The U.K.'s Indo-Pacific push

The United Kingdom’s admission to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a significant step forward for the U.K. to join a free trade area in the Indo-Pacific. It will be the first European country to join the CPTPP, and the first non-founding member to join. This manifests the attraction of the Indo Pacific region to countries outside the region.

This is the fifth prong of the U.K.’s pivot to the Indo-Pacific which was promised in its post-Brexit review of U.K. international strategy.[1] The Integrated Review Refresh 2023: Responding to a More Contested and Volatile World links prosperity in the Euro-Atlantic to security in the Indo-Pacific and merges developments between these theatres. It seeks “a new network of Atlantic-Pacific partnerships”[2] which it has been working on for the past two years.

For example, in August 2021, quiet diplomacy by the U.K. persuaded ASEAN to lift its moratorium on engaging with new dialogue partners and admit the U.K. as the 11th dialogue partner.[3] It made the U.K. the first new dialogue partner for ASEAN since India and Russia in 1996. Over the last 25 years, other countries have only been accommodated as sectoral or development partners, which have a restricted engagement compared with dialogue partners which “share best practices and leapfrog the learning curve” [4] of cooperation.

Another prong of the U.K.’s Indo-Pacific outreach was sailing the British armada with the aircraft carrier Queen Elizabeth II across the Indo-Pacific from May to December 2021. It visited 40 littoral countries and allies. It was followed by the HMS Tamar, a river class offshore patrol vessel of the Royal Navy, and sister ship HMS Spey which have been on long-term deployment in the Indo-Pacific since September 2021.[5]

The third aspect was U.K.’s decision to join the U.S. to help Australia produce nuclear submarines under the AUKUS. Enunciated in September 2021, AUKUS is a military grouping to counter China and in 2023 has acquired credible and evident collaboration dimensions for producing nuclear submarines which will be provided to Australia. While these will be U.S. submarines, the UK hopes for sub-contracts for U.K.-made Rolls-Royce reactors. AUKUS will surely impact “innovation incubation, technology and information-sharing, and reinforcing a stronghold in the Asia Pacific.”[6]

In a similar move, but without the U.S., the U.K. and Italy are joining Japan for the development of the next generation fighter jet built trilaterally by 2035. This is one of Japan’s major moves in the defence sector without the U.S. and will bring together Mitsubishi Heavy Industries from Japan, BAE systems from U.K. and Leonardo from Italy’s defence complex.[7]

The CPTPP however, is perhaps among the most important development around the U.K.’s Indo-Pacific engagement.

As chairman of the CPTPP, Japan helped the U.K. manoeuvre the minefields in the discussions to ensure that its admission goes through smoothly. Since the U.S. withdrew from the TPP under the Trump administration, it is Japan which has led the organization. CPTPP members would not allow the UK any exceptions to the commitments and higher standards of economic cooperation. As the CPTPP’s first precedent-setting new members, Japan was consistent that the U.K. accept the entire CPTPP package and resolve issues with its members, like Canada over agricultural trade. The UK will have to implement some internal reforms to meet CPTPP standards within a stipulated time frame.

The immediate economic outcome of the UK association may be limited since the U.K. already has bilateral free trade agreements with 9 of the 11 members. But it is looking at longer-term economic profit and does not necessarily want to have this compared as a balance to its Brexit since the losses from Brexit are evidently higher. The CPTPP will increase U.K. economic output by less than 0.1% in the long run, over nearly 15 years.

The U.K. Trade Policy Project[8], which is developing design and delivery of its new trade regime, sees the adherence to the CPTPP more as a strategic move by the U.K. than pure economics.[9] On its part, the grouping sees the U.K. as a reliable partner. For Britain, joining the CPTPP was key to connecting its economics with defence and diplomacy.

Interestingly, now that the U.K.’s application is settled, the CPTPP has to turn its attention to two troublesome applications from China and Taiwan, both of which were made in September 2021, during the New Zealand chairmanship of the CPTPP. But the CPTPP seems to be in no hurry to deal with the two applications. (Ecuador, Costa Rica, and Uruguay have also applied).

The U.K. has touted itself as a major investor in Indo-Pacific economies. By 2021 U.K.’s investment in the CPTPP members was $160 billion. It comprises mostly of services: $43 billion in financial services and $8.6 billion in professional and scientific services.[10] Taken together as a group, the CPTPP is the fourth largest beneficiary of U.K.’s FDI which is expected to rise. [11]

The entry of the U.K., however, does not balance the absence of the U.S. The U.S. has introduced its own Indo-Pacific Economic Framework for Prosperity (IPEF)[12] as an alternative regional economic arrangement. Those CPTPP members who are party to IPEF negotiations still see it as a poor cousin to the U.S.’ re-joining the CPTPP. Hopefully, some healthy competition between the two groupings will the benefit the Indo-Pacific overall.

Gurjit Singh was India’s ambassador to Germany, Indonesia, Ethiopia, ASEAN and the African Union.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here

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References

[1] Global Britain in a Competitive Age: The Integrated Review of Security, Defence, Development and Foreign Policy, Gov.UK, 16 March 2021, https://www.gov.uk/government/publications/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy.

[2] “Integrated Review Refresh 2023: Responding to a more contested and volatile world0″ Gov.UK, 13 March 2023, https://www.gov.uk/government/publications/integrated-review-refresh-2023-responding-to-a-more-contested-and-volatile-world/integrated-review-refresh-2023-responding-to-a-more-contested-and-volatile-world.

[3] “ASEAN-UK Dialogue Partnership: plan of action 2022 to 2026,” Gov.UK, 4 August 2022 https://www.gov.uk/government/publications/asean-uk-dialogue-partnership-plan-of-action-2022-to-2026.

[4] “Cooperation with Dialogue Partners,” ASEAN, https://asean.org/our-communities/economic-community/asean-science-technology-and-innovation/cooperation-with-dialogue-partners/.

[5] “India is first port of call for UK ship in Indian Ocean,” Gov.UK, 6 January 2023, https://www.gov.uk/government/news/india-is-first-port-of-call-for-uk-ship-in-indian-ocean.

[6] Lauren Kahn, “The AUKUS Alliance Has a Lot More to Offer Than Submarines,” CFR, 27 March 2023, https://www.cfr.org/blog/aukus-alliance-has-lot-more-offer-submarines.

[7] Andrew White, “New UK-Japan-Italy fighter takes shape, with electronics details emerging,” Breaking Defense, 20 March 2023, https://breakingdefense.com/2023/03/new-uk-japan-italy-fighter-takes-shape-with-electronics-details-emerging/.

[8] “UK Trade Policy Project,” ECIPE, https://ecipe.org/uk-trade-policy-project/.

[9] “UK Accession to CPTPP: The UK’s Strategic Approach,” Gov.UK, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1027860/dit-cptpp-uk-accession-strategic-approach.pdf

[10] In 2022, technology sector investment in the UK was among the highest in the world including China. The large number of unicorns and Decacorns were impressive. The UK believes that its new partnerships in the Indo-Pacific will develop the digital economic sector in partnership with the CPTPP members effectively. The UK would also bring in its strength as a lead player in offshore wind energy with nearly 13 gigawatts of installed capacity, the largest in Europe. The UK target of enhancing offshore wind energy installation to 50 gigawatts by 2030 is an attractive area for cooperation with other members of the CPTPP.

[11] The acceleration of the UK-CPTPP combined GDP will grow from 12.2% of global GDP to 15.4%, an increase of about $2.4 trillion. The UK as the world’s sixth largest economy will be the second largest member of the CPTPPP and possibly an important market for other developing members of the FTA. It will possibly help members to diversify their supply chains into other regions and build better and resilient supply chains across new markets.

[12] Gurjit Singh, “The launch of the Indo-Pacific Economic Framework,” ORF, 3 June 2022, https://www.orfonline.org/expert-speak/the-launch-of-the-indo-pacific-economic-framework/.