A new report by a leading UK-based think tank claims there is enough untapped trade potential to offset the possible effects of Brexit on exports to the European Union (EU).
Open Europe, in its research titled “Global Britain: Priorities for trade beyond the EU” released recently, said Britain can make up for any export loss as it exits the EU by building on under-developed links with countries like Bangladesh and making it a priority in its trade negotiations.
“According to the model, UK exports to India, Canada, and Israel consistently under-perform. By 2030, the UK would, we predict, under trade with those three countries by nearly £10bn of goods a year. When services are specifically considered, China joins those three countries and together the four have significant untapped potential of over £17bn of services trade. Other underperforming markets include Nigeria, Bangladesh and Pakistan,” the report notes.
The top 10 under-performing markets for goods and services represent untapped UK export potential of just over £41bn in 2030, according to the analysis.
The researchers, therefore, call on the UK government to pursue a careful strategy of “intensive engagement with under-performing countries.” It also advises not to focus too much on free trade agreements (FTAs).
“Although FTAs can be important, including because they serve to symbolise governmental commitment to support trade, the EU’s FTAs of which the UK is party have so far proved far less important for facilitating trade than could be expected. The UK already trades effectively with the USA and other major economies without an FTA,” the report notes.
Open Europe says it has developed its quantitative analysis to help inform the crucial decisions on trade and commercial policy. The model is based on the observation that countries trade more with bigger countries that are closer to them. Other factors, such as diplomatic representation and soft power connections were also considered.
It, however, does warn that the UK would not be able to “automatically” realise the untapped potential.
“There are complex and varied reasons for trade under-performance in each country. There will also be public pressure to consider the moral aspects of trade, and government cooperation, with countries whose governments pursue repressive and autocratic policies – Bangladesh, or much of the Gulf, are obvious examples,” it claims.