The growing threat of protectionism

Posted on 6 Apr 2018 by The Manufacturer

The good news is that on the back of last year’s global economic growth, UK manufacturing saw some impressive boosts to exports.

The worrying news is that despite the uncertainties of Brexit, the EU enjoyed the lion’s share of our trading growth – and continues to be the best prospect for growth, while the US, our most important non-EU trading partner, is turning to protectionism.

Protectionism Exports Shipping Crate Forklift Container Port Docks Trade Supply Chain - image courtesy of Depositphotos
UK exports to the EU expanded by almost 14% in 2017, twice as fast as exports to the rest of the world – image courtesy of Depositphotos

The latest UK trade data make for interesting reading in terms of analysing the export performance of UK manufacturers and the potential growth prospects of various markets around the world.

They also present some stark facts in light of the Brexit debate and the potential for a trade war between Europe and the United States. In short, if you’re in favour of the free market and less-disrupted trade, then they may make for uncomfortable reading.

The data show a fairly even appetite for UK-manufactured exports between EU and non-EU markets, with the EU accounting for just under half. This is where the split ends.

Exports to the EU expanded by almost 14% – twice as fast as exports to the rest of the world.

These figures chime with our manufacturing outlook survey for the first quarter, which revealed that two thirds of companies view the EU as having the best prospects for growth of any of the major global markets.

Broken down by individual markets, some good news came from China which saw the fastest rate of expansion, with exports growing by more than a fifth, albeit from a still small base of around 5% of the overall total.

Global growth expanded better than expected last year, and the Chinese appetite for imports helped support this trend. There was also good news from the Middle East and North Africa, where our exports grew by more than 12%.

 This article first appeared in the April issue of The Manufacturer magazine. To subscribe, please click here.

Trading partner reality check

The bad news, however, came from the United States, which accounts for over 15% of our manufacturing exports, making it the second most important market after the EU.

In a year where there was a significant expansion in global growth, the UK saw zero growth in exports to the US.

Stephen Phipson is expected to take up his role at EEF on 1 December, 2017.
Stephen Phipson CBE, chief executive, EEF.

Furthermore, this picture of flat-lining UK growth in exports to the US comes before the recent decision by President Trump to impose tariffs on steel and aluminium.

Such a move away from liberalisation and towards protectionism is not news to us – a trade survey EEF carried out last year showed that one in ten British companies had experienced protectionism or an increase in tariffs.

All this data should be flashing warning signs to government as it seeks to negotiate Brexit, and at the same time pins its hopes on signing a free trade deal with the US, just when our closest ally appears to be turning away from the very fundamentals of free-trade principles.

Above all, it is now even more essential that the government appreciates that the EU is a vitally important market.

The government must take account of this fact as it negotiates a transition and final Brexit deal, one which leaves trading arrangements as close as possible to those which currently exist.