The admission of the UK to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) received a mixed response in the national media, ranging from exuberance to seeming indifference. Apparently, some trading blocs are preferable to others.
It’s too early to gauge what immediate impact the move will have on the UK economy and capital markets, but it’s a worthwhile consideration for investors, at least those with lengthy horizons. The admission of another G7 country like the UK, with a reputation for market access, alignment and an internationally respected regulatory framework, should do much to limit the spread of unfair and coercive trading practices in the region and elsewhere, thereby increasing the attractiveness of the bloc to other potential entrants. At any rate, the potential implications for retail investment portfolios will become clearer as time moves on.
The UK is the first European nation to join the CPTPP, but some have questioned the rationale behind the move given that the country has existing Free Trade Agreements (FTAs) in place with nine of the 11 member states, such as the new Japan-UK Comprehensive Economic Agreement (CEPA). Yet provisions under the bilateral trade agreements can be altered when they are deemed mutually beneficial, providing a degree of flexibility when dealing with fellow members.