Last reviewed 29 December 2021

The UK Government has made clear its ambition to join the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) highlighting the fact that it covers £8.4 trillion of GDP with 11 Pacific nation members from Australia to Mexico.

However, a new Asia-Pacific free trade agreement (FTA), set to enter into force on 1 January 2022, looks like surpassing the CPTPP.

According to a study by UNCTAD (United Nations Conference on Trade and Development), the Regional Comprehensive Economic Partnership (RCEP), which includes 15 East Asian and Pacific nations, will become the largest trade agreement in the world as measured by the GDP of its members — almost one third of the world’s GDP.

By comparison, other major regional trade agreements by share of global GDP are the South American trade bloc Mercosur (2.4%), Africa’s continental free trade area (2.9%), the European Union (17.9%) and the United States-Mexico-Canada agreement (28%).

UNCTAD’s analysis shows that the RCEP’s impact on international trade will be significant. The agreement encompasses several areas of co-operation, with tariff concessions a central principle as they will eliminate 90% of tariffs within the bloc. While many tariffs will then be abolished immediately, others will be reduced gradually during a 20-year period.

The report, available here, states, “…the economic size of the emerging bloc and its trade dynamism will make it a centre of gravity for global trade”.

Trade between the bloc’s 15 economies was already worth about US$2.3 trillion in 2019, and UNCTAD’s analysis shows the agreement’s tariff concessions could further boost exports within the newly formed alliance by nearly 2% or approximately US$42 billion.