The UK’s accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) could present long-term opportunities for red meat and dairy, according to AHDB analysis.
CPTPP is a trade block currently consisting of eleven members – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam – collectively, producing around £9 trillion worth of goods and services in 2021.
The analysis, compiled in conjunction with Harper Adams University, examines the strategic implications for UK agriculture of joining the CPTPP.
Trade modelling work on the UK joining the CPTPP by the levy body has highlighted that a number of member countries are expecting to see significant growth in their food imports particularly for red meat and dairy products. This is fuelled by a combination of population growth and economic development causing a rapid expansion of middle class consumers.
According to US Department of Agriculture (USDA) forecasts imports are expected to grow:
- Pork: 19% by 2031 to a combined 3.9 Mt – focused on Japan, Vietnam, Mexico and Canada.
- Beef: 16% by 2031 to a combined 1.8 Mt – focused on Japan, Malaysia, Mexico and Canada
- Dairy – significant growth in Malaysia and Japan for butter and cheese, and for skimmed milk powder in Mexico
While initial opportunities are limited, the modelling revealed potentially more expansive benefits in the future in the Asian and South American markets, driven by increased demand for red meat and dairy products.
Further opportunities for UK red meat and dairy may also be presented by other countries such as China, Taiwan, Ecuador, Costa Rica and Uruguay joining the CPTPP with the offering of preferential terms and either lowering or removing tariffs over time to other members.
Imports
There are permanent inward tariff rate quotas (TRQs) for pork and beef but our analysis shows that currently trade between the UK and CPTPP for these products is low and the volumes are unlikely to be utilised unless there are dramatic changes to trading patterns.
There will be an inward pork TRQ, starting at 10,000 tonnes, increasing in equal increments to 55,000t by year 10 of the agreement.
CPTPP member Canada is the third largest exporter of pork (the EU is the largest exporter). They currently produce 2.2 Mt annually and export around 50% of it, with key markets being the US, China, Japan and Mexico. The current TRQ for pork into the UK is 5.8Kt but they currently only export 149 T to the UK showing that the quota is not currently utilised.
Although the TRQs are increasing and give Canada increased access to the UK beef and pork markets, AHDB’s analysis shows that this does not present an immediate threat to the UK industry. Canada does not utilise the current quotas and has already established markets in USA and Asia which take the bulk of exports.
Jess Corsair, AHDB trade and policy senior analyst, said: “The UK’s accession to the CPTPP is very much about playing the long game in terms of the potential benefits it will bring to UK exporters of red meat and dairy products.
“The expansion of the middle class in Asian and South American markets is likely to be a driver for these longer-term benefits for UK exports, reiterating the forecasts in our Prospects for UK agri-food exports analysis launched in January.
“Consequently, while we don’t anticipate any dramatic changes to trade overnight, the forecast increase in demand for pork and beef by 2031 in Japan, Vietnam, Mexico and Canada is encouraging.
“Similarly, opportunities for dairy with significant growth in Malaysia and Japan for butter and cheese, and for skimmed milk powder in Mexico will be areas that the UK can capitalise on.”
More opportunity than threat
Writing in the latest issue of the Weekly Tribune, James Webster, a senior agribusiness analyst, at the Andersons Centre, explains why he believes CPTPP is more of an opportunity than a threat for the UK pig industry.
While, there will ‘inevitably be concerns that imports from the Americas undermine domestic standards’, he adds: “However, the negotiations with CPTPP have concluded that an improved trading relationship will ‘not compromise our high animal and plant health, food safety, or animal welfare standards’. This is akin to the Australian and New Zealand FTAs. What this means in reality is yet to be determined.”
“On balance, I feel that accession to CPTPP is, in fact, positive for the pig sector, opening opportunities for trade with key importers such as Mexico and Vietnam. In 2023, the current members of CPTPP are forecast by the USDA to import 3.7 million tonnes of pig meat, with Mexico due to import 1.3 million tonnes.
“For exports to Mexico, tariffs of up to 20% on pig meat products will be removed on accession to CPTPP. Similarly tariffs on exports to Vietnam will also be eliminated.
“With the block set to expand over time, accession to CPTPP will also provide opportunities to export South Korea and the Philippines, should their expression of interest in joining the block be realised.”
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