Sophia Gaston, Dr Chun-Yi Lee and Dr Minako Morita-Jaeger.

Q8 The Chair: Welcome to this evidence session of the International Agreements Committee on the CPTPP. You have had a list of interests that are declared by members of the committee. The meeting is being broadcast via the parliamentary website, but a transcript of the meeting will be taken. You will have the opportunity to make corrections to it and it will be sent to you for that purpose. It will be published on the committee website. These are corrections, please, not a complete change of position; that would not be helpful for us.

I will start with the questioning and then, as you know if you are familiar with the process, questions will be asked by different members of the committee and others will come in from time to time. The question I want to start with is to ask your view as to what UK accession to the CPTPP means for its geopolitical priorities, particularly the Asia-Pacific tilt that was referred to in the March revision.

Dr Minako Morita-Jaeger: I am a trade policy expert working at the University of Sussex, looking at FTAs in detail and how they relate to foreign policy relations. The UK joining the CPTPP is, as everybody knows, more than economics and its political importance. Since the UK departed from the EU and then in promoting the Asia-Pacific—another way to say it is the Indo-Pacific tilt—starting from the continuity agreement bilaterally, then the UK-Japan CEPA and moving to bespoke FTAs with New Zealand and Australia, the UK has been promoting bilateral FTAs. This is a plurilateral FTA. The UK has jumped into US market-driven FTAs. This is a significant difference in context and from a regulatory policy perspective. That is one thing.

Then geopolitically, because the UK is the first country that joined the CPTPP from outside the Asia-Pacific, it opened the door to other countries outside the Asia-Pacific joining the club. That is a significant change; it completely changed the nature of the CPTPP. Geographically, the UK’s geopolitical strategy of joining the CPTPP enhanced its relationship with Asia-Pacific countries, but it is more than that, going to the potential of a more global context.

The Chair: Thank you; that was a very good start to our session. Let me ask the other two witnesses if they would like to add, contribute, contradict or vary what you have just said.

Sophia Gaston: Thank you very much for having me here. The CPTPP, along with AUKUS and ASEAN partner status, is one of the three jewels of the crown of the Indo-Pacific tilt, which has now evolved into a more established presence. This obviously reflects—and we have to come back to the integrated review and the refresh that has reasserted that conceptual framework—a prioritisation of the UK’s primary security theatres. We have seen a slight readjustment and rebalancing in the refresh that was published earlier this year, building on what we had in 2021, but what it really set out is that the UK sees the Euro-Atlantic as its home region and the Indo-Pacific as the most vital secondary theatre in both security and economic terms.

The CPTPP has some economic dimensions and opportunities and I am sure we will get into some of those in the discussion, but it is important to understand that it is a forum through which a lot of standard-setting and regulatory governance frameworks will be established. For the UK to have a seat at that table is very important.

The UK will also gain a seat at the table in decisions about future members of the CPTPP. There are some Latin and South American potential members that have put themselves forward. There is also China and Taiwan. These will obviously be incredibly challenging diplomatic decisions for all members and the UK will have a role in taking those choices.

The UK’s presence in CPTPP also to some degree fills the gap that has been vacated by the United States in this theatre. The United States has withdrawn to some degree from economic statecraft. There is a bipartisan omertà around trade in Washington at the moment, and the nightmare scenario is that China could be a member of the two Indo-Pacific trading blocs and the United States not a member of either. The UK is definitely acting to some degree as a proxy and that is certainly understood by many of our allies.

The UK has certain strong credentials and strengths as we are seen by our peers and other nations around the world. We are seen as a particularly strong advocate for free trade, as well as a leading diplomatic power and a penholder in institutions. The impasse at the WTO at the moment means that these regional trading blocs are increasingly important and our membership there also adds credibility to the CPTPP.

The Chair: Can I ask you this and then I will go on to Dr Lee? Dr Morita-Jaeger said that she saw the UK as being a leader, an example to other countries outside the countries otherwise served by CPTPP. Do you share that view?

Sophia Gaston: Certainly, the UK’s strengths are fairly consistently captured to be diplomatic skills, as I mentioned, being the penholder in a lot of diplomatic settings. Our membership of institutions, our strong historical and contemporary relationships and then more domestically the fact that we are home to leading global financial, legal, regulatory and education institutions and that these are considered to be very well run—all that plays a big role in our international standing. It is why our membership of frameworks such as CPTPP conveys benefits to us as the UK but also to the forum itself.

Dr Chun-Yi Lee: Before I start, we also published a book on China, Taiwan and the UK’s application to the CPTPP. I will forward you later the book details. It also includes the perspective of the US, so a lot of details are in the book.

The Chair: I cannot read the title from here; I am sorry.

Dr Chun-Yi Lee: I am sorry. Do not worry; I will forward you the details later. Both Dr Morita-Jaeger and Sophia Gaston have already said a lot. What I want to emphasise is the Indo-Pacific tilt that we mentioned. The tilt is an advantaged position to move things around. Joining the CPTPP for the UK is a very important tilt for the Indo-Pacific region. It is a resurgence of the UK’s position in the Indo-Pacific region and it shows the UK’s commitment in the region. Maybe Dr Morita-Jaeger would disagree with me, but I do not see much of an economic incentive in joining the CPTPP to that extent. However, I think that the CPTPP is a much higher standard in contrast to RCEP and it is, in a way, not only a financial standard but a standard for food, safety and e-commerce, which the UK will be able to have a say in. Sophia just mentioned the decision or the vote for future applicants, which is a traffic jam, if you like: a lot of countries are waiting to be admitted to the CPTPP.

Q9 Lord Watts: I have just a quick point. You say that one of the benefits will be in the area of regulation. Is it not the case that regulation will be set by the Americans and by Europe and that everyone else will follow?

Dr Chun-Yi Lee: I think that if—well, not “if” because the UK is already in the CPTPP—it is important to have a seat and discussion role in the forum. America will not come back to the CPTPP; that is clearly seen. In that sense, the UK can have a good and very firm position in the CPTPP to set up a standard or to discuss a standard. It is more important to see it in that way.

Lord Watts: I just want to be clear on this. The benefits would be that the UK would be able to convince members to toe the line with the American and European regulators. Is that what you are saying?

Dr Chun-Yi Lee: I would say that the UK would at least be able to assert its position. It is a negotiation table. I do not think that the CPTPP would be a forum where any one country says and the others follow. That is not a democratic process.

Dr Minako Morita-Jaeger: I have different views on the regulatory issues. We have to look back at the history of the CPTPP. The CPTPP was originally TPP, and it was driven by the US and the Obama Administration to counter China. This is why it reflects the American interests of a market-driven economy, which is a completely different style to EU FTAs. Since the UK was in and then departed from the EU, it tried to align with the EU regulatory framework and regulatory sovereignty in its politically driven approach then, little by little, departed from the EU regulation.

When we look at the detail of the CPTPP, there are so many things that pose a conflict for the UK domestic regulatory framework. I do not want to say in detail, but let me give you one clear example—digital governance. The UK is leading; it has the highest-quality data governance or digital governance from around the world, and EU members are all in the top quality of data governance. Let us take, for example, private personal data transfers: the CPTPP had a very free data flow, including personal data, on the condition that a country applies the APEC CBPR self-regulatory framework and, if not, the OECD personal data guidelines. That standard is lower than the EU GDPR. So the practice is now based on the UK adequacy decision and then it decides whether to transfer or export data.

Therefore, because of this Indo-Pacific tilt approach, the UK has been changing and reforming digital trade policy. This is domestic reform and then also international trade agreements in line with Asia-Pacific countries. Whether it is the right decision or not is something that we have to scrutinise. The FTA, the CPTPP, is already done. The UK accepted everything. It is not the UK that can change the agreement, so implementation does matter—how the UK implements the agreement—and showing best practice rather than racing to the bottom. That is the key issue here.

Q10 Lord Fox: I am trying to probe the practical changes that we might see in UK trade and foreign policy. Coming back to one of the points that Dr Lee made on decisions about economics, on 12 June the Department for Business and Trade put out a press release hailing £100 billion worth of inward investment from APAC countries and conflated that completely to CPTPP. Is that an unrealistic analysis?

Dr Chun-Yi Lee: I do think that is part of the situation but, in the sense of the actual GDP increase and how much it can be seen, it has been said that there was a 0.08% actual increase in GDP when the UK joined in comparison to before joining the CPTPP. I agree that that is a good example, Lord Fox, but, taking a longer-term perspective, economic incentive is comparatively smaller than the geopolitical meaning.

Lord Fox: I was not necessarily making that conflation myself; I was merely reporting one that was made by the Government.

Sophia Gaston: There are some tangible economic benefits. There are a handful of countries in there that we did not have existing FTAs with, including Malaysia, for example. There is certainly a loosening and a softening and a reducing of friction in all these relationships, but my feeling is that, over the longer term, the trading aspects of our membership of CPTPP will be relatively insignificant compared to the other aspects of it.

To loop back a little to the previous question, yes, the US will be setting standards. Yes, the EU will be setting standards, but China will be seeking to do that as well. Obviously, we have our relations with the EU and with the US and we will—

Lord Fox: I am sorry; I am struggling a bit. If we are not actually selling anything, why does it matter if we are setting standards or not? You say that there is no economic benefit or relatively low economic benefit, so it does not really matter what the standard is because we are not benefiting from it.

The Chair: I do not think you were saying that. Were you saying that we are not selling anything?

Lord Fox: Well, I am asking, if the economic benefits are relatively small, what the benefit is. The tilt to the Pacific is an action, but what is the benefit that arises from it, in your view?

Sophia Gaston: As my colleague mentioned, we will be one of the higher-standard members of the CPTPP on a lot of the different areas. We have an opportunity to work with them to raise standards to our levels rather than race to the bottom and so that the architecture of those standards is designed within principles that are important to us and to maintain an open order. All these countries also have their own relationships with countries such as China, which will be seeking to export its own standards and regulatory frameworks in all its products, services and relationships. This gives us an opportunity to shape it in a direction that benefits our interests and upholds the order that has so benefited our interests over many years.

The Chair: Can I just clarify that because I want to understand? I did not understand that we were being told that there would be no sales from the United Kingdom; rather, the real benefit of the CPTPP is not going to be an economic one.

Q11 Lord Fox: I am struggling with what the benefit is if it is not that, but I will bring in Dr Morita-Jaeger. I will ask an additional question that plays into what you have already said. If it is the converse of what Ms Gaston puts in, which is rather than us raising the standards of all the other members of the CPTPP we find ourselves working more towards their standards—the precautionary principle of which we are probably the strongest proponents ceases to be the way in which we trade—how does it affect our existing relationship through the TCA and the EU? There is a quid pro quo that moves in both directions here. Where do we see the balance coming?

Dr Minako Morita-Jaeger: In answer to your question, I wrote in detail in this book in the chapter on domestic UK regulatory constraints in accession to the CPTPP.

Lord Fox: I will have to get a signed copy.

Dr Minako Morita-Jaeger: Let me first clarify what the economic benefit expectation is for the UK. The reality is that without CPTPP it does not matter. I must say that. The first reason is that the UK already had nine bilateral agreements with CPTPP countries then, among the 11 CPTPP members, the UK’s major trade partners in services and trading goods are Japan, Australia, Singapore and Canada. That is more or less 80% of the UK’s trade relations, so the rest is very limited. What the UK expect, as the UK Government said, is for the CPTPP to have a DNA of expansion. That is the expectation; the CPTPP will expand in the future. Then we can benefit from most of it. However, the game-changer is China because China applied for the CPTPP.

Lord Fox: I think that we are coming to questions on China.

Dr Chun-Yi Lee: Then maybe I can explain later that it is unlikely that CPTPP expansion will happen in the foreseeable future. That is, in a sense, politically very complicated.

Coming back to the regulatory issues, as you rightly said, the UK did not have any voice to change the CPTPP agreement. It is outdated US market-driven interest. The nature of the CPTPP has been evolving since it was negotiated in early 2010, when the landscape of the CPTPP was completely different.

There are three major factors that impact the CPTPP. The second is economic security. All countries are now becoming inclined to monetary trade and industrial policy, expanding all around the world, especially in the EU and the US. Japan has completely shifted its position from the liberal order, so that is a very strong factor that will shape the CPTPP in the future. The second is the environment and climate change policy. The third is digital governance. These three factors shape CPTPP members’ policy so that, even though the CPTPP agreement is there, in practice they are doing other things. The UK has jumped into this US-style agreement, whether it was the right choice or not. We do not know the future consequences of that.

Sophia Gaston: There was a political dimension to the original intent around the CPTPP and I do not think that—well, I cannot speak for my colleagues, but I would not advocate this—the CPTPP could or should in any way replace or displace our trading relationship within our own neighbourhood, which will have to remain our most vital relationship in the longer term.

There were some carve-outs and accommodations with the UK coming in and there have been for some other members within the CPTPP, but we are at a very early stage. We have not got to those crunch points where things are coming up against each other. I would imagine that several CPTPP members, including countries such as Japan, would understand that it is important for the UK to also be able to maintain a relatively high alignment with the EU.

Lord Fox: Is it in their interests?

The Chair: I am anxious to get on a little because there is a lot to cover and we have another meeting. You mentioned Japan and Dr Morita-Jaeger did as well. Can I bring Lord Howell in at this point?

Q12 Lord Howell of Guildford: I wonder whether this a pathway out of this apparent dilemma. You mentioned Japan and the political dimension, quite rightly. The question is how this fits in with what is happening with the CPTPP. This is big stuff. Japan is the third-biggest industrial power in the world by a considerable margin. Some would say it is really still the second when compared with China. It has been a huge ally to Britain in the later part of the last century, when it transformed our entire motor industry, our electronic industry and our trade union restrictive practices, and it vastly increased productivity as long as its inward investment continued. We are now wrapped up with it in one of the biggest defence projects ever, the new combat aircraft, with all the associated trade, investment and technology exchanges from it. Thanks to the late Shinzo Abe, the Japanese are ready to join in international trade on weapons negotiations of all kinds, which is opening a vast new area as well.

My question to you, which I have really answered, is: how important is the UK-Japan relationship? The answer is enormously important. How might this be developed? Let us hear your views; you have heard mine.

The Chair: It is very easy to disagree with Lord Howell, of course.

Lord Howell of Guildford: Feel free.

Dr Minako Morita-Jaeger: Because I am Japanese I know a lot about Japanese trade policy. I observe that the UK-Japan relationship is one of the most stable and peaceful in terms of both economics and politics. Both countries promote co-operation frameworks in all fronts of policy or economic matters. What difference does the CPTPP make? There are two things I would like to raise to your attention.

One is that Japan has a very strong expectation of the UK since it did everything for the UK when it negotiated the UK-Japan CEPA. Japan did everything that it could do to support the UK. This is because Japan looks at the UK as one of the strongest alliances post-Brexit in sharing values, democracy, market economy and liberal trade. This is why it needed the UK to join the CPTPP. What does it mean? Is it China?

First, Japan wanted to maintain the liberal order of the international trading system using the CPTPP vis-à-vis China. When we look at CPTPP members, it is not really all developed countries; there are emerging countries and a different level of economic development, policy systems and cultural values. It needed a real, strong alliance in that perspective and the UK is the best country from a Japanese point of view. When it comes to China’s accession, the UK and Japan, together with Australia, New Zealand and Canada—these middle-power developed countries—will try to shape the CPTPP in the sense that they prefer to maintain the liberal order.

Secondly, the UK joining the CPTPP is giving a framework, a base or foundation, for Japan to promote collaboration in another area beyond trade. When we look at the political landscape and economic security, building a resilient supply chain with the UK within the context of CPTPP is coming next.

Lord Howell of Guildford: In a way this seems almost too good to be true. It is a very positive development and it is wonderful that Japan and its negotiators still seem to trust the UK very much, despite various criticisms from other quarters. Is there not a warning in what you are saying, too, about Japan in the new sphere of Asia—Mongolia, Russia and China—which is developing fast as well? I think that 66% of Japanese exports go to China. Huge investments by Japan are taking place in China in new low-cost EV cars and so on. Vast new railway systems are developing, which will include China and Japan. We will have to work quite hard, will we not, to make sure that our advantages, which you have described, are preserved and not lost in far bigger developments like the RCEP, which Japan is a member of and we are not?

The Chair: I can see nodding from our witnesses. That will not go on the transcript, but it may well be that what Lord Howell has said is acknowledged and accepted by each of our witnesses.

Sophia Gaston: Can I make one additional point that I think is important in the UK-Japan bilateral relationship and in the context of the CPTPP? One thing that we share as well—in addition to free trade, science and tech, defence and industrial co-operation and an emphasis on those—is that both countries are very much focused on the relationship between those two primary security theatres. We are seeing each other as the gateway and the hinge between the two, and that is significant.

While we are joining the CPTPP, AUKUS and all the other things we are doing in the Indo-Pacific, Japan has made one of the most significant contributions to the defence of Ukraine. It has not won an enormous amount of soft power for that; it has gone under the radar. It sees that as an investment in the global security order and it understands that, if it wants to call in its partners in the Euro-Atlantic like the UK and say, “We need you in the front lines of our security theatres” it needs to do that. I think that is an important aspect of the relationship.

Q13 Baroness Hayter of Kentish Town: I think that Professor Lee said that America will not come back into the CPTPP, but I think Ms Gaston used the phrase that the UK is a proxy. It would be interesting if you could explore what our membership means to our relationship. You all agree that America is not coming back, but what does this mean to our relationship with America? Has it been supportive of our membership?

Dr Chun-Yi Lee: I do think that America was supportive of membership, of the UK joining the CPTPP, for the reason that the proxy is not the UK. Maybe Dr Morita-Jaeger might say otherwise, but I think that the US proxy in the CPTPP is Japan. In that sense, the UK joining the CPTPP sees the alliance becoming firmer and stronger, exactly as we talk about here. I would not say that we have a completely united front but a stronger front in comparison to the CPTPP without the UK in it.

We need to come back to the earlier point that Japan has a lot of trade with China and so on. That is all true. However, there is a bigger concern for Japan, which is security and alignment with the US. I think that this is a common understanding between Japan and the UK. That is why we signed a security agreement with Japan this year, in January. We also signed a science and technology agreement with Japan, in May. After that we announced our semiconductor strategy. All this is drawn into the UK’s position aligned with Japan, which is as the invisible hand of matchmaker for both countries.

The Chair: That is very interesting. Do you all agree that the proxy for the United States is more Japan than the UK?

Dr Chun-Yi Lee: That is only my view; I have to say.

The Chair: I am asking whether it is the view of the others.

Sophia Gaston: It depends on which dimension. The proxy status and what I meant by that is because the UK and the US have a specific international diplomatic role and a role in international institutions, in that global governance P5 framework. That is how I conceive it, but I agree as the Japanese are obviously part of an Indo-Pacific nation but, in some ways our proxy could shame the Americans, in saying that even a non-Pacific country understands the need to have a seat at the table here. I think that we are working in concert on that.

Dr Minako Morita-Jaeger: If I may add one point, Japan is one of the strongest alliances for the US to survive in the battleground of the Indo-Pacific. The UK is geographically outside the Indo-Pacific, which is just a difference. Historically, the role of the UK is as an intermediate in the relationship between the EU and the US. As that role, that relationship, has disappeared, the UK now has to seek is value in relation to the US.

The Chair: We will come on to the EU, but can I ask Lord Udny-Lister to pick up on another point?

Q14 Lord Udny-Lister: You touched on this so I will take you back to it, which is China and Taiwan, both of which have applied for membership. How do you see that progressing? What do you think the UK’s role in that process should be?

Dr Chun-Yi Lee: It is a very difficult situation and dilemma for all the CPTPP membership, but we have seen this drama before when both China and Taiwan applied for APAC and WTO. Now the drama is repeated, with China and Taiwan both applying for the CPTPP.

Realistically, I do not think that it would be able to allow Taiwan into the group and exclude China. That is the geopolitical reality. However, I also do not think that it could be granted to China and Taiwan neglected. Again, this comes back to the CPTPP. The principle is liberal order, democracy, and it has damaged a lot of the overall forum reputation because, at the end of the day, it is not about economic incentive; it is about the status and reputation that this trading bloc represents. In that sense, I still think that it is probably possible—this probably comes back to how and why Japan has been working hard for the UK to join—to have this kind of alliance.

We talk about accommodating an alternative way. The best way, in my personal view, would be for both Taiwan and China to be granted in a different category or working group, but Taiwan also to have a representative. It could probably be an observation party or some kind of delegation in the group but, if China was granted entry without Taiwan, it would be very damaging to the trading bloc’s reputation.

Q15 The Chair: Can we talk for a moment and get your views in relation to other regional institutions that the United Kingdom might have—

Lord Fox: Can we come back to that China thing first, though?

The Chair: Let us get the answer to this and then ask your question, please.

Sophia Gaston: There is a question about meeting the standards of accession and then the geopolitical question, and they are quite separate. Of the nations that have applied to join, the South American nations have quite a few hoops to jump through before they could get into the realm of meeting those standards. Taiwan would probably be able to meet those standards more quickly. I think that we all know from the WTO that China has a history, a demonstrated track record, of being able to meet technical compliance without actually meeting the spirit of the regulations or standards. For all those reasons, even aside from questions of geopolitics, it would be very complicated to move that forward.

Dr Minako Morita-Jaeger: I completely agree with Sophia. The CPTPP’s rulebook says that applicants have to comply with all CPTPP rules. In a sense, the CPTPP members, especially Japan, said the UK’s accession to the CPTPP set a high standard. The UK accepted all agreements with very little side letters. That sets a high bar for China joining. It shows that if you can comply with these democratic rules and open market spirit you can join. We will welcome you, but only if you can. This is what they say.

I would also like to comment on the relationship with the Indo-Pacific Economic Forum, IPEF. IPEF is a new policy tool for the US. For the US, that era of the FTA is over and IPEF is now the policy tool to achieve its domestic interests and worker-centric trade policy relating to the level playing field, security, supply chains and so on. The IPEF is there, and then there are seven CPTPP countries that joined IPEF and RCEP. I may talk about RCEP later, but IPEF is there and it very much has an anti-China policy.

The other side of the coin is CPTPP maintaining the liberal order. Whichever country can apply this is welcome. This is the US’s intention—a kind of political equilibrium between IPEF and the CPTPP. The US may expect Japan and the UK to protect and maintain the CPTPP spirit in that sense.

The Chair: How does the Regional Comprehensive Economic Partnership fit in with this?

Dr Chun-Yi Lee: RCEP is a much lower standard of free trade agreement in the sense that China is the leading country. Before it was more ASEAN centric—the Association of Southeast Asian Nations—which already has a firm free trade agreement, ACFTA, with China. Again, we are looking at RCEP and CPTPP as two different standards. For one thing—and Dr Morita-Jaeger would be able to correct me—I think that the CPTPP has a very clear standard to reduce the percentage of state-owned enterprises and labour and independent trade unions are required for the CPTPP, which RCEP does not require. I do not think that the UK would need to consider much of RCEP in that sense.

Q16 Lord Fox: Coming back to China-Taiwan, my understanding is that it is a queue and you cannot deal with Taiwan until you have dealt with China. I am slightly intrigued by Professor Lee’s formula, unless there is some implicit agreement made somewhere along the line, which I think is what you are suggesting. Politically, do you really think that that will fly and why do you think that it will?

Dr Chun-Yi Lee: It flew before for the WTO and APAC and the situation back then for APAC—

Lord Fox: It is not flying in the WHO, for example.

Dr Chun-Yi Lee: Unfortunately it is not; you are right.

Lord Fox: That is the latest example of what is happening.

Dr Chun-Yi Lee: I have a different point on that. If we think back to the scenario of APAC and WTO, China was much more amenable to the global order, but it is now much less amenable to the global order.

Lord Fox: This is why your compromise seems less likely to be a successful strategy for the CPTPP to me.

Dr Chun-Yi Lee: I agree, but I probably would say that, if that were the case, it would probably compromise the CPTPP. Again, this is a liberal order and this is a higher standard of the liberal order in that sense.

Q17 Lord Howell of Guildford: How do you see the CPTPP evolving in the coming years, if at all? I have to associate that with something we have covered again and again, which is that I am a bit puzzled about where America stands in all this. Professor Lee, you said that America will not come back. Meanwhile, America invents the Indo-Pacific Economic Framework and it pursues its own legislation through things like the IRA, which clearly does not fit with any of this because it is protectionist and it is not trade expansive anyway. Is there any compatibility there? Do you think that it will ever reinvolve itself in the way it was before President Trump took them out and a future President Trump may keep them out?

Sophia Gaston: There is a fundamental question about whether the United States can come to understand alliances as an amplification of its own power and interests. I feel that the Biden Administration understands that, but trade and a lot of other aspects of economic statecraft have remained off the table. At some point the political logic that was created in 2016 will have to evolve. I am not so certain that it will never re-engage in those forums, particularly because they may come to realise that it is in their vital strategic advantage. We also have to take decisions and do a lot of scenario planning around the possibility that the United States will pursue its own interests in these issues, to some degree, and they may not always align with our conception of our own.

Dr Minako Morita-Jaeger: It is very difficult to foresee the future from the current policy landscape, but I can clearly say that the CPTPP does not fit US interests anymore. The CPTPP was in the interests of the US in early 2010. The world has changed completely, so there is no real intention or incentive for the US to come back to the CPTPP. This is why it created IPEF.

The key issue for the CPTPP is to what extent it can maintain liberal order. Even CPTPP members are very much affected by the US’s new policy on security issues and everything. One side of the economic security that it tries to promote is economic security through alliances, starting from the G7 and then maybe Japan, in line with the UK, as it is trying to make a resilient supply chain through alliances extending from the G7 and within the CPTPP. That political landscape really changed the nature of the CPTPP so it is very hard to see whether the CPTPP can be what it is now, and how the US will adjust to make use of it in the future.

Q18 Lord Razzall: What you just said leads into my question. It seems to be common ground that, for us, this is not about economic advantage but more about geopolitics. There is a lot of nodding there. I think it is a matter of agreement that geopolitics is now dominated by the three major groups—the US, the EU and China. To what extent do you think that the CPTPP, as a club of what we might rudely describe as medium powers—or politely describe, actually—could exert some influence and what role could the UK play in this?

Dr Chun-Yi Lee: I would say that a medium power alliance is the CPTPP and this is how the UK can play a role now. The UK has joined the group, as we mostly agree, not for economic reasons—

Lord Razzall: What will it achieve?

Dr Chun-Yi Lee: It is to achieve, if I may use this word, not being bullied by the US or China. CPTPP members, although mostly allied to the US democracy and its market economy, also have a different interest than the US. Of course, most of the member countries are not aligned to the Chinese way and understanding of politics, but I think the CPTPP is a forum of medium powers aligned together, in a sense, rather than an economic incentive, but it also provides a forum. It is not just about trade, but about information sharing and the digital economy, as Dr Morita-Jaeger mentioned. That is very important in the sense that we would be able to work with Japan and Australia along with those powers to achieve an important midway, not to align completely with the US and definitely not to align with China.

Lord Razzall: I understand the words and the concept. I am trying to grasp for some practical result that you envisage as an advantage for the CPTPP and for us as a result of our membership.

Dr Chun-Yi Lee: For instance, we are talking now about the agreement of regulation and the digital trade part. That is important, especially now, and it would not be influenced by the Chinese or the US; in a sense, we will be able to agree.

I come to a more specific point from my own research into semiconductors. The CPTPP agreement involves electronics and semiconductor parts.

Lord Razzall: Can we do that without Taiwan, though?

Dr Chun-Yi Lee: It would be better to include Taiwan, but that is a cheeky way to answer. There are also existing members—Japan, for instance, Singapore and Malaysia—which all produce chips to different degrees, advanced or less advanced. The UK is trying hard to assert a position; Arm is not necessarily a UK company, as you would understand it. In that sense, that is one of the concrete ways that the UK would be able to benefit a lot from this forum. I believe there are many others.

Lord Razzall: That is a practical answer to my question. Thank you.

Q19 Lord Watts: I have a wrap-up question. Are there any other matters with regard to the UK’s accession to the CPTPP that you would like to draw attention to before the end of the meeting?

Sophia Gaston: I would like to give more of the broader context of this, because we have emphasised the geopolitics and it is good to step back and look at the landscape in which this is situated.

China has moved from an intent at co-opting international institutions to disrupting them and replacing them with more regional blocs of varying significance and coherence. New forums such as the Shanghai Cooperation Organisation and so on are not all highly developed at the moment, but it is quite clear that China is trying to create a whole new series of different blocs that could disrupt the existing architecture. These are being created in its own interests, which are profoundly divergent from our own.

We are also moving into an age where, in part because of the rise of China and the multipolar world, we are shifting towards a national security-led industrial policy era, which will also facilitate the formation of these more protectionist blocs, whether that is in the United States itself or the EU. There will be a lot of pressure to be pursuing policies to compete not only compete against our strategic rivals but among allies. That will profoundly dislodge and disrupt the rules of the game that we have become very used to and which have worked in our interests.

In something like the CPTPP, we are there with other nations that, by virtue of their admission, are absolutely committed to the idea of being free and open trading nations, and are concerned about the stability and openness, whether of the regional order or the global order. These are countries that say, “We have a national interest and a higher interest”. That is incredibly important. Yes, we can squabble about the direct economic benefits that, particularly in the short term, are not hugely clear, but it is incredibly important as a statement of geopolitical intent.

The Chair: You see that as one of the advantages of the UK taking this position in joining the CPTPP and its development.

Sophia Gaston: I definitely do.

The Chair: We would like to hear from our other two witnesses on the benefits to the UK of the CPTPP.

Dr Minako Morita-Jaeger: There is one thing that I would like to emphasise because we have focused more on the geopolitical context of the CPTPP. I would like to bring us back to the regulatory issue. This is key, because the UK has jumped into the CPTPP and it is not a bespoke agreement. It is just what the US wanted to achieve in early 2010. Whether this is a good option or not it is too late to discuss, but the thing that the UK can do as a member of the CPTPP is implementation, which is about showing good regulatory practice rather than adjusting itself to Asia-Pacific style regulations. The UK has to show political coherence and then think about what is of value to it. It is not adjusting without any context to the Asia-Pacific. That is the real benefit that the UK can bring to the Asia-Pacific countries.

Baroness Hayter of Kentish Town: I may have just missed it when Sophia Gaston was going through the adherence to a world economic order. I may have missed it but did you mention the rule of law? I am wondering how key that is to this.

Sophia Gaston: I think that is a fundamental underpinning of the free and open order that we conceive and is a big dimension of this. As my colleagues have emphasised, this is a high-standard agreement and rule of law is one very important function within that. The question about whether we will be able to govern globally anymore is important. We have the AI summit coming next week and we have talked a bit about digital because that is very important in the CPTPP. The decision was taken to invite China to that; that is us trying to uphold and establish a framework of global governance where we feel it might be possible on this issue. Being able to walk and chew gum, but also recognising the regional realities when investing in forums such as the CPTPP, is very important.

Dr Chun-Yi Lee: A final point from me is to say that the UK has a high standard, that is true, but we are already in the CPTPP and now is a good chance to understand Pacific partners better and their conduct. It is a bilateral understanding so, on the one hand, the UK has a higher standard but, on the other hand, the UK has an actual concrete chance to work and engage with Pacific partners. To materialise this back to our talk about the Indo-Pacific tilt and how we tilt it, we have the chance now.

The Chair: That is very helpful. I have one final question of detail. At one stage I think that you, Ms Gaston, said that we do not have an FTA with Malaysia. Are there any other countries that would be affected by the CPTPP with which we do not have an existing FTA?

Lord Watts: Brunei would be affected.

The Chair: Thank you very much indeed. This has been a very lively session and I am grateful to you for giving us so much information and opinion. As I have said, your evidence will be recorded, and please make any corrections that you need to.