…By for TDPel Media. The UK government celebrates the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade deal as a significant milestone that will strengthen connections with dynamic economies.
However, hidden from the public eye is the fact that this deal will have little impact on London’s economy.
Understanding CPTPP and Its Limited Economic Benefits
CPTPP is a trade bloc comprising countries in the Asia-Pacific region.
Opinions on the UK’s participation are divided along Brexit lines, with some promoting overly optimistic projections of economic benefits, while others point to modest gains indicated in the government’s own assessments.
While any increase in trade is advantageous, particularly geopolitically, the deal’s economic gains will likely be minor for advanced economies like the UK.
Free trade deals primarily focus on slashing tariffs on goods, yet tariffs on most products (except agriculture) are already relatively low, limiting the potential boost.
Services Trade and London’s Predicament
London, as a major services economy, especially in finance and technology, faces a particular challenge with modern free trade deals.
These agreements often neglect services trade, with CPTPP being no exception.
Though the deal has provisions to facilitate services trade and reduce red tape, they fall short of comprehensive measures.
Distance Matters: The Impact on London’s Services Trade
The significance of distance in trade cannot be overlooked, and this applies to both goods and services.
Companies tend to engage in more trade with neighboring countries due to logistical considerations, language barriers, and cultural differences.
As such, London-based professional services firms are likely to do more business with nearby European partners than with far-off CPTPP countries.
Prioritizing Professional Services in Trade Policy
In an ideal scenario, trade deals should benefit every region and sector of the economy.
For the UK government, emphasizing the importance of London’s professional services is crucial.
Collaborating with other governments and the World Trade Organization (WTO) to harmonize regulations, recognize qualifications, and cut red tape would facilitate London’s services trade globally.
Capitalizing on the Potential of Independent Trade Policy
Although joining CPTPP is a positive step, its economic benefits may remain limited.
However, the UK government has the opportunity to use its independent trade policy to advocate for reforms in the global rules-based system and emphasize the significance of services trade.
This approach could yield substantial economic gains for the entire UK, particularly for London.
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