Accessing Preferential Duty Rates with CPTPP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a significant free trade agreement that was established to enhance economic integration amongst its member countries. It is designed to reduce trade barriers, promote economic growth, and create jobs across the participating nations. The treaty established a free trade area between the states.

CPTPP is a trade block of 12 countries which the UK acceded just as of 15 December 2024.

The UK decided to join this Partnership for many reasons, including helping to improve the trade of goods and services across these countries and to remove trade barriers for businesses trading internationally.

Covering a population of 600 million people, members thus far include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United Kingdom. 

This agreement will build on the current trade deals established with Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam. The combined economies of the current twelve members represent roughly 14% of the global gross domestic product so it is therefore a considerably large portion of global international trade that continues to increase.

There are a further seven countries applying to join the CPTPP at present: China, Taiwan, Ecuador, Costa Rica, Uruguay, Ukraine and Indonesia. 

The CPTPP trade agreement evolved from the original Trans-Pacific Partnership (TPP), which was not fully ratified. This was a proposed trade agreement between 12 Pacific Rim countries, hence the Pacific reference and therefore explains why the UK is the only country of the twelve not actually a part of the Pacific Rim.

In January 2017, after the election of Donald Trump, his government withdrew the United States from the TPP. The remaining eleven participants negotiated a new deal, which became CPTPP.

How Does This Impact UK Exporters?

In terms of the UK joining the CPTPP, one of the most tangible benefits to UK exporters is the tariff-free trade for goods exported from the UK to CPTPP parties that comply with the preferential rules of origin established in the agreement. 

In the long term, the UK Government is forecasting a £2.6 billion boost in exports of UK goods to CPTPP countries. These figures could increase even further with the likes of China and Taiwan set to join.

What is Preferential Origin?

Preferential origin refers to the status given to traded goods depending on the country they originate. This status is determined by the preferential rules of origin established in free trade agreements between two or more countries. Preferential origin rules establish the criteria products must meet to qualify as “originating” and therefore access nil or reduced duty rates.

Each trade agreement has its own set of preferential rules, and they can differ from one agreement to another, but they navigate around three main categories: Wholly produced, last substantial transformation and non-originating.

To access preferential duty rates, exporters are required to confirm the origin of their goods in their trade documentation (i.e. commercial invoice) and if needed, present evidence to their importing counterparts and/or importing customs authorities that the goods shipped qualify as originating. Documentation, such as a Certificate of Origin or an EUR 1 might be required to claim preferential tariff benefits. 

Key Features of CPTPP

Market Access: The agreement aims to decrease red tape for services and reduce tariffs on originating goods traded between member countries.

Investment Protections: CPTPP includes provisions that protect investments made by businesses in member countries against unfair treatment or expropriation.

Regulatory Cooperation: The agreement encourages regulatory coherence among members to facilitate smoother trade processes and reduce unnecessary regulatory burdens.

Labour and Environmental Standards: CPTPP establishes commitments related to labour rights and environmental protections to ensure that trade does not come at the expense of these important areas.

Small and Medium-sized Enterprises (SMEs): Recognising the challenges faced by SMEs in accessing international markets, CPTPP includes specific provisions aimed at assisting these businesses in exporting their goods and services.

Accession Process: The CPTPP has an open accession process that allows other economies to join if they can meet its high standards for trade and investment.

Further guidance is available through specialised exporting guides from the UK Government for each member country: Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, Vietnam.

To understand how to apply for export documentation, please visit the LCCI's Trade Documentation page.

LCCI runs regular training courses on preferential rules of origin, visit our website to book your spot and make the best of the UK’s free trade agreements

Sources: UK Government CPTPP benefits, UK Government Markets.

This article was written by Edward Jones, Certificates of Origin Account Executive, LCCI.