A few days ago on Radio 4 I heard Donald Trump stating “There is tremendous potential in that trade deal. I say probably two or even three times of what we’re doing right now.” It turns out that the piece was recorded in June when Trump visited our nation. The words are also included on this online news piece. On another press piece his words during his dinner with the queen included his comment “big trade deal is possible once UK gets rid of the shackles” It is of course essential for businesses that rely on exporting or importing that our Government improves our trade opportunities if we do leave the EU. The challenge is that a great deal of our trade is based in or out to the EU at the moment and if we lose any of that, we will certainly be under pressure as a nation to find new ways of engaging with countries outside of the EU that can offer similar opportunities. However it is also important that we do not make the mistake of assuming that a trade deal with the USA is simple or that rushing into such an opportunity given our Governments lack of skill at such activities will make sense in the long run. As Adam Jackson from Grant Thornton explains in this article if we are going to do a good job with a complex group of 51 states and one Federal Government, we should begin by improving our skills with some smaller nations which themselves are less powerful and complicated than the USA.
I checked out the 2018 trade statistics published on the Governments website and during the last year the USA represented 15.7% of our exports and 8.6% of our imports. This places them as the largest of our exporting nations and fourth largest of our importing nations. However it also places them as one of our largest nations as things stand without a trade deal. Clearly growing these statistics will be good for some businesses, but doing so will make us even more dependent on one nation alone which is a very weak economic position to take and the opposite of the strength of the EU where some people may feel that we are too dependent or too overpowered politically, but they are 27 other nations, not one. If we take the top 10 EU nations they represent 3 times the Exporting to USA and 6 times the importing value of the USA.
Another way of looking at the statistics is the nations which offer us a net gain or a net loss of exporting over importing. The USA is top of our net exporting nations and that is followed by Ireland, UAE, Australia and Singapore. Hong Kong comes in sixth. The net importing nations are Germany followed by China and then Norway, Netherlands, Belgium and Italy. One more EU nation is Spain before we get to Russia and then three more EU nations before Japan and India. I wonder if sometimes the ones at the top of the exporting nations are the ones that the Government favours and the ones at the top of the importing nations are the ones the Government disagrees with most? The reality however is that our economy can benefit substantially from our imports as well as our exports and neither one is the crucial end of line.
There are many people such as Nigel Farage, Daniel Hannan, Arron Banks and Liam Fox who all want us to believe that the USA is our future and the EU is our past. However such a polarised approach is clearly nonsensical and we need to prepare for a future that includes the USA as well as China but also many of the EU nations, which ideally we would trade with through the EU customs union or the single market or indeed both mechanisms!