A report from the European Commission to the European Parliament and EU Council was recently published (23 June 2017) by Cecilia Malmström the EU Commissioner for Trade. The report, Trade and Investment Barriers 1 January 2016 – 31 December 2016 analyses trade and investment barriers reported by business and Member States to the Commission through the Market Access Partnership (“MAP”) program.
36 new Trade Barriers were recorded in 2016 bringing the total number registered to 372
Opening comments in the report mention how jobs in the EU depend on exports and that trade is vital to the prosperity of citizens in the EU.
Other quotes include:
…The success of the EU, therefore, relies on free and fair trade.
…With protectionist tendencies on the rise over the world, it is more important than ever to pursue an ambitious agenda for a progressive trade policy
…In the year to come, the EU will work to keep the global economy open for trade.
I find it interesting to note that, to date, the EU has shown little interest in having (free) access to the UK market and appear willing to introduce yet more barriers to EU Trade as a consequence of Brexit.
The UK is a member of the G20, an international group of 19 countries together with the EU, representing major world economies and accounting for 80% of world trade.
How big is the UK economy ?
There is some debate about where the UK economy sits in relation to other countries.
The size of a countries economy is measured in GDP, the total value of goods and services produced in a country, which was £1,940 billion for the UK in 2016. When converted to $US, as a straightforward currency conversion, this equates to $2,629 billion placing the UK as the 5th highest economy behind the USA, China, Japan and Germany.
However, another method for converting local currency to $US is to use purchasing power parity
Purchasing Power Parity (PPP)
A theory which relates changes in the nominal exchange rate between two countries currencies to changes in the countries’ price levels. The purchasing power parity theory predicts that an increase in a currency’s domestic purchasing power will be associated with a proportional currency appreciation, and that a decrease will be associated with a proportional currency depreciation.
Using this method, the UK comes in 9th place behind China, USA, India, Japan, Germany, Russia, Brazil and India
Regardless of the mechanism for calculating the size of the UK economy and even without breaking down the current actual trading between countries in the EU with the UK, I would expect that there are benefits for the EU in being able to have free trade (non-tariff) access to the UK market.