The Business and Trade Secretary, Jonathan Reynolds, has outlined a bold new direction for UK trade policy under the Labour government, embracing a dual strategy aimed at strengthening ties with the European Union while simultaneously forging new global partnerships.
In an article for the Observer online, Reynolds hails the UK’s upcoming entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a “real win” for British exporters, underscoring the importance of expanding trading opportunities as a critical component in rebuilding the nation’s economy.
“Greater trading options are crucial to the rebuilding of the country,” Reynolds emphasises, reinforcing Labour’s commitment to a multifaceted trade approach.
This announcement further solidifies that Keir Starmer’s government will not seek to rejoin the EU or its economic structures. Rejoining the EU would require Britain to exit the Trans-Pacific Partnership, as the coexistence of separate free trade agreements is incompatible with EU membership in the single market and customs union.
The CPTPP, a significant trade pact involving nations such as Australia, Japan, and Canada, is set to include the UK following an agreement signed by the previous Tory government in July 2023. Once completed, the bloc will represent a combined GDP of over £12 trillion, including the UK’s contribution.
However, while Reynolds expresses enthusiasm for the CPTPP, economists remain sceptical about its immediate impact on the UK’s trade and GDP. Many argue that it will not compensate for the losses incurred from leaving the EU, the single market, and the customs union. The Office for Budget Responsibility, for instance, projected that the CPTPP would add a mere 0.04% to GDP over the “long run,” defined as 15 years of membership.
Similarly, two bilateral deals with Australia and New Zealand, which were touted by the Tories as landmark achievements of post-Brexit “global Britain,” are expected to increase the UK’s real GDP by just 0.1% by 2035.
In his article, Reynolds is clear: while Labour will vigorously pursue global trade opportunities like the CPTPP, it will also seek to deepen relations with the EU, albeit outside its formal economic and trading structures. This nuanced approach reflects Labour’s intent to navigate a complex global trade environment while keeping the UK’s best interests at the forefront.
