Improving trade with non-EU nations to boost British exporters

Written by Mr. Kunal Sawhney, CEO, Kalkine Media

The cross-border trade to and from the United Kingdom has been a victim of multiple adversities including the ever-evolving problems due to the coronavirus pandemic and its aftermath, supply side disruptions, shortage of hauliers and the induction of new trade arrangement between the UK and European Union post termination of the Brexit transition period.

The present calendar year has been quite volatile for international trade as the domestic exporters felt the double distress in January-February period with the Downing Street announcing the third national lockdown and the businesses adjusting their operations according to the administerial modifications in the ongoing processes following the zero tariff and zero quota agreement with the bloc.

Since the last couple of years, the government of the UK has been increasingly trying to magnify the proportion of exports and imports linked to the non-EU countries, especially the nations where the penetration of UK-based goods is relatively low.

Augmenting the broken trade ties with countries outside the Euro Area will certainly diversify the so-called dependence on a handful of international markets and, at the same, British exporters can offset the potential losses incurred in the recent past by increasing the trade volumes, effectively helping the administration to narrow the gap trade deficit.

According to the latest trade data publicised by the Office for National Statistics (ONS), the net trade deficit in the three months to August of 2021 rose to £6.6 billion, registering an increase of £4.5 billion as compared to the preceding three-month period. During the corresponding stretch, the quantum of exports reduced by £0.8 billion to £144.8 billion, while imports surged by £3.7 billion to £151.4 billion.

Marginal improvement in the exports volumes and the frequency of partners looking for British-made goods is not going to help the trade deficit to narrow in the upcoming months as the businesses continue to face the industry-wide operational challenges due to the extended course of Covid-19 and regional troubles in various international markets. In the month of August itself, the total exports shrank by £1.3 billion.

Considerable increase in the number of export orders, more countries willing to import British-made goods, and friendly cross-border arrangement for the domestic traders remain the primary driving factors that can collectively ameliorate the net exports from the UK to EU, as well as non-EU regions, productively helping to reduce the burdening trade deficit.

Prime Minister Boris Johnson has recently clinched a free-trade agreement with the New Zealand counterpart PM Jcinda Ardern, fulfilling the broader objective of increasing the potential number of international trading partners other than the countries under the umbrella of the European Union.

The all-inclusive trade arrangement and the newly agreed terms between the UK and New Zealand will help reduce red tape for the domestic enterprises involved in exports of goods, at a time when it will become easier for UK professionals to live and work in New Zealand. Alongside this, the technology and services corporations will be better equipped for creating thousands of new opportunities, effectively complementing the down-trodden employment landscape as a result of the acute limitedness of the workforce.

With the UK and New Zealand agreeing to cut red tape and tariffs on the goods exchanged, the domestic exporters and a plethora of small-to-medium scale businesses stand to benefit greatly in terms of volume and overall profitability. Led by the negotiators of the Department for International Trade for 16 months, British PM Johnson and New Zealand PM Ardern agreed on the terms that are highly likely to enhance trading volumes for both the nations.

In 2020, the total trade between the UK and New Zealand stood at £2.3 billion. Subsequent to the new trading arrangement, the quantum of trade will improve in the upcoming quarters as domestic businesses from both the nations are looking forward to maximising the benefit of tariff-free trade, at a time when the largest economies struggle with reciprocatory trade practices.

With the deeper cooperation on climate change and digital trade, there will be a number of opportunities for the UK citizens to live and work in New Zealand with the help of the new trade deal. Furthermore, the trading arrangement will make it easier for the smaller corporations to reach out to potential international customers in the New Zealand market.

Both the nations have a mutual admiration for each other’s traditional products as the local consumers in the United Kingdom will be able to enjoy Manuka honey, exotic fruits including kiwi and Sauvignon Blanc wine at a much cheaper price as compared to the previous market prices.

On the other hand, the British exporters will be able to capitalise on the removal of 10% tariff as the volume of products from buses to bulldozers, ships to excavators and clothing to footwear can be increased as New Zealand market remains a major consumer of branded products sourced from various international partners as it is poised to grow nearly 30% by the end of 2030.

Not only this, both the nations have committed to explore the possibilities of deepening the people-to-people links across the nations as UK-based workers will benefit from the improved business travel arrangements.

Professionals including lawyers and architects will be equipped to work in New Zealand more easily as compared to the working conditions now as the UK companies will be allowed to set up shop and bring the best talent with them. For instance, the insurance and financial services corporations based out of Edinburgh will have wider access to New Zealand’s market following the easing of business travel and digital trade.

Automobile corporations situated in Wales will materially benefit from the tariff-free exports as they exported nearly £3.4 million worth of road vehicles to New Zealand in the Covid-laden 2020. The vehicle sales across the world is on track of improvement and will see a sharp spike in the first quarter and forthcoming period of 2022, the countries manage to contain the coronavirus activity, while increasing the proportion of immunised citizens.

The manufacturing companies including K-form and Zip-Clip will also benefit from the removal of 5% tariff on construction products and metal goods as construction activity remains a key driver for many nation’s overall economic output. With Covid-19 witnessing a substantial fallback and New Zealand’s supremely protective stance against the pandemic, the construction orders are expected to go up in the near term.