Speaking at a Department for Business and Trade webinar in November about the UK’s accession to the CPTPP, Garima Srivastava – International Trade Legislation Senior Advisor at the Chartered Institute of Export & International Trade – described ‘cumulation’ (whereby a product can qualify for preferential tariffs if it incorporates materials from one or more countries that are co-signatories of an applicable free trade agreement) as a significant benefit of CPTPP.
UK companies are no longer restricted to domestic or single country sourcing and can tap into inputs from multiple CPTPP countries without losing preferential tariff benefits. In sectors with complex supply chains such as automotive or electronics, cumulation will simplify compliance with origin requirements.
Daisy Knox, the Mexico Lead for free trade agreement utilisation at the Department for Business and Trade referred to other benefits for goods traders including shared commitments on customs procedures, electronic processing of customs documentation and a reduced burden for conformity testing in CPTPP markets.
These are important considerations at a time when the US looks set to massively expand tariffs across a range of industries. As this article was submitted, President Donald Trump ordered a 25% import tax on all steel and aluminium from 12th March, while similar import duties on all products from Canada and Mexico were suspended for a month last week but remain on the table.
Around one-fifth of air care and cleaning products company AirPure International’s turnover comes from international markets.
According to Managing Director, Rob Keeling, the removal of tariffs on UK goods entering the CPTPP countries (which include Australia, Japan, Malaysia, New Zealand, Singapore and Vietnam as well as Canada, Chile, Peru and Mexico) will create new export opportunities by allowing his products to be more available and competitively priced in these markets.
“An increase in price competitiveness – combined with improved market access – should enable us to expand our customer base and achieve significant growth,” he says. “It also incentivises us to innovate further and tailor our offerings to meet the specific needs of these diverse markets.”
Aside from tariffs, each country has its own regulatory requirements and compliance standards, which can be both time-consuming and resource-intensive to navigate across multiple countries and languages.
“Understanding the regulatory environment, cultural nuances and consumer behaviour is key,” says Keeling. “We have spent the time to seek out and develop solid relationships with like-minded distributors to help us carry our product offering into multiple countries effectively. Exhibiting and attending trade events has helped us to cultivate working relationships, staying on top of market trends and complying with regulatory developments.”
In 2009, shower design and manufacturing firm Roman launched a joint venture in Malaysia to build a specialist aluminium plant to cater solely for added value aluminium with specialist finishes and fabrication. With the addition of a second plant this has given the company a significant commercial advantage.
However, it was paying 6% duty to bring aluminium to the UK to manufacture shower enclosures when all its main competitors were bringing finished goods from China with 0% duty. Now the CPTPP is in place, this duty is eliminated.
In 2013, Roman Asia was established in Malaysia to explore opportunities in high growth regions such as Cambodia, Vietnam and the Philippines, allowing the company to secure a foothold in both residential and high-end hotel projects across the region explains CEO, David Osborne.
“Our competitive position is about to strengthen further as the current 25% tariff on finished goods shipped from the UK to Malaysia is set to drop to 0%,” he explains. “This change will provide a significant cost advantage and create new opportunities to expand into the luxury sector and large scale hotel developments across Asia Pacific.”
Roman also stands to benefit from the introduction of temporary three month business entry permits, which will make it easier to manage short term projects and foster stronger relationships with clients and partners in the region.
“This added flexibility is expected to bring greater efficiency to Roman Asia’s operations and further strengthen its presence in these key markets,” adds Osborne, who notes the company now exports to 72 countries.
