At the end of September, it was reported that the United Kingdom and the European Union has made progress on Brexit talks, but not enough to move onto the next round of discussions on the transition period after Brexit for future trade deals.
When the fifth round of talks ended in deadlock in Brussels on the 12th of October, the EU’s Chief Negotiator, Michel Barnier, said that he hoped for ‘decisive progress’ before the December summit of the European Council. Welsh Finance Secretary, Mark Drakeford, has said that UK and EU negotiators, must ensure Brexit discussions move on to discuss trade by December.
The UK is currently the fifth-largest economy and British ministers are concerned that a deal may not be reached by the time that the UK leaves the EU in 2019.
Bloomberg reported on the 1st of October, that Britain is likely to forge its first post-Brexit deals with the United States, Australia, and New Zealand.
The UK currently has 40 free trade agreements in place, as part of the EU. The UK’s International Trade Secretary, Liam Fox, said that the country is working to adopt these before Brexit takes place in 2019 and the Conservative Government is also keen to forge new deals. It was reported that the UK will review existing trade deals so as not to ‘copy and paste’ what is currently in place.
The UK is unable to sign new trade deals until it leaves the EU but the Government plans to line up agreements that can be signed when the UK is free to do so. However, it’s been over 40 years since the UK negotiated its own trade deals before joining the EU in 1973.
Liam Fox said that securing post-Brexit trade deal would be the “easiest in human history”, as trade talks would only become complicated if the EU deliberately chose to “punish Britain” for leaving.
The Director General of the British Chamber of Commerce, Adam Marshall, has said that due to the US trade representatives being one of the ‘best-oiled machines in the world’, the US may not actually be the best country to start post-Brexit deals with. This is reportedly due to the lack of experience the UK has. Nevertheless, Donald Trump has said that he would strike a deal with the UK.
The Daily Telegraph reported in the middle of October, as seen in this Independent article, that the UK could join a formal trade alliance known as the North America Free Trade Agreement (NAFTA) which includes the US, Canada, and Mexico if a post-Brexit trade deal is not reached. However, President Trump said in October that he may end the 1994 NAFTA deal, due to it no longer servicing the US’s economic interests.
According to trade analysts, if the UK joined NAFTA, manufacturers who want to export to the EU and North America would have to produce goods in accordance with the two separate sets of rules,
There is, however, good news to report. According to a member of the Bank of England’s monetary policy committee (MPC), the UK’s trade balance (the difference between the level of its imports and exports) is improving.
Professor Silvana Tenreyro (one of the MPC’s newest members) said that in the aftermath of the Brexit vote, the trade deficit had increased but the gap between imports and exports is now closing.
The BBC has produced six charts detailing UK imports and exports. Overall, the trade deficit is in fact decreasing, and total international trade is increasing, with data from January to July 2017, showing that Britain’s biggest exports are now machinery, vehicles, and semi-precious stones.
Encouragingly, according to data from 2015, the UK’s top 10 trading partners for good imports are Germany, China, the US, Netherlands, France, Belgium and Luxembourg, Italy, Spain, Norway, and Ireland.
According to data from 2015, the UK’s top 10 trading partners for goods exports are the US, Germany, France, Netherlands, Ireland, China, Belgium and Luxembourg, Spain, Italy, and Switzerland.
Keep an eye on our LinkedIn and Twitter pages for the latest news and updates on international trade. Find out more about how SquareOne could help you by visiting our website: www.squareone.us.com or emailing us on email@example.com.