The UK must carve out a new global trading role for itself as part of a new, rapidly-changing European Union, CBI Director-General John Cridland urged today.
In his New Year message, he outlined the importance of securing a ground-breaking EU-US free trade agreement to generate long-term UK growth and boost the flat domestic economy.
He called on politicians both sides of the Atlantic to seize the moment during the first 100 days of President Obama’s second term, to create a long-lasting economic legacy – and not risk looking back with regret in four or five years’ time.
The CBI says a historic US deal is vital to creating long-term, sustainable economic growth and job creation in the UK and EU. It would eliminate tariffs, liberalise goods and services, harmonise regulation, promote investment and set benchmark standards for trade in the 21st century.
Mr Cridland said the UK could not afford to miss out on opportunities to use the EU to help rebalance the economy towards exports and create new trade deals based on its world-class reputation – in particular in financial and professional services; pharmaceuticals; and creative industries.
It comes as the CBI kickstarts a major project in the New Year to flesh out how the UK’s global role should look in a new Europe. It will examine how the UK can remain a leading location to do business globally – expanding export markets particularly for high-growth small and medium-sized firms, without losing access to the Single Market. It will report in mid-2013.
The CBI says that while the EU and US have relatively open economies, there are numerous examples of obstacles to trade across many sectors – from tariff costs and mismatched regulations, which lead to significant costs to firms on both sides:
- The transatlantic chemicals industry enjoys low tariff levels, but it pays over 500 million EUR in customs duties each year.
- Logistics firms, when trading in the EU, must handle 27 different customs processes and costs, while pharmaceutical firms believe major cost savings would be possible with the harmonisation of packaging in both markets.
- ‘Unseen’ barriers such as these cost businesses across a whole range of industries, impeding the level of trade possible for US and European companies. One study identifies up to 122 billion EUR in potential gains being possible for the EU every year, if those regulations that could plausibly be aligned, were (see notes to editors).
Mr Cridland argued that business leaders were pragmatists and have always adapted to new economic and political realities emerging in Europe.
But overall, they still saw the EU as a strong launchpad to project themselves globally and a basis on which to attract inward investment.
He said the UK must drive forward ongoing EU trade talks with India, Japan and rapidly growing economies.
He said businesses were clear the Eurozone crisis showed that the EU needed to address huge structural reforms that it had ignored for many years – but did not want the “baby thrown out with the bathwater” – when it came to getting the UK’s future relationship with Europe right.
Mr Cridland said it was vital the UK remained at the EU table banging the drum for its national interest – shaping the agenda on Single Market reform; on climate change; protecting the financial services industry; and promoting new trade agreements.