Analysis of UK Trade with US, California After Brexit

Friday, March 05, 2021

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The trade partnership between the United Kingdom and California can serve as an ideal model for how Anglo-American trade can go forward, political scientist Dr. Matt Beech said during an international virtual event hosted by the California Chamber of Commerce on Feb. 25.

The event, titled California-UK After Brexit: Prospects for Partnership, was moderated by CalChamber President and CEO Allan Zaremberg, and featured a presentation by Dr. Beech where he provided analysis of what Brexit means for future trade partnerships; the pending trade deal between the U.K. and U.S.; and the trade relationship between the U.K. and California.

Dr. Beech is a political scientist and historian who teaches post-war British political history, government and ideas, and is a fellow of the Royal Historical Society and the Royal Society of Arts. He also is the founding director of the Centre for British Politics at the University of Hull and senior fellow at the Institute of European Studies at the University of California, Berkeley.

 

 

Was Brexit Successful?

The European Union was formed for economic trading cooperation, but over time evolved into a close political social union, Dr. Beech explained during the presentation. The primary goal of the supporters behind “Brexit,” the U.K.'s departure from the EU, was to regain sovereignty. Supporters wanted the Houses of Parliament to be the sole body able to make laws for British citizens, determine its own borders, and set its levels of immigration.

Brexit supporters also took issue with the fact that the U.K. was a net contributor to the EU, always paying more in membership than it took out. Still, Dr. Beech said, the primary force behind Brexit was a desire for autonomy and sovereignty.

There is no clear picture yet on the economic consequences of the UK leaving the EU as the country is only a year out of the union, but in the political sense, Brexit has been successful, he asserted. The U.K. is sovereign and the country has already signed 63 trade deals with other countries.

Deals with the U.S. and India are still being negotiated. A deal with China is uncertain.

U.K.-U.S. Trade

Reflecting the strong history and trust the U.S. and U.K. have shared, the two countries are each other’s single largest foreign direct investor, and the U.S. had a goods/service surplus with the U.K. of $18.9 billion in 2018, Dr. Beech points out.

As is to be expected when a presidential administration changes, there have been some delays with the incoming Biden administration, but Dr. Beech is hopeful that a trade agreement between the U.K. and U.S. will be signed later this year.

There are, however, several sticking points in the negotiations, particularly regarding agriculture, health care and the food sector, he says. Understandably, American companies want market access in the health care sector, but the area is tricky given that health care is primarily delivered by the National Health Service and publicly funded through taxation in the U.K.

U.K.-California Trade

Trade between California and the U.K. is “broadly balanced” and broadly equal to the point that no party has a significant surplus, Dr. Beech explains. The two partners share much in common: a highly-skilled workforce; highly developed economies; and shared values.

In fact, Dr. Beech says, the West Coast is the region in the U.S. that shares the most similarities with the UK in terms of the outlook between citizens and many businesses.

The shared values and similar two-way trade between the U.K. and California, in particular, can serve to help future UK-U.S. trade negotiations.

“I think the U.K.-California trade partnership is really crucial,” Dr. Beech says. “I think in a way, that which has been done in the past is a very firm foundation for the future, and I would like to think that as negotiators hopefully come together in the coming months, between the U.S. government and U.K .government, the knowledge we have between the California and British trading communities can serve as an exemplar of how Anglo-American trade can go forward.”

Upcoming Challenges

Dr. Beech also answered questions submitted by viewers and talked about some of the upcoming challenges that the U.K. will face.

Due to the COVID-19 pandemic, the country will likely be in a different place next year than it is currently, especially given that the U.K. is still in lockdown and won’t likely come out of lockdown until June, Dr. Beech points out. Therefore, impacts on trade, business, and commerce are not yet known.

Financial markets have been preparing for Brexit for several years, so Dr. Beech expects London to remain the finance capital of the continent, and that it will remain a desirable city to live and work in.

Dr. Beech does anticipate some changes to the way the U.K. attracts international students. Up until now, EU students at British universities enjoyed the status of “home students,” with financing from the British government. In the next academic year, however, these students will now be considered international students and will need to finance their own way. Dr. Beech said there will likely be an increase in scholarships and sponsorships from companies that want to draw in talent from around the world.

(Source: CalChamber)

Category: UK Connection, California, International Trade