in the existing Canada-U.K. TCA in respect of dairy products. For example, as a CPTPP member, the United Kingdom will benefit from opportunities to export cheese to Canada duty free.
Bennett Jones’ trade experts have extensive experience in negotiating, interpreting and applying international trade agreements. We are available to assist in developing submissions to Global Affairs Canada on the potential benefits and drawbacks of adding countries to the CPTPP, or to provide general advice on opportunities and risks associated with the CPTPP or other Canadian trade agreements.
For assistance, please contact Darrel Pearson, Valerie Hughes, or any other member of the International Trade & Investment group.
1 Although Brunei signed the CPTPP, it has yet to ratify the agreement.