The Department for Business and Trade (DBT) is working to open markets through a series of new and upgraded free trade agreements (FTAs) with markets including: Australia, New Zealand and Japan (all signed); India, Mexico, Canada and the Gulf Cooperation Council (for which negotiations are ongoing); and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This is alongside strengthening existing trading partnerships with trusted partners such as the US.
Since the end of the pandemic, new opportunities have arisen for UK businesses to sell their goods and services overseas, says Rob Waugh
WHAT ARE THE KEY BENEFITS OF FTAs?
Improved market access
Better investment opportunities
Enhanced protections for businesses in areas such as data protection and intellectual property
New global opportunities
await UK businesses
What country would you like to export to?
Australia is the UK’s 21st largest export market. Situated in the dynamic Asia Pacific region, it’s an increasingly important market and expected to be the world’s 10th-largest economy by 2050.
UK exports were worth £10.7 billion in the four quarters up to the end of the third quarter of 2022, according to the Office for National Statistics (ONS), and these exports already support 100,000 jobs in the UK.
According to His Majesty’s Trade Commissioner (HMTC) for Asia Pacific, Natalie Black, the UK’s new FTA with Australia, could “potentially unlock £10.4 billion of additional bilateral trade”.
Trade agreements make it easier and cheaper to do business overseas in a number of ways such as:
Top three goods exported to Australia in the four quarters to Q3 2022
Medicinal and pharmaceutical products (£470.1 million)
Consumer manufacturing (£339.9 million)
Cars (£295.3 million)
Services opportunities
The UK is already the world’s second-largest services exporter, with services firms making up the backbone of the UK economy and employing more than 80 per cent of the workforce (Source: ONS).
The new FTA with Australia will give UK businesses the guaranteed right to compete in the Australian market on an equal footing with local providers.
UK services are already popular Down Under – with exports worth over £6.3 billion – but the new provisions will make it easier to trade in sectors ranging from architecture, law and financial services to IT, shipping, logistics and public relations.
The top 5 UK goods exports, in the four quarters to the end of Q3 2022, to Australia
Medical & pharmaceutical
products
£469.7m
Other manufactures (consumer)
£339.6m
Cars
£295m
Specialised machinery (capital)
£261.9m
Beverages
£250.6m
TECH opportunities
The UK-Australia FTA will make it easier for UK firms to trade digitally with Australia, including in tech, creative industries, finance, telecommunications and many other sectors.
One important provision secures the free flow of data necessary for UK businesses to provide many products and services to customers, while locking in a legal requirement for personal data protection in both countries.
UK tech firms can also be confident they will be spared the cost of setting up servers in Australia to trade there.
With the majority of services exports now delivered digitally, from banking to food delivery apps, and many goods exports ordered online using digital payments, these provisions mean opportunities in Australia across sectors well beyond the tech sphere.
The deal, which is expected to enter into force in the coming months, is expected to increase trade by 53 per cent, and boost the UK’s economy by £2.3 billion when compared to projected levels of GDP in 2035. Goods and services exporters from around the UK are expected to benefit. The deal is projected to add £900 million to household wages in the UK in the long run, compared to 2019 levels.
To take one example, whisky has faced five-per-cent tariffs in Australia, but these will now drop to zero, as will all tariffs across the food and drink sector.
The FTA comes at an opportune time for UK exporters, with Australian demand for UK imports expected to grow by 30 per cent in real terms over the coming decade.
Australia’s appeal as a market is clear, with no language barriers, many shared cultural values and interpersonal links with the UK. With a population of over 25 million, including more than a million Britons, it is also an ideal place to test and develop new products and services.
DIT is working to open markets through a series of new and upgraded free trade agreements (FTAs) with markets like Australia, New Zealand and Japan (all signed), as well as India, Mexico, Canada, the Gulf Cooperation Council and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This is alongside maintaining existing trading partnerships with trusted partners such as the US.
With more than 285,000 inhabitants out of five million New Zealanders having been born in the UK (Source: Stats NZ, 2018 Census), New Zealand is a tempting market for British businesses – with no language barrier, and similar legal practices.
The UK-New Zealand FTA was signed on 28th February 2022. It’s the second bespoke, bilateral FTA after Australia and is expected to enter into force in the coming months. This deal will make it easier for British businesses to break into the New Zealand market and build on bilateral trade that was worth £2.5 billion in the year to the end of September 2022, of which British exports were worth £1.5 billion.
A Tempting choice for UK businesses
Almost 5,900 British businesses exported to New Zealand in 2020, employing 233,000 people.
an increasingly important market
The UK and India currently enjoy a strong trade relationship, with bilateral trade at £34 billion (year to Q3 in 2022). Our investment relationship supports over half a million jobs across both economies.
Total trade in goods and services (exports plus imports) between the UK and India was £34 billion in the four quarters to the end of the third quarter of 2022, an increase of 51.7 per cent, or £11.6 billion, from the four quarters to the end of the third quarter of 2021.
India accounts for 1.9 per cent of total UK exports and is the 12th largest UK export market in the four quarters to the end of the third quarter of 2022.
Negotiations are under way to secure an FTA with a nation on its way to becoming the world’s third largest economy with a quarter of a billion middle-class consumers by 2050.
Third largest economy by 2050
INDIA
India was the UK’s 12th largest trading partner in the four quarters to the end of the third quarter of 2022, accounting for two per cent of total UK trade
India is poised to overtake China as the world’s most populous nation next year, and is projected to be the world’s third-largest economy by 2050
A forward-facing trade deal seeks to strengthen the economic links between the UK and India, potentially boosting the UK economy by around £3 billion by 2035.
There are clear benefits of a UK-India FTA in general terms. A trade agreement with India will make trade easier and cheaper for UK importers, which can improve choice and value for UK consumers.
In 2019, UK businesses sold £5.35 billion in products to India, of which £5.24 billion were subject to tariffs. An FTA with solid market access and provisions to ease red tape could boost UK firms of all sizes hoping to sell more of their goods to India.
But FTAs are about more than just market access for goods. The UK’s services sector is the second largest in the world, with businesses exporting £6.5 billion (year to Q3 in 2022) to India. And India is already a key destination for UK foreign direct investment – it was worth £19.1 billion in 2021.
A trade deal that opens opportunities for services and provides greater legal certainty for investment means that UK businesses who are keen to export to and invest in India can feel more secure in doing so.
Finally, a trade deal with India supports the UK Government’s growth strategy by taking advantage of the United Kingdom’s status as an independent trading nation, creating new trade and investment opportunities and championing free trade, supporting the levelling up agenda in all regions and nations of the UK.
The Indo-Pacific region represents 40 per cent of global GDP and has some of the world’s fastest-growing economies (source: IMF). A deal with India is a big step forward in the UK’s strategy to refocus UK trade on the Indo-Pacific. A UK-India trade deal puts ‘Global Britain’ at the heart of this economic powerhouse, allowing the UK to create a pillar in the region supporting free and fair trade.
The new trade deal will include commitments to remove tariffs on all goods exports, cut red tape for technology and service companies, and help boost digital trade.
Precedent-setting provisions will streamline business mobility, create a pathway for improved recognition of professional qualifications and lift the investment-screening threshold for UK companies.
Natalie Black says: “Our free trade agreement with New Zealand will eliminate tariffs on all UK exports, from ships and buses to clothing and footwear, and make it easier for UK tech and services companies to expand. All this is expected to increase UK trade with New Zealand by almost 60 per cent, boosting our economy by £800 million when compared to projected levels of GDP in 2035.”
HOW MANY BUSINESSES EXPORTED TO NZ?
NEW ZEALAND
AUSTRALIA
A new FTA has ushered in a new era in trading relations between the UK and Japan, which is the third-largest economy in the world. Natalie Black says: “UK businesses looking to export to Japan will particularly find opportunities in decarbonisation, defence and digitalisation – major areas of focus for the Japanese government.
“The UK-Japan Comprehensive Economic Partnership Agreement (CEPA) will open new doors for British businesses and further increase UK exports to Japan, worth £13 billion in the past year.”
Third largest economy in the world
JAPAN
Trade between the UK and Japan was already worth £26.8 billion in the four quarters up to the end of the third quarter of 2022
The top 5 UK goods exports, in the four quarters to the end of Q3 2022, to Japan
Non-ferrous metals
£957.7m
Cars
£700.7m
Medicinal & pharmaceutical products
£644.2m
Mechanical power generators (intermediate)
£618.2m
Scientific instruments (capital)
£304.6m
Value (£billion)
Source: ONS
Japan has a large, wealthy and highly educated consumer market and high demand for high-quality goods and services.
The new trade deal, which was signed in October 2020 and is already in force, makes it easier for British companies across sectors, including food and drink, manufacturing, and digital and financial services, to reach those potential customers.
The CEPA deal could boost trade between the UK and Japan by over £15 billion and drive economic growth in the long term compared to not having an agreement with Japan.
It also reduces tariffs on British food and drink (in 2019, whisky exports to Japan were worth £149 million), and on car parts coming to the UK from Japan, which could offer a valuable boost for British car manufacturers.
Japan remains a formidable economic force: the economy of Tokyo is bigger than Russia’s entire economy, and the country has the highest numbers of millionaires in Asia (3.4 million).
For British companies, it’s a stable place to do business – commitments are upheld, things happen on time and intellectual property is well protected.
Japanese people are fans of cutting-edge technologies and of high-quality imported products.
Japan is an attractive country for UK tech businesses to export to. Home to many world-renowned technology companies such as Sony and Fujitsu, Japan’s Society 5.0 initiative aims to ‘integrate cutting-edge technology’ into society to address social challenges such as an ageing population, according to DBT.
The UK’s digital industry exported £725 million of services to Japan in 2020 (source: Department for Culture, Media & Sport).
£372 million of this was in computer programming, consultancy, and related activities.
Globally, the digital industry is seeing a rapid rise in demand, with a 7 per cent increase in UK digital services exports between 2019 and 2020.
Access free information on trading with Japan, including practical step-by-step exporting advice, on the Export to Japan website.
The US is the UK’s largest single trading partner, and trade between the two nations is growing, reaching a total of £262.7 billion in the four quarters up to the end of the third quarter of 2022.
The world’s largest economy offers many appealing aspects for British exporters: there are no language barriers and low regulatory barriers.
In the four quarters to the end of Q3 2022, British exports to the US grew to £161.5 billion (an increase of 20.6 per cent year-on-year), according to the ONS.
The US accounted for 20.8 per cent of total UK exports for the four quarters to the end of the third quarter of 2022.
UK's largest single trading partner
United States
Why export to the US?
British products and services across all sectors are in strong demand in the US due to their reputation for quality.
The US is the UK’s third largest market for food and drink exports, which totalled £2 billion in 2021, according to data from HM Revenue and Customs.
The US is an attractive market for food and drink exporters due to its large, affluent and diverse population, and its manageable tariffs are appealing for UK businesses.
British sparkling wines, cheese and gin in particular are all emerging as popular products in the US, with high growth potential.
Previous import tariffs on UK steel and aluminium into the US have been removed and it is now possible to export UK lamb to the US after a gap of more than 20 years.
In addition, memoranda of understanding have been signed with three US states – Indiana, North Carolina and South Carolina – aimed at encouraging trade in sectors such as clean energy, life sciences and advanced manufacturing.
Supply chain opportunities
The US pharmaceutical market is one of the biggest in the world, with a large number of biotech and pharma companies, according to the International Trade Administration.
This offers opportunities for UK companies to sell into their supply chains.
US hospitals and healthcare organisations are keen to deliver healthcare more efficiently using artificial intelligence and this has opened up a gap in the market for UK medtech companies.
To find out more about trade agreements and how you can use them to grow your business visit great.gov.uk/freetradeagreements.
The top 5 UK goods exports, in the four quarters to the end of Q3 2022, to USA
Medicinal & pharmaceutical
products
£5.9bn
Cars
£4.9bn
Mechanical power generators (Intermediate)
£3.9bn
Refined oil
£3bn
Crude oil
£2.9bn
Value (£billion)
Now is an exciting time for your business to sell to new markets. The Department for Business and Trade provides a wide range of free support, wherever you are on your exporting journey.
Find out how the department can help your business sell to the world at great.gov.uk
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New Zealand economic growth
$
GDP per capita
AUSTRALIA
NEW ZEALAND
JAPAN
United States
TECH opportunities
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The top categories of goods exported to New Zealand in the year to the end of September 2022 were:
Cars
£162.1m
Specialised machinery
£71.9m
Other road vehicles
£48.3m
Value (£billion)
Source: ONS
Source: ONS
New Zealand
INDIA
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Source: ONS
Source: ONS
Source: IMF, 2021
Source: DBT
Source: ONS
Source: ONS, October 2022
The top categories of goods exported to New Zealand in the year to the end of September 2022 were:
Medical & pharmaceutical
products
£571.8m
Other manufactures (consumer)
£344.1m
Cars
£279.1m
Value (£billion)
Source: ONS