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New realities of UK trade relationship with EU

The UK’s trade relationship with Europe might be different to how it is popularly portrayed, research by the OECD and World Trade Organisation suggests.

A report which breaks with the conventional measurements of trade, which record gross flows of good and services across borders, delves into the value added by a country in the production of good and services.

The findings show that UK exports to EU countries are largely intermediate services and inputs that then processed further and shipped to other countries.

It suggests trade with the EU is not as important as commonly thought, as the transatlantic trade relationship with the US appears stronger in value-added terms.

The data will surely play into the hands of Euro-sceptics, and is published ahead of David Cameron’s speech on Europe.

On average, 60% of the value of gross UK exports is made of value-added originating from the services, and this share is one of highest observed among the countries on which the study was based.

Speaking during the launch of the new database, OECD Secretary General Angel Gurria, said: “Countries’ capacity to sell to the world depends on their ability and readiness to buy from the rest of the world.

“Our new work with the WTO allows us to see more clearly than ever before how blocking imports will damage a country’s own competitiveness. Trade negotiations have to catch up to these new realities, and countries need to implement policies that help their firms better manage their place in international value chains.”

This was posted in Bdaily's Members' News section by Tom Keighley .