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Brexit could bolster UK free trade deals
July 25, 2016, 11:09 am

Foreign Minister Boris Johnson is likely to preside over free trade negotiations with nearly a dozen non-EU countries [Xinhua]

Foreign Minister Boris Johnson is likely to preside over free trade negotiations with nearly a dozen non-EU countries [Xinhua]

With the results of the June 23 referendum firmly backing Britain’s departure from the European Union and new Prime Minister Theresa May establishing a “Brexit cabinet”, a number of countries are lining up to secure lucrative trade deals with London.

On Sunday, Chancellor of the Exchequer Philip Hammond told the BBC that he shared China’s eagerness to secure a free trade deal between the two countries.

He said that such a deal would significantly expand opportunities beyond an existing strategic relationship with China.

Hammond’s statements come quick on the heels of Brazil’s announcement that it, too, was looking forward to a trade arrangement with the UK.

Brazil’s Foreign Minister Jose Serra has said that he is looking forward to trade negotiations with the UK on behalf of the Latin American economic bloc Mercosur, which also includes Argentina, Paraguay, Uruguay, and Venezuela.

He told the Financial Times that “as soon as the new Minister of External Affairs Mr. [Boris] Johnson takes office I will make contact with him to enforce existing initiatives [and] explore how to advance them under the auspices of Mercosul.

That’s music to Theresa May’s ears.

Her cabinet has it an absolute necessity that London negotiate as many trade agreements with countries outside of the EU as possible.

This is being seen as both an economic imperative and as a means to boost Britain’s trade exposure globally.

While it was a member of the EU, the UK could not independently negotiate exclusive trade deals with any countries outside the bloc.

Technically, the UK is still a member of the EU and final Brexit negotiations have yet to begin.

But May’s cabinet ministers are not waiting – they’re currently in talks with Australia and Canada among others to establish preliminary trade negotiations that would swing into full effect by the time but Brexit has become official.

According to new Secretary of State for International Trade Liam Fox, Japan is also a very likely candidate for exclusive trade deals in the course of the next two years.

During his visit to Hong Kong in early July, Lord Mark Price, the Minister of State for Trade and Investment, said he believed that the UK was on the cusp of seeing the creation of a “Commonwealth Trading Pact”, particularly if Canada and New Zealand go forward with trade agreements post-Brexit.

London is likely to also seek trade pacts with emerging nations, such as China, including India and others. A trade pact with China would likely benefit both countries as Beijing grows increasingly dissatisfied at the slow progress of trade growth with the EU.

This works right into the hands of Prime Minister May’s new mantra which is that she has created a cabinet that will make Brexit as successful and as rewarding for the UK as possible.

If her ministers are able to pull free trade agreements out of the proverbial hat, then the UK will have successfully negotiated these pacts with at least a dozen vital world economies by the beginning of 2019.

This is something that the UK has been unable to do for more than two decades because all trade deals have been negotiated by Brussels, not London.

Theresa May’s cabinet needs these prospective free trade agreements to be able to ride out the latest economic data which shows that the economy went through a negative downtown in the weeks following the referendum vote.

A Markit/CIPS purchasing managers survey indicated that’s manufacturing and services output plummeted to the lowest level in seven years down to 47.7 in July.

The reading is below the neutral 50-point level, signalling a marginal deterioration in the manufacturing sector, according to the survey conducted by financial information service provider Markit.

A reading above 50 indicates expansion, while a reading below 50 represents contraction.

The survey had registered at 52.4 before the Brexit referendum in June.

The BRICS Post with inputs from Agencies

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