Rishi Sunak and Joe Biden announced a new economic agreement this week, designed to strengthen critical supply chains as well as support investments in future technologies.
The Declaration recognises the already close ties between the two nations whilst this new agreement sets out a pathway to strengthen those economic bonds to move quicker and increasingly in lockstep in future.
The Declaration covers quite a bit of ground, including:
- More information sharing during a crisis to reduce tech supply chain vulnerabilities
- A new civil nuclear partnership
- A new ‘data bridge’ for UK-US data sharing
- A new international summit on AI safety
- Cooperation to stop adversaries from developing more powerful tech
- Joint research into AI, 5G and 6G, quantum, engineering biology and semi-conductors
- A potential pathway for UK firms to benefit from US government investment
Read more detail on the UK government website here.
Sunak said of the agreement that: “It’s natural that, when faced with the greatest transformation in our economies since the industrial revolution, we would look to each other to build a stronger economic future together.
“The Atlantic Declaration sets a new standard for economic cooperation, propelling our economies into the future so we can protect our people, create jobs and grow our economies together.”
What does this mean for exporters?
At the moment, not too much. This agreement is a far cry from the manifesto-promised fully-fledged trade deal that the Conservative party offered in 2019. Three US Presidents have kicked that can down the road in succession, in part due to worries over the UK’s handling of Brexit and Northern Ireland.
Read more: Talks over UK – US trade deal unlikely to restart until 2025
It does mean there may be new opportunities, and updated regulations, to look out for in the medium term.
Updated rules on data transfer would make it a lot easier for UK and US firms to work in lockstep with less red tape and save an estimated £92m each year. And any new pathway to deride investment from a government is a great opportunity should any UK-based firm be able to capitalise on it.
Negotiations are now underway over many aspects of the new partnership, so expect further announcements towards the end of 2023.
Update: The UK’s trade deals with Australia and New Zealand came into effect on 31st May 2023 and are now live.
UK exporters are getting ready to enjoy the benefits of the UK’s new trading arrangement with Australia and New Zealand.
The first brand new free trade deals sealed by the UK government following Brexit, the agreements with both nations will see tariffs removed on thousands of goods as well as enhanced access for UK service providers to do business in the respective countries.
Following some final regulatory tweaking, it’s expected that both trade deals will go live at midnight on 31st May.
Both deals are expected to increase long-term bilateral traded by up to 59% whilst also enhancing investment opportunities and access to government contracts, producing tariff-free access to both markets for all British goods, flexibility on rules of origin, removal of UK import tariffs on the majority of goods from Australia and New Zealand, and more opportunities for UK professionals to work in both nations.
Read more: UK to join £11 trillion CPTPP trading bloc
Business and Trade Secretary, Kemi Badenoch, said on the deals’ impending launches that: “With these two deals the UK is using our status as an independent trading nation to tailor agreements to our country’s economic strengths. Alongside our recent conclusion of talks to join CPTPP, the government is forging a bold new future alongside the world’s most dynamic and fast-growing economies.
“Putting these trade deals into action will help create new opportunities for business, boosting wages and helping spur economic growth.”
UK exporters confident of future benefits
A small poll of 200 business leaders in the UK by the Institute of Export & International Trade found that 95% were confident they’d be able to benefit from both trade deals with nearly eight in 10 noting that reduced tariffs was a huge benefit.
However, half said that the biggest potential stumbling block will likely be the distance between the trading nations, whilst a lack of market knowledge of Australia, in particular, could be a hurdle.
If your business is looking to benefit from the new free trading agreements with Australia and New Zealand but aren’t sure where to start, then Go Exporting can help.
We can help to assess the global market potential for your company and products and pinpoint specific nations where the potential demand is highest.
Learn more about how we can help you make the right market entry decisions with the clarity of real market information here.
Fresh data from Alibaba in partnership with the Institute of Export & International Trade has shone a light on just how powerful exports can be for UK businesses.
Their new report entitled ‘The UK Opportunity Report – Global Horizons: helping UK businesses grow through international trade’ quizzed 3,000 UK businesses to uncover just how powerful international trade has been for them.
Businesses already exporting, some three-quarters, said that export sales accounted for 49% of their total revenues with 82% of all responders saying exports had increased company revenues – 97% for enterprise-level firms, and still a healthy 68% for micro businesses.
And the benefits of exporting aren’t just revenue related. The report also found that 79% of firms viewed international trade has helped to ease the pressure of doing business in the UK with a similar number saying exports had made their business stronger and more resilient.
Eight in 10 said exporting was critical to their future plans.
Download now: 7 Key Changes to UK-EU Trade Post-Brexit
Alibaba’s Roland Palmer noted that: “International trade is widely recognised as a key driver of growth, benefitting businesses that export and the UK economy.
“Furthermore, the UK’s recent economic challenges underline the importance of advancing prosperity by accessing new markets and customers.”
One in four UK firms missing out on export benefits
The report by Alibaba and IOE&IT also highlighted how 25% of UK businesses are still yet to start exporting, despite the wide-ranging benefits of doing so.
Some of the complexities surrounding starting to trade abroad for the first time can be a big stumbling block for smaller firms, especially in the wake of Brexit.
If your business would like to explore the benefits of exporting for the first time but aren’t sure where to start, then Go Exporting can help.
Our international trade consultancy services helps you to plan and prepare for your export journey. But before that, we can help you undertake an export readiness evaluation to assess and prepare you to start your global expansion plans.
Rishi Sunak’s new Windsor Framework was designed to do a few things. First and foremost was to fix the backstop issue in the original Brexit deal and remove the border down the Irish sea. And second, it was supposed to unlock talks with the Biden administration over a new, lucrative ‘Brexit dividend’-worthy trade deal with the US.
And the latter looks to have worked… to a degree. The White House suggested to the UK government this week that it would now be open to starting talks over a trade deal again – but not until 2025.
That timeline is only likely to accelerate should Biden lose in the 2024 US elections, if he decides to run for another term. If Biden is reelected, then 2025 could be pushed back further as he battles with those on the left of his own party who are concerned at the number of US jobs being lost overseas.
Conservative MP David Jones told The Telegraph that: “The US can remain on the back-burner until we have a more sympathetic US President.
“Indeed, it was rumoured that Biden himself was keen [for the US] to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [CPTPP]. If that happens, we will not need a bilateral deal.”
Read more: UK to join £11 trillion CPTPP trading bloc
“In the meantime, we can focus on more enthusiastic trading partners, who are accounting for an increasing share of the global economy.”
The UK has signed its most significant trade agreement since leaving the EU by joining the Indo-Pacific trading bloc.
The deal, which took two years of negotiations to strike, will unlock access to a region worth £11 trillion a year.
UK firms will now have increased access to markets including Canada, Mexico, Australia, Japan, Vietnam, and Singapore, with tariffs on food, drink and car exports expected to be cut.
The value to the UK economy is expected to be £1.8bn – still far below the economic cost of leaving the EU.
Prime Minister Rishi Sunak said of the deal that: “We are at our heart an open and free-trading nation, and this deal demonstrates the real economic benefits of our post-Brexit freedoms. As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.
“Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies, as the first new nation and first European country to join. British businesses will now enjoy unparalleled access to markets from Europe to the south Pacific.”
Read more: UK food and drink exports exceed pre-pandemic levels
The deal has been welcomed by business leaders, with CBI director general Matthew Fell noting: “Joining CPTPP is a real milestone for the UK and for British industry. Not only does the agreement provide greater access to a group of fast growth economies representing 14% of global GDP and over 500 million consumers, but membership reinforces the UK’s commitment to building partnerships in an increasingly fragmented world.
“CPTPP countries and business need to work together to future proof the rules-based trading system and stimulate growth with a focus on digital, services and resilient supply chains.”
The deal comes as UK officials are hopeful that a new agreement reached with the EU over trade provisions for Northern Ireland may help unlock trade negotiations with the USA – something two presidents have put on hold until the fallout from Brexit was solved.
New data from the Office for National Statistics has found UK service exports have grown to their highest-ever levels.
Sales grew by 20% compared to 2021 – and up 23% against 2018 – to £400 billion last year.
The UK sits behind only the US as the biggest services exporter globally with the sector contributing some 80% to the UK’s total GDP.
Business and Trade Secretary Kemi Badenoch said of the latest figures that: “These new figures are a trade success story and cement the UK’s position as a global services superpower.
“Services are the lifeblood of our economy, employing over 8 in 10 of our workforce. To see services trade reaching these heights is a firm reminder of the resilience of our strong services economy and shows significant progress in our race to export over a trillion pounds of British goods and services a year by 2030.
“I’ll be using my talks with Mexican politicians and UK businesses operating in Mexico to make the case for a revamped UK-Mexico trade deal which will significantly increase export opportunities, and boost jobs around the UK.”
Read more: New Northern Ireland Protocol could unlock US trade deal
The new Windsor Framework agreed between UK Prime Minister Rishi Sunak and President of the European Commission Ursula von der Leyen could open even more avenues for UK firms to prosper.
The new policy for managing trade between the UK and NI, and then NI to the EU, could unlock negotiations with the US over a mega trade deal. Meanwhile, threats to the Good Friday Agreement had put the brakes on the UK’s efforts to join the CPTPP trading bloc, something which now looks more likely.
The global appetite for UK food and drink has continued to grow despite pandemic and post-Brexit pressures.
New data from the Food and Drink Federation (FDF) has shown how food and drink exports have now surged past pre-pandemic levels to stand at a record £24.8bn with chocolate and cheese exports proving ever-popular.
Over half of all food and drink exports went to Europe where sales actually rose 22% to £13.7bn. New emerging partners like Vietnam have also seen double demand, whilst sales to non-EU countries broke the £10bn value barrier for the first time.
And high demand has been seen across almost all categories, highlighting a general trend towards UK produce – and not just high-demand brands.
Dominic Goudie of the FDF commented: “UK food and drink continues to be recognised around the globe for its high quality, safety, and sustainability credentials, with demand as strong as ever across the EU and at record levels in developing markets.
“As the UK’s largest manufacturing sector, dynamic trade is vital if our sector is to deliver the robust growth we’d like it to in the coming months and years, benefitting communities in every part of the UK.”
Read more: Free Webinar: Exporting to Ireland
“Imports are essential for the success of our sector, adding value to UK produce while ensuring consistent availability and value for shoppers.
“There also remain substantial opportunities to deliver further export growth, but this will require the government to use all the trade policy levers at its disposal in support of the food and drink sector, to ensure that our producers can access competitively priced ingredients and sell into the fastest-growing markets.”
UK Prime Minister Rishi Sunak and President of the European Commission Ursula von der Leyen displayed what has become an increasingly uncommon showing of UK/EU cooperation and agreement late last month with the announcement of the breakthrough Windsor Framework.
The new deal for Northern Ireland fixes many of the problems that the previous protocol had thrown up for both businesses and individuals.
If agreed upon and enacted into law, some of the key takeaways for UK firms include:
- Green and red lanes for trade, with green lane goods destined for NI requiring significantly fewer checks and less paperwork, whilst red lane goods at risk of moving into the EU requiring normal checks
- New data sharing and labelling arrangements (TBC)
- Goods moving from NI to GB will not require export declarations
- Specific GB products like potato seeds and sausages will once again be sold in NI
- Updated rules on pets, parcels and medicines too
Breakthrough could reignite US trade deal talks
Both Trump and Biden have been outspoken in their ‘disappointment’ at the state in which Northern Ireland was left as a result of the old protocol… and that disappointment actively put a blocker on talks towards a mega trade deal between the two nations.
The announcement of the Windsor Framework was greeted warmly by the current President who noted its importance in upholding the Good Friday Agreement.
A White House source then hinted towards wider benefits, noting that: “We believe that this will help improve the prosperity of both the EU and the UK, and will open up all kinds of new avenues for trade that were somewhat at risk.”
Download now: Post-Brexit planning checklist
The government had been hoping for a swift trade deal to be agreed upon with its largest ally in the wake of the Brexit vote and has since opted instead to pursue economic arrangements with individual States.
New developments could mean a more comprehensive agreement is back on the table, whilst talks for the UK to gain access to the CPTPP could also be reignited.
The Trade and Co-operation Agreement (TCA) between the UK and EU in the wake of Brexit is delivering more headaches than benefits for the majority of exporting SMEs.
That’s according to data collected in December last year by the British Chambers of Commerce from almost 1,200 surveyed businesses.
The survey found that almost eight in 10 firms had found the Brexit deal was not helpful in their drive to increase sales or grow their business overall, whilst more than half continue to face difficulties adapting to the new rules for trading goods.
Download now: 7 key changes to UK-EU trade post-Brexit
Meanwhile, 45% of service businesses said they’re still trying to adapt, whilst over four in 10 said they’re finding it difficult to obtain visas for new staff.
These difficulties are directly translating into business performance too.
The survey also found that 80% of firms are seeing the cost of importing increase, whilst more than half have seen their margins cut. Three-quarters of manufacturers also said they’d had issues with shortages too.
One manufacturer commented on their experience that: “Brexit has been the biggest ever imposition of bureaucracy on business.
“Simple importing of parts to fix broken machines or raw materials from the EU have become a major time-consuming nightmare for small businesses, and Brexit-related logistics delays are a massive cost when machines are stood waiting for parts. We used to export lesser amounts to the EU, but the bureaucracy makes it no longer worthwhile.”
To help alleviate some of the issues UK businesses are facing, the British Chamber suggested five fixes that the government should look to introduce:
- Create a supplementary deal with the EU that either eliminates or reduces the complexity of exporting food for SMEs.
- Establish a supplementary deal, like Norway’s, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU
- Allow CE-marked goods and components to continue to be used in Great Britain after 2024.
- Make side deals with the EU and member states to allow UK firms to travel for longer and work in Europe.
- Reach an agreement on the future of the Protocol on Ireland/Northern Ireland with the European Commission in the early months of 2023, to stabilise our trading relationship.
If your business is suffering as a result of Brexit, combined with current global economic headwinds, then Go Exporting can help.
Our international trade consultancy helps businesses of all sizes to expand into new markets, from research and strategy to full export implementation and sales generation.
Learn more about how we can support your company here.
New data has highlighted how a range of global economic factors are hampering growth efforts for small and medium-sized exporters.
Data from more than 2,300 UK SMEs as part of the British Chamber of Commerce’s quarterly Trade Confidence Outlook for Q4 found that just one in four had seen international sales growth at the backend of 2022, with a further 47% saying sales had stagnated if not fallen.
The picture for 2023 looks equally stagnant too with 28% expecting a sales slump against 24% saying they could see an increase in demand.
Total revenues are expected to rise though as cost pressures and shrinking margins mean 64% of respondents are planning to increase pricing over the coming months.
Difficult business environment
Consumers and businesses alike have struggled in the post-pandemic era to really kick on once more with the cost of living, inflation and economic headwinds driven by the war in Ukraine contributing to a trading environment some are finding more difficult than during the lockdowns.
Additional factors such as Brexit have made it tougher, and more expensive, for UK firms in particular to access the EU market.
Respondents to the BCC survey noted that energy (72%), labour (67%) and raw materials (61%) were the biggest cost pressures being faced – three critical areas that it’s hard to mitigate against.
Head of policy at the Chamber, Willian Bain, said of the survey results that: “Last autumn the World Trade Organisation forecast global trade growth of just 1% in 2023, down from 3% in 2022. This is creating huge headwinds for smaller UK firms battered by the pandemic, Brexit and energy price shocks.
“Against this background, it could be some time before the global shipping and trading systems return to anything approaching normality.
“The UK government cannot afford to sit idly by as we head into such uncertain trading conditions. It must throw a lifeline to our struggling exporters who are desperately trying to keep their heads above water.”
Download now: 7 key changes to UK-EU trade post-Brexit
Bain continued: “Outside of the EU, the US is our biggest trading partner, and the one that BCC members are most interested in, yet progress on free trade talks are stalled. As the Good Friday Agreement anniversary looms the UK has a golden opportunity to transform our trading relationship with our two biggest export markets in one fell swoop.
“Other measures Government should consider include providing effective end-to-end trade finance and setting up a trade accelerator – by working alongside our global network to help firms enter new markets and maximise sales.”