Trading up on Global Britain
Although the majority of UK trade is currently conducted with countries within the EU, 90% of future growth in global GDP will be from outside the EU. The rational approach therefore is to seek a good deal with Brussels, but to face down EU intransigence with justified self-confidence. Post-Brexit, we have a world to win
The start of the Transition Period on February 1st 2020 is certainly a date to look forward to. This Saturday our country will be officially out of the European Union.
There are still battles to be fought in future negotiations, but the Prime Minister is due to set out his red lines next week in a series of position papers on trade.
This will be mirrored by Michel Barnier, the EU’s chief Brexit negotiator, when he unveils the EUs draft negotiating mandate next Monday. Regardless, in a matter of days, we will be free to officially take back control and pursue our own independent trade policy, tailor-made to UK interests, instead of trying to appease 27 other countries.
If the EU tries to restrict our ability to make our own deals, Boris Johnson must not be afraid to walk away from negotiations, and trigger ‘No Deal’, trading on World Trade Organisation terms. The soon to be formed ‘Taskforce Europe’ must not make the mistakes of the Department for Exiting the EU which it replaces. These are negotiations for the future of the United Kingdom, and not damage limitation exercises.
Although the majority of UK trade is currently conducted with countries within the EU, 90% of future growth in global GDP will be from outside the EU. So whilst it is important to get a good deal with Brussels, the UK must be prepared to look beyond the European continent.
The opportunity for British businesses to trade more freely with the United States represents a golden one. The US is not only the world’s largest economy, it is already the largest single export market for UK businesses. The US is also the biggest source of investment in the UK with just over a quarter of foreign investment coming from America. Exports to the US were worth a massive £92 billion in 2018.
Clearly there already exists a strong trans-Atlantic economic relationship despite the existence of many tariffs (as commanded by the EU). A removal of these barriers - through a free trade agreement with the US, something US officials have said would be possible within a year – would allow British businesses to flourish in the American market even further, without the threat of huge tariffs from the Trump White House.
However, this does not mean we would see a complete end to tariffs and it will all depend on the type of trade deal which is agreed and the priorities each country has in negotiations. For example, the Business Secretary, Andrea Leadsom has confirmed the UK plans to implement a ‘digital tax’ on US companies such as Google to make sure they pay their fair share, despite threats of retaliation from the US. This would force companies such as Google to pay tax on profits earned within the UK even if they are registered in different countries.
While controversial to the White House, crucially it will be the UK Government which decides this trade policy and not the EU.
Key sectors which stand to benefit from a free trade deal include the British aerospace, financial services and pharmaceutical sectors. However, the UK-US trading relationship goes beyond the trading of goods and services. A trans-Atlantic free trade agreement must also build upon our already strong cultural connections, which must not be thrown away in favour of accepting a poor deal with the EU.
A trade agreement with China would bring clear benefits. It has taken years for the EU to get even close to an agreement with China. However, as with all EU trade negotiations, it is impossible to get a high-quality deal because you are trying to please 27 different countries. As an independent trading nation, the UK will be able to negotiate an agreement with China which should better reflect our mutual interests at a much faster rate.
A specific industry in China to focus on is the market for British cars. Currently subject to a 25% tariff on the final price, they still represent the most popular British good in China, making up 35% of imports from Britain. A deal which reduces this tariff would serve to make China an even more attractive export destination for the British automotive sector, creating more jobs here in the UK.
But while a trade deal would be of great benefit, the UK must not leave its security vulnerable to manipulation by a potentially hostile China in the future.
And though trade deals with both the USA and China would be of great significance, there is also a need to focus on new trade deals with the fastest growing economies in the world such as Nigeria and India, which the UK already has existing relationships with. While the EU is constantly looking inwards, the UK must take a dynamic forward-looking approach for our global future.
As of this month, the UK has already signed 20 continuity trade agreements covering over 50 countries. This means we already have a baseline for future trade deals with all of these countries. We are not starting from scratch.
At the recent UK-Africa Investment Summit 2020, it has been confirmed 27 deals were struck for additional foreign investment totalling more than £6.5 billion. These are relationships which the UK must build on. With Africa being one of the fastest growing market places in the world, they are opportunities we must not ignore.
There are dozens more countries not often mentioned which we could list – among them, Brazil, Japan, Canada, Australia, New Zealand and Singapore. A free trade agreement with any of these countries would bring a myriad of benefits to British businesses, with Brussels’ enforced tariff barriers lifted, giving companies of all sizes the opportunity to develop international markets for both importing and exporting without cumbersome regulation getting in the way.
Work on these trade deals has reportedly already started, with informal talks being held and ministers being sent on specifically tailored goodwill missions to individual countries, paving the way for rapid negotiations from the beginning of the Transition Period on February 1st 2020.
This demonstrates that Leaving the EU is an opportunity for the UK to boldly move away from the protectionist, narrowly focussed EU, and to Get Britain Out into the wider world beyond the European continent as a forward thinking, global pioneer for free trade as we enter a new and drastically more exciting decade.
Joshua Mackenzie-Lawrie is a Senior Research Executive at cross-party grassroots campaign Get Britain Out
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