The bar chart of the annual percentage change in Chinese imports from Europe (six months to October) shows that imports from Great Britain fell more sharply than those from Italy, Germany and France

Great Britain is losing to the EU in trade with global markets before Brexit

Welcome from London, where the clock is ticking for the Brexit transition period.

Time will expire on December 31st and in less than a month there will still be uncertainty as to whether the UK and the EU will even manage to sign an agreement. Even if an agreement is reached, it is likely to be on far less favorable terms than the exporters would like.

It is understandable, therefore, that Britain is keen to improve agreements with countries outside the bloc. Unfortunately, research by the Financial Times has shown that Britain’s attempt to become a major exporter to non-EU countries has suffered a setback this year.

The subject of today’s main piece This research shows that the UK will not only see a significant deterioration in its relations with its key trading partner, it will do so at a time when it is losing market share in key markets outside the EU, including China. the USA, India and South Korea.

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The data contradict the optimism of Brexiter

British Prime Minister Boris Johnson claimed during the Brexit campaign that Britain would improve its trade relations with “the most lucrative and fastest growing markets in the world” after leaving the EU.

However, the data shows that EU member states, particularly Germany, not only managed to gain much larger market shares in key markets, but also widened the gap over the course of this year.

China has been a rare ray of hope for the global economy since the summer. It was the source of demand for many exporters as it successfully contained coronavirus. However, the UK has not benefited as much from this trend as other European countries.

In the six months leading up to October, the value of goods from Britain was imported into China 18 percent down on the same period last yearFor goods from Germany, it rose by 1.1 percent – for goods from Italian manufacturers by more than 5 percent.

China’s trade relations with Germany eclipsed relations with Great Britain even before the pandemic. Since 2014, Chinese imports from Germany have consistently been around four times higher than those from Great Britain. The abyss has grown and increased 5.4 times. To get a feel for the numbers, in the six months leading up to October, it imported $ 53 billion worth of goods from the eurozone’s economic powerhouse;; It acquired less than $ 10 billion worth of goods from the UK.

We have seen a complete U-turn with Italy later this year. In the six months to October, China imported 18 percent more from Italy than from Great Britain – the opposite of the previous year, when it imported 9 percent more from Great Britain than from Italy.

The UK’s underperformance could reflect temporary factorslike importing goods related to pandemics. This would certainly explain why, after a period when Chinese imports of goods from the UK have grown at a similar pace as those from other countries, we are now seeing such differences.

In the six months to September, the US imported $ 23 billion in goods from the UK, less than half of the $ 52 billion in goods imported from Germany. It was also 29 percent below what the US imported from the UK over the same period last year. While that in and of itself isn’t surprising The numbers between the UK and the US are falling much faster than Germany and Italy. It’s a similar drop to France.

Line chart of US imports from Germany / US imports from Great Britain, rolling 6 month total, ratio showing that US imports from Germany have decreased less than those from Great Britain

This lost market share will only compound concerns about the future of trade relations between the US and the UK. President-elect Joe Biden has already spoken about Brexit and warned Johnson not to disrupt the peace process in Northern Ireland.

It’s the same picture elsewhere. South Korea’s imports from Germany rose 5.7 percent in the six months to October compared to the same period last year, while imports from the UK fell 13 percent. From April to September, Indian imports from Germany and Italy fell much less than those from the UK. In terms of value, both emerging countries import twice as much from Germany as compared to Great Britain. French exporters also lagged behind their German and Italian counterparts, but tended to outperform the British.

It’s not that the UK industry is blind to this. According to the latest survey by the European Commission, the The net share of UK manufacturers reporting improved competitive positions in both the EU and extra-EU markets fell to a multi-year low in November and fell to far worse levels than EU companies.

Line graph of the net balance in% over the past three months, showing that UK companies have reported falling competitive positions in the EU

The Prime Minister himself, however, was less reluctant to admit defeat.

Policy monitoring

Is China’s Belt and Road Initiative getting much greener? The country’s president, Xi Jinping, surprised everyone earlier this year when he announced that Beijing wants to become climate neutral by 2060. While critics say – rightly in our view – that this is too little and too late, it seems that Beijing’s stance could have a more immediate impact on this aspect of trade policy.

Christian Shepherd reports that a Study supported by the Chinese Ministry of Environment has called for polluting belt and road projects to be put on a negative list in order to encourage the country’s banks to avoid polluting investments along the route. According to lawyers, the study paves the way not only for a coal investment ban, but also for China should set stricter and more comprehensive standards on disclosure, environmental impact assessment and engagement with local communities. The question now is whether the rest of the government will support the study.

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