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Trade

UK knocks on TPP door harder after EU exports fall 16%

Britain also nearing trade deals with India and Australia

British Prime Minister Boris Johnson reviews the Brexit trade deal with the EU that he signed at number 10 Downing Street in London, on Dec. 30.   © Reuters

LONDON -- A sharp drop in Britain's exports to the European Union following its exit from the bloc last year is adding a sense of urgency to the debate within the U.K. on whether to join the Trans-Pacific Partnership trade agreement.

The TPP's top decision-making body agreed Tuesday to formally begin the review to see if the U.K. meets the requirements to enter the 11-member trade bloc. The British government wasted no time in selling the public on the advantages the TPP has over the EU.

"We would get all the benefits of joining a high-standards free trade area, but without having to cede control of our borders, money or laws," International Trade Secretary Liz Truss said Tuesday. Free movement of migrants into the U.K. and rules brokered by "Eurocrats" were two hot-button issues that triggered the Brexit vote.

The government will publish its approach to talks with the TPP in the coming weeks, with a goal of reaching an agreement "as quickly as possible." The U.K. is also advancing separate trade deals with India and TPP-member Australia.

British export of all goods during the first quarter of this year has dropped 11% to 73.4 billion pounds ($103.9 billion) from a year earlier, according to official statistics. Exports to the EU alone sunk even further by 16%. Compared with the first quarter of 2019, or prior to the coronavirus pandemic, trade to the EU plunged by nearly 30%.

The government insists there is not enough data to determine long-term effects. What the statistics do reveal is the large immediate impact of non-tariff barriers that have emerged following the transition period for leaving the EU.

Although the U.K. is still able to export goods to the EU at zero tariffs, the shipments have to go through entirely new formalities, such as quality checks on foodstuffs and manufactured goods. The red tape has raised costs and depressed shipments across a wide spectrum of British industries.

But trade with the TPP, officially called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, holds better promise. The U.K. has maintained roughly the same level of exports to TPP nations compared with a year ago. First quarter exports to India exceeded the year-earlier result by nearly 23%.

The U.K. looks to seal a free trade agreement with India as part of an enhanced bilateral relationship. The British government started in late May to accept input from the public on the pending trade deal over a 14-week period.

Furthermore, the U.K. navy is dispatching this year a carrier strike group to the Indo-Pacific region that will be led by the aircraft carrier HMS Queen Elizabeth. The move was made with an eye on China's expansionist activities in the region.

The U.K. plans to win the trust of Indo-Pacific nations by contributing to freedom of navigation patrols. That way, the U.K. can tap into the growth of Asian nations such as those in the TPP. The 11 TPP members are Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

It is too early to tell if the trade deals with the TPP and India will proceed smoothly. Australia and the U.K. are expected to reach a broad agreement on a free trade agreement this month. However, an interest group representing British farmers have objected to opening up the domestic market to Australian beef and mutton. This issue caused a massive row within Prime Minister Boris Johnson's cabinet at one point.

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