Thursday, 04 August 2016

Brexit: Opportunity or peril for trade with small and poor developing economies?

The UK is rethinking its position in global trade. In the wake of the UK’s EU referendum and the vote to “leave,” the government has created a new Department for International Trade and is busy re-deploying several hundred civil servants to staff it. Yes, after more than 40 years, trade negotiations are seeing a revival in the UK. They are suddenly all the talk in town [...] The headline figures suggest that the UK isn’t a major trade partner for many developing countries. Over the past five years the UK accounted for just over two percent of exports of goods from developing countries and four percent of exports from least developed countries. For the largest developing countries, including China, India, and Brazil, the UK accounts for less than three percent of exports on average. While these countries may find interesting new opportunities in forging deeper links with the UK, they don’t face a major threat of trade disruption in the event of a UK exit from the EU. The reality is very different for some small developing countries that rely heavily on the UK market (see Figure 1). Belize, for instance, sent nearly one quarter of its goods exports to the UK over the past five years. Other countries that rely heavily on the UK for their exports include Mauritius (20%), Fiji (15%), Gambia (14%), Sri Lanka (11%), Bangladesh (10%), and St Lucia (9%).