Trade Tuesday: Coronation takeover
With the UK and the Commonwealth making their final preparations ahead of this weekend’s coronation, the nation has once again been overcome by royal fever. As we enter this new era for global Britain, we have taken a look at what this means for the UK’s trade with the other Commonwealth realms where King Charles III is head of state, and the broader group at large.
The UK’s trade with the Commonwealth was worth £63 billion in exports and £58 billion in imports in 2021, accounting for almost 10% of the UK’s total trade. The state with which the UK has the largest trading surplus is Australia, and we can only expect this relationship to grow following the signing of the UK’s first “from scratch” trade deal in 2021. The empowering legislation for both the FTA with Australia and that with New Zealand received Royal Assent on 23 March 2023, and is expected to enter into force shortly, but a date is still to be announced.
Coming in at numbers two and three are Singapore and Canada, for which the UK has a trade surplus of just over £5 billion and £3 billion respectively. The UK now has a digital trade agreement with Singapore which is intended to allow for a more secure digital environment; increasing the ease of data flows and supporting digital trade. These kinds of deals are still relatively new and have been described as new frontier by the World Economic Forum. The UK started negotiations with Canada for a bespoke trade deal in March 2022 but as of yet, they have seemed to make relatively slow progress. That being said, with the difficult negotiations around the UK’s accession to the pacific trading block(CPTPP) now behind us, it is hoped that more positive progress will be made with Canada. The sticking point appears to centre around agricultural access, with Canada seeking the same market access that was granted to Australia and New Zealand. This was something that proved incredibly controversial in the UK, and it is unlikely that the UK Government would wish to hand further ammunition to their critics.
One positive piece of news came earlier in March however, where the UK and Canadian governments signed an agreement on critical minerals required in most modern technologies, such as cobalt and lithium. It is forecast that the demand for some minerals will rise 500% by 2040, with the agreement securing supply chains and jobs in the UK.
Finally looking to the other end of the spectrum, India represents the UK’s largest Commonwealth importer, importing goods and services worth £15.7 billion into the UK in 2021. Negotiations with India started in January 2022. It was hoped that negotiations would be completed in time for Diwali last year, but this deadline was missed with concerns over migration and tariffs on whiskey and the automotive sector mooted as the main sticking point. The sixth round of negotiations were held towards the end of last year, with the Trade Secretary in attendance and the seventh round were concluded in February. The government’s intention remains for the negotiations to be concluded as soon as possible, and despite concern around the timings continuing to slip further, Trade Minister Lord Johnson was in India last week and opened the new British Trade Office in Pune. This trade hub is expected to play a key role in driving new trade and investment once the FTA has been signed.
This represents just a small snapshot of the trade the UK has with her Commonwealth partners across the globe. As we celebrate the coronation this weekend, it is important to consider the key diplomatic role that the King plays, both as head of state and the head of the Commonwealth, a political association that continues to expand and grow.