Let me be clear; I do not accept the premise that the Government has to choose between a close trading relationship with the EU and negotiating a new free trade agreement with the US. British officials now have substantial experience negotiating free trade deals and we are more than capable of negotiating with many different countries simultaneously. I am not sure it’s helpful to have a “top priority” for trade deals - this Labour Government should be proceeding with talks across the globe just as the previous Government was doing.
I am proud that the previous Government implemented the clear will of the British people and delivered Brexit. The Trade and Cooperation Agreement was a historic achievement that delivered on the promises of the EU referendum and the Conservative Party manifesto, which the British people supported in the General Election 2019. As part of the Agreement, there are no tariffs or quotas for trade in goods between the UK and the EU. This was the first time the EU agreed such a deal and it provides the UK with the same benefits in tariffs and quotas that EU member states enjoy.
It is important to note that, since Brexit, UK exports of services have grown strongly and, as of 2023, were 8% (in real terms) above 2019 peak in exports. They have also grown strongly for non-EU exports now 15% above 2019 in real terms. This is why it is so important to pursue wide opportunities across the globe, especially with a focus on service exports.
The current Prime Minister was against withdrawing from the European Union and even tried to thwart efforts to leave by calling for a second referendum. Therefore, I was pleasantly surprised to see the Prime Minister acknowledge recently that one of the major benefits of Brexit is the ability to regulate our own industries and diverge from EU regulation, particularly on technology and AI, industries where EU regulation has stifled European companies.
The other major benefit of Brexit is our newfound ability to make trade deals. The UK is now able to make free trade agreements (FTAs) with countries around the world. The previous Government secured Free Trade Agreements with Australia, New Zealand, and Singapore; concluded negotiations for the UK to accede to the Comprehensive and Progressive Trans-Pacific Partnership; and signed Memorandums of Understanding with eight US states - Indiana, North Carolina, South Carolina, Oklahoma, Utah, Washington, Florida, and Texas. It is important that the UK builds on the good work of the Leader of the Opposition when she was Trade Secretary and makes the most of the Trump administration’s openness to do a deal with us. Any trade deal with the USA must benefit our key sectors and meet our national interests. As we have an independent trade policy, we have the flexibility to do this.
The potential benefits of an ambitious and comprehensive UK-US FTA are substantial. Aside from being the world’s largest economy, the US is the UK’s single largest trading partner. The latest figures from the Department for Business and Trade reveal that total trade in goods and services between the UK and US was £294.1 billion in the four quarters to Q3 2024, total exports to the US amounted to £182.6 billion, and total UK imports from the US amounted to £111.5 billion. The US was the UK’s largest trading partner in the four quarters to Q3 2024, accounting for 17.2 per cent of total UK trade.
While the Biden Government was not focused on securing new FTAs, the previous Conservative Government took steps toward increasing the UK's trade with the US. In June 2023, the former Prime Minister and President Biden announced the Atlantic Declaration – a first-of-its-kind action plan covering economic, technical, commercial and trade relations. Additionally, since exiting the European Union, the previous Government secured Memorandums of Understanding (MoU) to boost trade and investment with eight US states – Indiana, North Carolina, South Carolina, Oklahoma, Utah, Washington, Florida, and Texas – with a combined GDP of £5.3 trillion.
Equally, the EU remains an important trading partner for the UK. The EU accounted for 42 per cent of exports and 51.9 per cent of imports in 2023. It is worth noting that in 2015, the year before the Brexit referendum, the EU accounted for 42.6 per cent of our exports and 53 per cent of our imports. So despite the Brexit process, UK-EU trade remains similar to our historic levels as a percentage of total trade.
It is also worth noting that since the UK left the EU in January 2020 that the COVID pandemic, Ukraine War, and a global shift towards protectionism have distorted trade statistics and make it difficult to determine precisely what impact Brexit has had. However, I speak with businesses in my constituency on a regular basis and I am aware of their concerns about red tape. I believe we can work with our EU partners to reduce unnecessary and burdensome red tape for both UK and EU businesses whilst retaining our Brexit freedoms.
I understand that the new Government has pledged to publish a trade strategy and seek targeted trade agreements aligned with the UK's economic strengths. I would welcome any agreement that capitalises on the many opportunities and benefits Brexit has afforded the British people.
However, for clarity, with regard to any future negotiations over our trading relationship with the European Union, the Opposition has set out five key tests that would have to be met before we would even consider such a deal:
- No backsliding on free movement or compulsory asylum transfers
- No new money paid into the EU
- No reduction in our fishing rights
- No rule taking, dynamic alignment, or European Court Jurisdiction
- No compromising on the primacy of NATO as the cornerstone of European security
