By Lord Karan Bilimoria
The UK is a globally-trading nation. With export and import trade both valued at over £0.5 trillion, overseas trade is central to business growth in goods and services. How else could the UK have the fifth largest economy in the world, despite being just one per cent of the world’s population?
The EU may not be perfect, but it has presented us with enormous advantages as a globally-trading economy by removing barriers to free trade. The single market and customs union allow us to trade freely with partners that account for approximately 50 per cent of import and export trade.
We have always been a global trading nation; we have always been an open economy, an open market, and respected for it, which is why we are a recipient of amongst the highest levels of inward investment in the world. We need to keep this reputation, and to do this we need to push through with trade, with a focus on keeping options open within the EU.
This Government threatens to take away our advantages, all in the name of going global. But we are already very global. We must not throw all of this away by leaving the customs union.
A recent report released by Open Britain highlights some of the issues that were not addressed when the public where asked to vote to leave the European Union two years ago, which await us after the end of the proposed Brexit transition period in 2021.
Open Britain warns about the very real challenges we will encounter when seeking free trade agreements outside the EU, demonstrating how it would take a total of 26 years before free trade agreements with the United States, China, India, Australia and New Zealand come into fruition.
Trade deals will take a significant length of time to negotiate, with India taking on average 6 years 11 months, 5 years 9 months to negotiate a trade deal with China and 3 years 9 months to agree terms with the United States.
The Open Britain report does not begin to tackle our continuing trade with the EU. The combined EU member states are Britain’s single largest trading partner, accounting for 47 per cent of our exports and 54 per cent of our imports.
It will be essential that Britain looks to continue trading with the EU even after is has left. By far, they are our most valuable trading partners. To have duty-free free movement of goods within that customs union is a huge advantage.
Last week, London hosted the Commonwealth Heads of Government Meeting. I would love to do more business with the Commonwealth— a potential market of 2.4 billion people in total; 1.25 billion people in India alone. What is our total trade with the Commonwealth at the moment? It is 9 per cent of our trade—9 per cent versus the 50 per cent of trade that we have with the European Union.
Although Open Britain’s report highlights the significant challenge Britain faces once it has left the EU, it does not look into the complexities within each of the individual trading partners. When you begin to look at these, further questions arise. How many free trade deals does India have with any country in the world on a bilateral basis? It has nine, and not one with a western country.
Britain needs to look at negotiating these trade deals, however they will not be able to with such restrictive international policies.
For example, the Prime Minister and former Home Secretary Theresa May’s position on immigration is well-known. Evidently, our relationship with India struggles as a result of the stifling of business and tourism visas, as well as for entrepreneurs, skilled migrants and Indian students in particular.
Classifying students as immigrants and associating international students with the target to reduce net migration to the tens of thousands sends completely the wrong message to the world. We must remove students from net migration calculations immediately. India is a globally-trading country and an important historic partner of the UK, but it will not look to sign a trade deal with Britain unless we are willing to accept greater freedom of movement between India and the UK.
We must prove to the world that we can be an adaptable, dependable partner. In just under a year’s time Britain is set to leave the European Union. The Leave campaign was led under the slogan of ‘take back control’, yet the UK is far from in control.
I am encouraged by the big defeats the Government has faced in Parliament already on the customs union, but on the evidence alone it needs to take a different course, or best of all, halt Brexit altogether.
Lord Bilimoria is Founder and Chairman of Cobra Beer, Founding Chairman of the UK-India Business Council and President of the UK Council for International Student Affairs.