Hands up if you were aware that the world’s largest free trade agreement came into force at the start of 2022?
You would certainly be forgiven for having missed that, as coverage in the UK around the start of the Regional Comprehensive Economic Partnership (RCEP) on 1 January was limited to say the least.
This is surprising considering the 15 member countries of this Asia-Pacific focused Partnership, with signatories including Australia, China, Indonesia, Japan, South Korea and Singapore, account for close to a third of the world’s population and global GDP.
RCEPs existence is a clear sign of how countries across that part of the world are taking pro-active steps to ensure that the economic establishment of what is increasingly being described as the ‘Asian Century’ - with significant shifts in terms of an increasing Asian global share of trade, capital, people, knowledge and resources – is based on solid foundations.
The Richardson family business has long held a number of interests around the Pacific Rim, from the west coast of Canada through to Singapore, Australia and New Zealand. Given that presence, and our ongoing thirst to seek out new business, we have been paying close attention to developments in the region for some time, and believe that these very clear economic shifts mark the area out as one that deserves ever closer engagement for those seeking future opportunities.
2021 saw the UK government make a concerted and very public ‘tilt’ towards greater activity and presence in the Indo-Pacific. Militarily, this was demonstrated when the carrier HMS Queen Elizabeth led a ‘Strike Group’ on a seven-month tour of duty in the region, while the desire for closer economic ties was seen with the UK’s application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a trading agreement between 11 counties positioned around the Pacific which was formed in 2018.
Without getting into all the details here, there are a range of similarities and differences between CPTPP and RCEP, with seven countries being members of both and a multitude of questions as to the relative strength and subsequent real value of their respective free trade commitments. At a very high-level it is fair to say that the two agreements should complement each other for those countries who are members of both, while the existence of both the RCEP and CPTPP underlines how the region is seeking ways to bind itself more closely together economically, even at a time when diplomatic tensions between certain nations might be very visible in the world’s media.
From a UK perspective our eggs are very much in the ‘CPTPP basket’, with accession into this partnership as the first new member expected to be confirmed later this year. On an initial glance it might seem strange that having left the EU we would then seek to join a new trading bloc with countries based around the Pacific Rim. However, leaving a discussion on the merits of Brexit and the EU to one side for the purposes of this short piece, when one thinks about the rapid economic developments taking place in the Asia-Pacific, then finding ways to align ourselves more closely with this region makes far more sense, and provides a helpful platform for entrepreneurial businesses to use when searching out new opportunities.
2022 promises to be an exciting year for Birmingham and the West Midlands, with the Commonwealth Games being a marvellous opportunity to celebrate the strengths of the region and showcase our wares to the world. At the same time, if ever there was a year to be fully aware of our economic future as a country, and developments such as RCEP and CPTPP, then this is it. After all, how else can we capitalise on the international reach of the Games if we do not have a good sense of the shifting sands around us?
Paul Faulkner is chief of staff for RCL Partners, the retained advisors to the Richardson family business