Being a global free-trading nation isn’t as easy as it looks
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Version 0 of 1. The nature of trade has changed dramatically since the days when Britain’s manufacturing firms dominated the economic scene, refashioning imported raw materials into completed trucks, fridges and aeroplanes under one roof. Nowadays, British manufacturers rarely get their badge onto a product. Most of their efforts go into intermediate goods, like wings for airliners or components for hatchbacks. It is time-consuming, but possible, to itemise all the parts in a modern plane, car or bus and their origins, but even that is only half the battle when it comes to negotiating a new modern-day trade deal. When the UK leaves the EU, there will need to be a strong will on both sides to negotiate something that can take can take six or seven years to carry through. Leave campaigners believe the EU will want to replicate its all-encompassing deal with Canada to preserve the union’s huge trade surplus with Britain. But most of that trade is between the UK, the Netherlands and Germany. Most other EU countries either have a deficit with the UK or trade is negligible. In the wider world too, the issue is fraught with difficulty. Asian countries involved in the Trans Pacific Partnership (TPP) were happy to compete with US imports, knowing their farmers were low-cost producers, though Japan proposed delaying the introduction of tariff-free beef for more than a decade to protect its own farmers. However, both the TPP and the EU-US Transatlantic Trade and Investment Partnership (TTIP) were scuttled by Trump. What about Britain’s prospects with India? Delhi has made it clear there will be no deal on the services sector – which makes up 80% of British GDP – without one for skilled Indians to move to the UK. India has also blocked moves by the World Trade Organisation to open up agricultural markets, putting itself between most of the WTO’s 164 members and a global market in food. Nigel Driffield, professor of international business at the University of Warwick, says the UK will need to be wary unless it can find specialist negotiators who can work out the comparative benefits of reducing tariffs, warning that generalists cannot spot specific issues in areas like pharmaceuticals or the whisky industry. Without significant experience, decisions could be made that harm competitiveness. |