Three countries to watch in 2022
With the U.S. opting for the inward-focused, political appeal of protectionism – while also deliberately keeping the World Trade Organization gasping for air and relevancy – other countries are filling the free trade void by embracing open markets and knocking down barriers to trade.
And for good reason. Doing business beyond one’s borders and seeking to attract foreign investment is a proven way to create jobs and generate new sources of wealth for one’s citizens. This is probably why the three countries below are aggressively looking for new trading partners and putting the pursuit of opening new markets at the top of their economic agenda. Let’s take a closer look at what each is doing.
UK
Once Brexit was complete, all the trade deals the UK benefited from as a member of the EU ceased to exist. This was about 40 deals covering more than 70 countries. Thankfully, most countries – nearly 63 – that had agreements with the EU simply rolled them over to create new bilateral pacts with the UK. However, many of these deals are simply stop-gap measures and will require negotiating permanent, stand-alone agreements in the months ahead.
To its credit, the UK has wasted little time kickstarting an ambitious trade expansion agenda. In addition to the rollover deals, it has concluded negotiations with Japan, New Zealand and Australia and of course the EU itself. Perhaps most significantly, it is seeking to join the Comprehensive Progressive Trans-Pacific Partnership which would cement its footprint in the Asia-Pacific. And just two weeks ago, the UK and India officially launched bilateral talks.
In short, the UK is going all in on trade liberalization as core to its economic growth objectives.
India
In recent months, India has also sent the signal it is driving forward a plan to open new markets for its exporting sectors. In addition to the launch of talks with the UK, India is pursuing deals with a variety of countries including the EU, the United Arab Emirates, the Gulf Cooperation Council and Canada. As we reported in another recent letter, India believes it can boost its exports to $500-billion USD annually by embracing free trade in a variety of sectors including IT, pharma, agriculture, autos, textiles and across its services sector. Indeed, the Modi government is on the march in global markets and as the world’s largest democracy, countries around the world will be welcoming the opportunity to tap into such a large market.
United Arab Emirates
Another country we’re watching closely is the United Arab Emirates (UAE), the second largest economy in the Arab world. As part of its economic diversification efforts, the UAE is undertaking an aggressive trade strategy to export more metals, minerals, machinery and electronics with a particular focus on deepening its ties with India.
Other markets it is focused on include South Korea, Indonesia and Israel. And like the UK and India, the pursuit of new export markets is front and centre in its plan to boost competitiveness and fuel economic growth.
What to make of it all?
Overall, while we’re not quite at the “free trade is back” stage, it is good to see major economies once again recognizing the prosperity generating benefits of doing more business across jurisdictions. We’ll continue to track these efforts closely.