Official figures have shown that the potential benefit to the UK economy from a proposed partnership with Asian countries is less than one-fortieth the expected losses from Brexit.
And Labour warned that the projected 0.08 per cent (£1.8bn) boost to GDP over the long term will shrink to just 0.017 per cent (£400m) if Malaysia continues to resist ratification of the deal, as it has for the past three years.
One trade expert branded the expected benefits “teeny” by comparison with the negative impact of leaving the EU, just days after food and drink producers warned they had lost £2bn worth of exports to Europe in just the first three months of Brexit.
Meanwhile, campaigners warned that details of the UK’s plans released today show that international trade secretary Liz Truss is ready to sign up to legal mechanisms which would allow big businesses to challenge governments in the courts over social and environmental legislation or barriers to involvement in public services.
Launching negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Monday, Boris Johnson said membership would “open up unparalleled opportunities” for British businesses, while international trade secretary Liz Truss said that the region is “where Britain’s greatest opportunities lie”.
However, analysis released today by Ms Truss’s Department for International Trade forecast a boost to UK GDP of just £1.8bn in 15 years time – the equivalent of 0.08 per cent of the British economy.
This amounts to less than one-fortieth of the 4 per cent long-term hit to UK GDP forecast by the government’s independent Office for Budget Responsibility as a result of Brexit, even with the Trade and Cooperation Agreement (TCA) secured by Mr Johnson on Christmas Eve.
And the DIT’s forecast of £1.7bn worth of additional UK exports to the 11 existing members of the CPTPP is less than the £2bn loss in exports to the EU reported by the Food and Drink Federation over the first three months of this year.
London School of Economics trade expert Dr Thomas Sampson told The Independent: “A small gain is better than nothing. But if you take the OBR figures, they have put the cost of Brexit at 4 per cent.
“Any potential gains from joining the CPTPP are teeny compared to the costs of Brexit and there is no realistic possibility that CPTPP membership can offset the economic costs of Brexit.”
The DIT also estimated an £800m boost to UK workers’ income in 15 years’ time from joining the Pacific partnership – the equivalent of around £25 a year for each of the country’s 32.5m people in employment.
The DIT stressed that the £1.8bn figure represented extra growth over above increased UK trade with the CPTPP countries – including Australia, Japan, Malaysia and Singapore – that could be expected anyway over the long term.
And the department said that the boost to GDP would swell to £5.5bn if South Korea and Thailand joined the partnership.
The forecast “excludes a number of future trends that could mean that the UK and global economy look very different in the future, and which could increase the economic value of UK accession,” said the DIT in its document setting out the UK’s strategic approach to negotiations.
“In reality, the world is changing: the number of middle-class consumers in CPTPP member countries is expected to rise, driving a shift in consumption patterns towards high-value, luxury goods and services in which the UK has strengths.
“While the modelling provides an indication of the likely economic impacts, it does therefore not tell the whole story and should be understood in the context of underlying economic growth and other potential changes in the global economy.”
But Labour’s shadow trade secretary Emily Thornberry said: “The forecast benefits of joining CPTPP depend heavily on increased trade with Malaysia. So what if Malaysia keeps refusing to ratify?
“Read the small-print on the last page of the DIT document. The UK growth benefits fall to £400m, just 0.017 per cent of GDP.”
Liberal Democrat trade spokesperson Sarah Olney said: “It is shocking that the government is presenting these negotiations as a free trade triumph when the expected benefit to our economy is a drop in the ocean.
“Ministers continue to get their priorities wrong on international trade. Instead of paying attention to the huge drop in trade with Europe – by far our biggest trading partner – they are trying to present the Pacific Trade Pact as the way forward.
“The government must focus on the mountains of paperwork and red tape threatening British small businesses trading with the EU.”
Meanwhile, campaign group Global Justice Now warned that CPTPP membership would require the UK to sign up to an Investor-State Dispute Settlement (ISDS) mechanism allowing companies to sue governments if they feel they are not being given fair access to markets.
The DIT document confirmed that membership of the CPTPP would include an ISDS mechanism to provide “legal redress” for investors.
It insisted that the government would “protect the UK’s right to regulate in the national interest, to achieve public policy objectives and, as the government has made clear, to continue to protect the NHS”.
But GJN director Nick Dearden said big polluters could be expected to attempt to use the ISDS to get round climate regulations which add to the cost of doing business.
“Liz Truss is on a mission to drive down standards and hand over power to transnational corporations,” said Mr Dearden. “CPTPP membership will sign us up to a system of secretive corporate courts, known as investor-state dispute settlement (ISDS), that allows big polluters to sue governments for taking action on the climate.
“Just as we’ve knocked these courts out of the UK-Australia trade deal, we find out the government is trying to sneak them into other trade deals. If the UK joins this block, it will be an act of environmental vandalism in the year we host COP26, binding us to climate inaction for another generation.”
