UK seeks greater global trade - AmpGFX

In view of the Greg Gibbs, Director at Amplifying Global FX Capital, the market is well aware of what Britain stands to lose as it leaves the EU single market, but it has focused less on what the UK stands to gain as it seeks trade and economic relationships outside of Europe. 

Key Quotes

“This is a point that PM May attempted to drive home in her speech on Tuesday.”

“She said, “Important though our trade with the EU is and will remain, it is clear that the UK needs to increase significantly its trade with the fastest growing export markets in the world.

Since joining the EU, trade as a percentage of GDP has broadly stagnated in the UK. That is why it is time for Britain to get out into the world and rediscover its role as a great, global, trading nation.

This is such a priority for me that when I became Prime Minister I established, for the first time, a Department for International Trade, led by Liam Fox.

We want to get out into the wider world, to trade and do business all around the globe. Countries including China, Brazil, and the Gulf States have already expressed their interest in striking trade deals with us. We have started discussions on future trade ties with countries like Australia, New Zealand and India. And President Elect Trump has said Britain is not “at the back of the queue” for a trade deal with the United States, the world’s biggest economy, but front of the line”

“Prioritizing new global trade deals

A significant area of concern in the market is whether the UK can begin and finalize trade agreements outside of the EU before it has completed Brexit.  At issue is whether the UK can continue to enjoy tariff-free trade with the EU remaining inside the EU Customs Union.

PM May could not provide clarity on this issue, but she sees a way for the UK to push on with trade deals outside the EU while seeking on-going benefits of the Customs Union.   One might conclude from the overall tone of her speech that seeking new trade deals outside of the EU is a priority, but she will work hard to maintain as much free trade with the EU as she can.”

“She said, “I want Britain to be able to negotiate its own trade agreements.  But I also want tariff-free trade with Europe and cross-border trade there to be as frictionless as possible.

That means I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff.  These are the elements of the Customs Union that prevent us from striking our own comprehensive trade agreements with other countries.  But I do want us to have a customs agreement with the EU.

Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends.

And those ends are clear: I want to remove as many barriers to trade as possible. And I want Britain to be free to establish our own tariff schedules at the World Trade Organisation, meaning we can reach new trade agreements not just with the European Union but with old friends and new allies from outside Europe too.”