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Trade

How important is trade?

Key Questions

How important is our trade deficit with EU members?

What is the basis of our trading relationship with the EU?

Are tariffs distorting trade with non-EU countries?

Key facts

We have a total deficit of £59 billion in trade with EU (-£80 billion manufactured goods, + £21 billion services)

45% of our exports go to the EU, 17% of EU exports go to UK

Germany is our largest trading partner: £31 billion exports, £61 billion imports of goods and services.

US is our largest customer to whom we export £37 billion

China is our second biggest supplier by selling us goods and services worth more than £36 billion.

There is a surplus of £24 billion in our trade with non-EU countries (+£283 billion exports, -£259 billion imports)

The EU has negotiated all EU trade agreements with 50 countries

Links

Fullfact: Where does the EU trade with

Trade with EU

We import more from the EU than we export, leaving a deficit of nearly £60 billion (-£80 billion manufacturing, +£20 billion services).

Our imports from the EU of £289 billion are 17% of their total exports but this is a misleading comparison since it differs widely across the community. Our exports to the EU total £230 billion which is 45% of our total exports although this share is falling. Over the last ten years all EU countries other than three have sold more to us than they bought and we are now running a deficit with 16 of them.

A major part of the Government case over the years has rested on the 3 million people “linked” to exports to the EU. This is a very misleading statement that is equivalent to the statement that every civil servant is linked to the Conservative government.

These were our manufacturing trading partners in 2015 in the EU:

Export (£billion)Import (£billion
Germany30.4Germany60.7
France17.8Netherlands30.9
Netherlands17.3France24.0
Ireland16.7Belgium15.81
Belgium11.6Italy15.8
Spain8.9Spain14.0
Italy8.4Ireland12.5
Sweden4.4Poland8.1
Poland3.6Sweden6.8
Total EU133.4Total EU218.7

Source: HMRC trade statistics

Trade with non-EU countries

Our trade with non-EU countries generated a surplus of £24 billion with exports of £283 billion and imports of £259 billion.

The US is easily our biggest customer and takes 20% more than Germany – our largest overall trading partner – while China is our second largest supplier although it has a much smaller share than Germany.

The tariffs that we charge are based on the trading agreements that the EU negotiates on behalf of its members – we do not have any that we have arranged ourselves.

These were our non-EU trading partners for manufacturing in 2015. If you match them with the EU countries you can judge the relative importance.

Export (£billion)Import (£billion)
United States45.3China36.1
Switzerland22.2United States35.3
China18.1Norway13.0
UAE6.8Canada9.5
Hong Kong6.6Switzerland8.9
Saudi Arabia5.4Turkey7.4
South Korea4.7Japan7.0
Japan4.3Hong Kong6.6
Singapore3.9India6.1
India3.9South Korea4.4
Total non-EU171.5Total non-EU192.3

Source: HMRC overseas trade statistics

EU tariffs and quotas

There are no tariffs or quotas for trading between EU members but when it comes to trading with non-EU countries it is very different and can go as high as 46% on some goods.

All trading arrangements between EU members and non-EU members are negotiated centrally by the Council. Therefore it is the largest trading bloc in the world with more than 500 million customers and 28 separate economies. This implies that it can get the best terms from trading partners – assuming that they are good at negotiating.

There are trading agreements with more than 50 countries.

The latest significant trade agreement was with Canada and this eliminated nearly all tariffs – excluding noticeably some foodstuffs. However there are other provisions, noticeably with regards to financial services, that impose restrictions on the way the Canadian companies do business in the EU.

China has recently been accused of dumping goods and the EU imposed anti-dumping measures that effectively erected trade barriers.

tariffsLinks

WTO tariffs

Comments and quotes

Osborne: “WTO tariffs would be set at 10% on importing a Fiat car, 17% on Adidas trainers….”

OUT

Trade with non-EU countries is growing faster than with EU

We would have same trading relationship with EU as US, China and Japan

Smaller companies’ growth is hampered by red tape

Trade agreements with non-EU countries could be more favourable.

Business for Britain says EU tariffs cost £7.4 billion p.a.”

FT on trade if UK leaves

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