10. Towards a New World Trade Order? The EU, Brexit and North-East Asia

British political leaders regularly speak of the importance of free trade. In doing so, they overstate the importance of trade with North-East Asia but understate that of inward investment, which is of greater importance to the UK than to any comparable economy. The rise in this has gone in tandem with how modern manufacturing has responded to globalisation through global value chains. Bilateral and regional free trade agreements need increasingly complex rules of origin to cover these, reducing their attraction to businesses. Although the UK’s preference is to negotiate new bilateral trade agreements, nonetheless, Japan has suggested that it could join the new trans-Pacific CPTPP regional trade agreement and that the EU and CPTPP could together negotiate a further agreement. This would be the world’s largest free trade area, covering more than 30% of global GDP. For Japan, the proposal seems to be defined primarily by its rivalry with China and Korea, but it is still an opportunity for the EU to enhance trade relations with the Pacific Rim and to project its values. But the EU should push for inclusion of Korea and Taiwan in the agreement to ensure maximum impact.