The UK joining the Indo-Pacific trade bloc (CPTPP), which now has a total GDP of GBP11tn (US$13.75tn), could create new relationships for the apparel industry, UK Fashion and Textile Association (UKFT) CEO Adam Mansell tells Just Style exclusively, however he notes the rules of origin are "very narrow".

UK Prime Minister Rishi Sunak announced last week (31 March) the country will be joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free-trade area of 11 countries spanning the Indo-Pacific.

Mansell explained the UK already has bi-lateral trade agreements with key CPTPP export markets for fashion and textiles, including Canada, Japan, Mexico and Vietnam which are already ratified and operational.

However, he explained: “As with all trade agreements, the Rules of Origin for the CPTPP agreement will determine whether goods can pass under preference or not. It is in this regard that UK fashion and textile exporters will need to take special note, as this important nuance is missing from the texts. The CPTPP Rules of Origin are very narrow and will only include goods which are made in either the UK or one of the CPTPP countries. There is no automatic EU cumulation and most non-originating materials would lead to duty being paid.”

His advice for the apparel sector is to choose the agreement that works best. He said: “As has been seen from the way CPTPP is implemented in other countries, where the UK also has bilateral agreements with CPTPP countries, UK exporters should expect to be able to choose which agreement is more beneficial to them. For example, the UK-Japan agreement is based on single transformation and the UK-Canada agreement includes EU cumulation whereas CPTPP does not. Therefore, companies may still prefer to use the UK’s bilateral agreements for their exports.  Importers may also prefer to use the existing UK-Vietnam agreement for example or may find that CPTPP is an easier agreement for their imports, for example, from Peru.”

The Indo-Pacific bloc is home to 500 million people and will be worth 15% of global GDP once the UK joins. The UK Government says it is estimated that joining will boost the UK economy by GBP1.8bn in the long run, supporting jobs and economic growth across the country.

Some additional benefits of CPTPP for the UK are said to include:

·        Increased flexibility: Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely across the bloc. It will also help exporters diversify their supply chains and create new export opportunities.

·        Pro-investment: Investment between the UK and CPTPP countries is expected to increase as the agreement contains provisions to limit barriers and encourage more inward investment. Inward investment stocks to the UK from CPTPP countries were worth GBP182bn in 2021.

·        New markets: Joining means we will have a Free Trade Agreement with Malaysia for the first time, giving businesses far more access to an economy worth GBP271bn in GDP in 2021. Tariffs of around 80% will be eliminated on UK exports of whisky and 30% on UK exports of cars, helping the UK get a larger share of the market.

·        Cutting-edge: Remotely delivered services from the UK to CPTPP were worth GBP20.5bn in 2020. CPTPP sets modern rules for digital trade across all sectors of the economy and will support UK businesses of all sizes to seek new opportunities in CPTPP markets.

UK Prime Minister Sunak stated: “This deal demonstrates the real economic benefits of our post-Brexit freedoms. As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation. As the first new nation and first European country to join, british businesses will now enjoy unparalleled access to markets from Europe to the south Pacific.”

Meanwhile, the UKFT’s Mansell said the organisation is in close contact with the UK government and encourages it to support UK companies with their export activities. Additionally, UKFT will monitor the situation around CPTPP and its impacts for UK fashion and textile exporters, importers and re-exporters, with Mansell concluding: “Trade agreements alone do not sell goods.”

The UK and CPTPP members will now take the final legal and administrative steps required for the UK to formally sign in 2023.

By Just Style