UK and India launch free trade agreement talks
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In the year since the end of the Brexit transition period imports of goods from non-EU countries have overtaken EU imports for the first time. According to the Office for National Statistics imports rose 1.4 percent in December, driven by a £0.6bn rise in imports from non-EU countries. China has emerged as the UK’s largest source of imports at a value of just over £63.5bn. Across the entire year imports overall have risen 8.4 percent on 2020, with exports up 4.9 percent over the same period.
Cornelius Clarke, of financial services firm Ebury, commented: “Imports from China reached an all-time high in 2021 despite the rise in shipping costs indicating that UK businesses are already diversifying their supply chains.
“The ongoing free-trade negotiations with India could also present a significant opportunity for UK importers too in lowering costs and barriers to trade with a rapidly growing global economic superpower.”
A trade deal with India has been suggested to be capable of delivering as big a boost to the economy as a deal with the US and also forms part of a wider pivot towards ties with Asia.
The UK is currently hoping to become the first European nation to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a group currently made up of Pacific Rim countries such as Australia, Japan, Vietnam, Canada and Mexico.
Around eight percent of UK exports are currently covered by the grouping.
According to the ONS, the US remains the UK’s single largest destination for exports, at a value of £47.1bn.
It’s followed by Germany at £29.38bn.
Despite fears of disruption to trade following the end of the transition period exports to the EU overall increased by £1bn in December with chemical exports and machinery making up a large proportion of this.
The ONS also found no evidence of stockpiling in the wake of customs controls starting in 2022 with current UK trade found to reflect usual patterns.
Despite the positive end to the year, the UK still has room for improvement when compared with pre-pandemic levels.
William Bain, Head of Trade Policy, at the British Chambers of Commerce, said the data “was significantly lower than the trade growth experienced by Germany in 2021.
“Moreover, comparing 2021 with 2018 shows both goods imports and exports have fallen sharply.”
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He added: “These figures show why the UK Government and European Commission should engage positively with our recommendations to improve the two-way flow of goods and services.
“To kick-start a trade-focused recovery there needs to be further action from policymakers to support UK importers and exporters.”
The ONS also reported that a majority of importers and exporters had faced challenges in recent months due to additional paperwork and transportation costs on trade across the EU border.
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