U.K. Could Offset EU Trade Loss Through `Untapped' MarketsBy
Under-performing markets have 40 billion-pound potential
U.K. should deepen existing FTAs, Open Europe says in report
If it plays its cards right, the U.K. government could compensate for decreased trade with the European Union by improving agreements with other countries, according to Open Europe.
“There is enough untapped U.K. trade potential to offset the effects of Brexit on exports to the EU,” the think tank that advocates for liberal economics said in a report published Tuesday. “An ambitious, outward-looking U.K. trade strategy could compliment a deep and comprehensive deal with the EU and contribute to delivering increased U.K. prosperity.”
The top ten under-performing markets for goods and services trade represent export potential of over 40 billion pounds ($51 billion) by 2030, according to the report, written by Henry Newman, Stephen Booth, Aarti Shankar, Alex Greer and Vincenzo Scarpetta.
The U.K. under-exports to India, Canada, Israel, and China, and the U.K. government should therefore focus on developing trade with those countries after Brexit. It should also prioritize exports in services, Open Europe said, since global services trade is expanding while goods trade is slowing.
Britain currently conducts about half its trade with the EU, compared with about 20 percent with countries in the Americas or Asia. Membership in the EU has added as much as 2 percent to gross domestic product per person, according to economists at Bloomberg Intelligence.
Prime Minister Theresa May is seeking to quit the EU single market and pursue a sweeping trade deal with the bloc. That’s a tricky task, as EU governments are toughening their position on the negotiations, adding limits on financial services and explicit demands on citizens’ residency rights into their plans.
The British government shouldn’t necessarily be too preoccupied with free-trade agreements, Open Europe said, since bilateral investment treaties or agreements on specific trade issues could be pursued even if a full FTA is difficult to achieve.
And while the U.K. should replicate existing FTAs with the EU once it leaves, they could be approved upon, Open Europe said. That seems to be the approach being taken by some countries such as Canada, which is hoping to replicate its existing EU trade agreement with the U.K. and then deepen it in certain sectors like financial services.
“Those FTAs were often a one-size-fits-all, lowest-common-denominator and there may be a potential for deeper bilateral agreement after Brexit,” the report said.