Manufacturing businesses set to benefit as UK concludes tax agreement with Peru and ratifies deal to join major Indo-Pacific trade bloc

17 May 2024

The UK has, earlier than expected, completed its key step required for joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP, Minister for Trade Policy Greg Hands will tell fellow members of the group during a meeting in Arequipa, Peru.

Joining CPTPP – which will account for 15% of global GDP with the UK included – means over 99% of current UK goods exports to CPTPP members will be eligible for tariff-free trade. Encompassing 500 million consumers in some of the world’s largest current and future economies, the potential for increased trade is huge.

Business and Trade Secretary Kemi Badenoch signed the deal last July to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a modern, ambitious trade pact spanning 12 economies across Asia, the Pacific, and now Europe. Being part of CPTPP will support jobs and economic growth across the country, with every nation and region expected to benefit.

Only six economies, in addition to the UK, need to ratify by October for the deal to enter into force by the end of the year. Singapore, Japan and Chile have already ratified, with other countries in the works.

During a two-day visit which starts on May 17, Minister Hands will also welcome the conclusion of negotiations on a Double Taxation Agreement (DTA) which will protect businesses from being taxed twice – once in Peru and again in the UK, or vice versa.  Reducing costs and providing certainty, it is a major win for businesses in both countries and will provide opportunities for substantial increases in bilateral trade and investment.   


View from the UK: Essential Coatings

Minister for Trade Policy Greg Hands said: “The UK has been racing to get our ratification done because we know how much CPTPP will benefit British businesses, whether through access to new markets or cutting red tape on existing exports.

“I’m delighted we were able to bring this forward, ahead of our original July forecast, so we can get the countdown to Entry into Force going as soon as possible.”

The UK intends to be an influential member of CPTPP, making its voice heard on all key matters, and is already involved in meetings and discussions with CPTPP Parties on the future of the agreement. Peru, a member of the bloc, is a longstanding trading partner for the UK, with bilateral trade worth £1.8 billion last year.

The manufacturing sector is estimated to grow in gross value added (GVA) by around £250 million relative to 2021 levels as a result of the CPTPP deal. UK manufactured goods exported to CPTPP were worth £4.1 billion in 2023 and this could increase by over £1 billion in the long run. The automotive sector in particular could benefit from the deal with exports potentially increasing by £712 million long-term, driven by a liberalisation of tariffs and non-tariff measures.

Alexander Dennis is a global leader in the design and manufacture of double deck buses and is also the UK’s largest bus and coach manufacturer. President and Managing Director of Alexander Dennis Paul Davies said: “From our home market in the UK, we have consistently expanded into new markets around the globe and our double decker buses are a familiar sight in Canada, Mexico, New Zealand and Singapore, to name just some of the CPTPP parties.

“Trade deals like this allow us to better support our customers across the world by making it easier to choose Alexander Dennis and allowing us to provide our AD24 aftermarket services more smoothly.”

William Bain, Head of Trade Policy at the British Chambers of Commerce, said: “There are few multi-national trade agreements like this one. The UK’s addition to this bloc will open up new opportunities for both inward and outward investment.

“Trade rules will be more favourable for manufacturers looking to sell products to other member countries and data transfers for firms in the services sector will also be more straightforward.

“Crucially, it will also give the UK a say in the bloc’s future development, making it a deal that will work for our traders both now and in the future.”

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