A summary of the most important trade news stories from the past week. This summary is emailed to our subscribers every Monday morning, along with the latest comment and analysis from The Channel Group. If you would like to receive this direct to your inbox, you can sign up at the bottom of this article or click here.
UK will leave single market
In significant, if rather unsurprising news, the Prime Minister has signalled that the UK will leave the single market. Currently, the only ways to be a ‘member’ of the single market is to be in the EU or to negotiate membership of the EEA through EFTA. Members of the EEA must contribute to the EU budget and accept the four freedoms – something that the UK is unlikely to want to continue doing. Theresa May said that she will not try to “keep bits of membership”.
Therefore, the only solution available is for the UK to negotiate access to the single market – something that May has said before, in comments that she would seek a “red, white and blue Brexit.”
It is also likely that the UK will leave the customs union, allowing it to negotiate trade deals with other countries. It is really not surprising whatsoever that May has signalled a UK exit from single market membership. Considering that the UK does not want to accept freedom of movement, would like to negotiate trade deals with third countries, and does not want to contribute to the EU budget, it is the only obvious solution.
This position has been supported by the Labour Party and those in the leave campaign. Big businesses and some remain campaigners are not altogether convinced. Speaking on the BBC, prominent remain campaigner Anna Soubry MP said that she “didn’t want to rerun the arguments of the campaign” but nevertheless thought that single market membership should still be an option. Vote Leave Chief Executive, Matthew Elliott, responded that those wishing to retain single market membership were absolutely rerunning the arguments of the campaign and should accept that the UK will cease to have membership after Brexit.
Hopefully, this will mean that I no longer have to summarise a plethora of pro- and anti-single market membership views each week. The Prime Minister has spoken: Brexit means Brexit.
Soft Brexit could stop Indyref2
Scottish First Minister, Nicola Sturgeon, has suggested that a ‘soft Brexit’ could see a second Scottish independence referendum taken off the table. She said a second referendum could be “put aside” as she seeks “consensus and compromise” over Brexit. In a new report, Scotland’s Place in Europe, the Scottish government set out other solutions which could see Scotland retain single market membership.
Fox draws up list of 50 target countries for trade deal
International Trade Secretary, Dr Liam Fox, has reportedly drawn up a list if 50 countries with which to pursue post-Brexit trade deals. His list includes nations that would benefit from UK expertise, with whisky and air traffic control technology being cited. He said, “We have a real opportunity to build on this country’s wide range of successful exports, reach out to new markets and help more businesses achieve their exporting potential.”
Lack of negotiating experience may lead to ‘very hard Brexit’
Norway’s Prime Minister has said that the UK’s four-decade membership of the Eu has left it without expert negotiators and that this could lead to a “very hard Brexit”. Erna Solberg, said, “We do feel that sometimes when we are discussing with Britain, that their speed is limited by the fact that it is such a long time since they have negotiated”. The inference being that a UK-EU trade deal will take a long time to negotiate, resulting in a reversion to WTO rules for a period of time.
“Leaving customs union will create 400,000 jobs”
Analysis by Change Britain has found that the UK could create almost 400,000 jobs if it leaves the customs union. Using European Commission data, it has said that the UK could benefit from up to £20 billion in extra imports and 387,580 new jobs.
China launches freight train to UK
In a major development for China’s ‘One Belt, One Road’ project, a freight train has set off from Eastern China and will arrive in London. The 18-day journey links China with the UK and other Eurasian nations. The China Railway Corporation said that the link will help to strengthen UK-China trade ties.
Trump nominates pro-protectionist trade rep
Donald Trump has nominated Robert Lighthizer, a pro-protectionist and anti-China figure, as his US trade representative. The president-elect has consistently signalled his intentions to crackdown on what he sees as unfair Chinese trading practices and US companies manufacturing products abroad. Mr Trump said, “He will do an amazing job helping turn around the failed trade policies which have robbed so many Americans of prosperity”.
Meanwhile, Chinese officials have warned that Beijing will retaliate if the Trump administration imposes new tariffs. The outgoing US commerce secretary, Penny Pritzker, said: “The Chinese leadership said to me ‘If you guys put an import duty on us we are going to do it on you’ and then they said ‘That will be bad for both of us’.”
Emerging market exports to rise
Emerging market exports will rise for the first time since 2014. The resurgence is helped by higher commodity prices and stronger demand. Bhanu Baweja, Head of EM cross asset strategy at UBS, said: “EM exports will show year-on-year growth of between 8 and 13 per cent in dollar terms in the first quarter of this year”.
Best of Elsewhere:
- UK access to the single market is ‘not on sale’, warns former top EU diplomat
- Should Britain leave the customs union? (ConservativeHome)
- The Hidden Costs of a ‘Soft’ Brexit (Wall Street Journal)
- Britain’s view of trade with China sounds fanciful (FT)
- Alibaba will sell you anything, including a spot on a container ship (Quartz)
- Why Brexit’s mandarins must know their place (FT)
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Before this, he worked for GlaxoSmithKline and as a theatre producer. Thomas enjoys playing cricket, cycling, and reading.