BY ALEX STORY
A few days ago, after two years of negotiation, the United Kingdom reached an agreement to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
As the Centre for Strategic and International Studies, the Washington based think tank writes, with a combined GDP of close to $13.5 trillion, the partnership is “already one of the world’s largest free trade agreements” in the world. The European Union is of a similar size.
The United Kingdom had to reach an agreement with 11 sovereign states, including: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam.
Other applicants are China and Taiwan, among others.
It is a significant watershed in our post European Union history. As economist Catherine McBride writes in her recent and excellent “CPTPP Mythbuster”, the agreement focuses solely on trade, not on politics – as it should always be.
It is completely different by design from the European Union, which is driven by the “ever closer union” mantra and is as a result “entirely a political project”, which imposes “an additional layer of government demanding more import tariffs and sales taxes to pay for a Court, Parliament, Commission and officials with bloated salaries, accommodation, pensions and chauffeur driven limousines”.
Mrs McBridge continues: “CPTPP does not impose tariffs on its members should they choose to import goods from outside the group”, adding “quite unlike the EU, which imposes tariffs on non-EU imports.”
In other words, one relationship is based on the idea of facilitating trade between sovereign countries; the other is a protectionist block intent on both shielding certain sectors, such as agriculture, from global competition, and sacrificing the national interests of 27 very different countries in the name of an abstract “greater good”, or as former President of the European Commission Barroso called it: an “Empire”.
One is trade specific, the other politics dominated.
The European Union, centralised as it is, is a boon for large corporations and their lobbyists.
Raising the cost of doing business within the European Union’s borders through regulations and directives is a way of protecting the incumbents. The upshot is that goods, whether manufactured or grown, are more expensive than they should be.
Our exit from the European Union should have made this clear. But it has been a very painful process.
The main reason is that our bureaucratic class evidently suffered, and still do, from the political equivalent of the Stockholm syndrome, as they developed, over forty long years, positive feelings toward their continental abusers.
As a result, we are not quite where we ought to be.
However, as Leornard Cohen, the late Canadian poet, used to sing: “there is a crack in everything. That’s how the light gets in”.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a ray of light, shining in the faces of the EU and supernationalist armies of doom, daily talking down UK Plc, while never having the decency to read up on the constant societal upheavals rocking France, Germany or Holland and their farmers to name but a few.
Two specific but meaningful examples illustrate the importance of a combination of trade and sovereignty on the one hand and the subjection to trade regulations shorn of democratic accountability on the other.
First the context: the Bank of England reminds us that inflation is an eye watering 10.4%, while the current base rate is 4.25%.
For us, as consumers, money is tight.
Reducing costs, then, must be one of the key priorities of a sovereign country, in particular in basic items such as foods and cooking oils.
With the CPTPP, the UK’s food manufacturers have access to Malaysian palm oil free of import duties.
Palm oil is a good example of a product that has been vilified perhaps more than most by the EU’s enormous agricultural sector intent on protecting its rapeseed oil market.
The facts are that palm oil is more sustainable than any other vegetable oil.
Oil yields for palm per hectare is almost 6-10 times that of other oilseeds such as rapeseed, soybean, olive, or sunflower.
Because of its high yield, palm oil also uses around one-ninth the land of other aforementioned substitutes.
For example, by expanding palm oil production to keep pace with the demand would require 36 million hectares of additional land, whereas soybean, the second most popular oil crop, would need 204 million more hectares.
A more efficient product that is cheaper: Here we have Adam Smith’s invisible hand at play.
The other benefit of having left the European Union, and the advantage of divergence, is that the EU recently passed regulation 2023/5, allowing for partially defatted powder of the house cricket (Acheta domesticus) into the food chain for human consumption.
From February, the regulation makes clear that cricket powder can be added to a multitude of products from multigrain bread and rolls, to chocolate, confectionary and nuts and oilseeds, and, finally, to “meat preparations, intended for the general population”. Delicious.
The regulation is effective inside the European Union but was not ratified by any of the 27 national parliaments within the EU. Regulations are imposed (not debated) by the European Commission.
In this case, the powdered bug was forced into the food chain of around half a billion people without debate.
The new trade deal (CTPP) is a positive. It enables businesses large and small to source their preferred raw material across the planet without having to give away any of our country’s sovereign powers as a quid pro quo. In so doing, it inevitably leads to better sourcing, responding to specific needs, and leading to cheaper and better goods.
Had our leaders had more gumption, the benefits of Brexit would have been easily discernible much earlier.
Perhaps the CPTPP will accelerate the hitherto painful decoupling process from our abusive neighbour.
Alex Story is Head of Business Development at a City broker working with Hedge Funds and other financial institutions. He stood for parliament in 2005, 2010 and 2015. In 2016, he won the right to represent Yorkshire & the Humber in the European Parliament. He didn’t take the seat.