BREXIT BRITAIN
CREATES MORE GLOBAL TRADE DEALS WORTH BILLIONS
Since Brexit
finally came into force at the end of January 2020, there has been a high
degree of uncertainty over the impact it will have on UK commerce. The
longstanding deals Britain had with the EU are no more, so it’s very much been
the case of having to forge new deals free from the bureaucracy coming out of
Brussels.
The good news for
the UK is that the government is working hard to establish bilateral free trade
deals with a number of countries - something that will bring in many billions
of pounds in revenue. The negotiations are ongoing and there’s a good deal to
be optimistic about - as we look into in more detail now.
THE DEFINITION OF A
FREE TRADE DEAL
When we talk about
trade deals, what we’re actually talking about are ‘free trade deals’ , but
what does that actually mean? Well, it’s an arrangement between all interest
parties that seeks to encourage trade between the nations involved, typically
concerning goods and services. The terms of said agreements usually involve the
reduction of the complete elimination of tariffs or taxes.
Free trade
agreements also seek to eliminate quotas, which, in layman’s terms, are the
limits imposed on the amount of goods and services that are able to be traded.
With all of these barriers removed or greatly reduced, the conditions are
created for profitable partnerships to occur.
£1 BILLION TRADE
DEAL WITH INDIA
The first example
of what we’re talking about is Prime Minister Johnson’s recent announcement of
a new trade deal with India that’s said to be worth an impressive £1 billion.
Part of this agreement includes an additional £500m of brand new investment
coming out of India, with as many as 6,000 new UK jobs being created in the
process.
Many were quite
vocal about the fact that they believed the UK would struggle to create their
own trade deals in the same vein as was possible inside the EU. However, this
is not the only front on which Britain is making great strides in replacing the
revenue enjoyed whilst in the union.
ONGOING
NEGOTIATIONS ON A DEAL WITH THE US
The United States
of America is one of the biggest countries that Britain deals with and a free
trade agreement could potentially be worth hundreds of billions annually. The
likelihood is that if the pandemic hadn’t struck when it did, it would likely
already be in place, but the reality is that it didn’t and import/exports with
the US dipped sharply during this period as a result.
Previous growth in
trade in 2019 was perhaps unsurprisingly reversed in 2020 when the impact of
global lockdowns came into effect. President Biden has been far from active
since taking office, with public appearances happening far less regularly than
any previous White House incumbent before him.
However, whilst the
likelihood of any agreement being made in the short-term is questionable, the
long-term prognosis of lucrative deal being struck is much, much more positive.
PROFITABLE DEALS
WITH ASIA & PACIFIC NATIONS
Another area in
which good progress has been made is with countries in Asia and the Pacific
nations. As of 22nd of October 2021, the UK signed a free trade deal with Japan
that’s believed to be in excess of £31 billion - equating to roughly 2% of the
total trade conducted by the UK.
That’s not all
though, as a further 11 Pacific and Asian nations are part of the Comprehensive
& Progressive Trans-Pacific Partnership (CPTPP), which the UK officially
applied to join on 1st of Feb ‘21. Current members of the CPTPP include New
Zealand, Japan, Canada and Australia.
AN ABUNDANCE OF OTHER
NON-EU AGREEMENTS
The agreements
we’ve mentioned so far represent the biggest individual arrangements, however,
there is an abundance of deals already in place with a number of other non-EU
countries. These trade agreements include but are not limited to:
- Central America
£1.2bn
- Eastern &
Southern Africa £1.3bn
- Iceland &
Norway £21bn
- Israel £4bn
- Southern Africa
£8.6bn
- South Korea £11bn
The UK truly is a
global trader and this is reflected in the amount of agreements that are
already in place. This is just a small selection of the current arrangements
that have been agreed, with more being added as time progresses.
NOT FORGETTING THE
EU-UK TRADE & COOPERATION AGREEMENT...
What also must not
be forgotten is the fact that despite Brexit occurring, the EU still represents
by far the biggest trading arena that the UK is involved with. As a result, a
deal has since been struck - something that was high profile news last year. Signed
back on the 30th of December in 2020, the EU-UK Trade & Cooperation
Agreement (TCA) became provisional at
the start of 2021 and came fully into force just a few months later on May the
1st.
The EU-UK TCA
details preferential agreements in a variety of trade areas, such as
intellectual property, digital trade, aviation, road transport, fisheries,
social security, public procurement and traditional goods and services. And
while it doesn’t come close to the financial integration that the UK had with the
EU prior to Brexit, the TCA does provide a sound foundation on which to work.
A PROMISING TIME
AHEAD FOR UK TRADE
The ‘remainers’ in
the UK who still advocate being part of the EU due to the financial benefits it
offers may need to take note that Britain is already showing its ability to
stand on its own two feet. Of course, there’s going to be a natural period of
adjustment during which the overall level of import/exports may take a hit,
however, there’s much evidence pointing towards it being a temporary situation.
As with many
things, sometimes they need to get worse before they get better. Having greater
control over its own destiny is good news for Britain in the long run, as it
will no longer be at the behest of EU rules and regulations. Sure, the road may
not be as clear and untroubled as it would have been if Britain had indeed
remained, but the doom-mongers seem to have painted a falsely pessimistic
picture of the situation.
Only time will
tell, of course, but the signs are promising at the very least.
