The UK is in the process of negotiating a new post-Brexit trade deal with their fellow CANZUK nations. With so much speculation surrounding negotiations, we explore what the future of trade might look like.
It’s no secret that the formation of a ‘CANZUK union’ could aid post-COVID 19 economic recovery for all nations involved, as well as provide a wealth of new business opportunities. Although negotiations are still in progress and speculation is running high, the possibility of a favourable deal looks promising. Based on the information available, here’s what UK businesses might see from a CANZUK trade deal, and how they could start preparing.
Potential business opportunities
Looking at UK business as a whole, a CANZUK trade deal would result in increased trade, travel, investment and cultural engagement between all nations involved. According to a report on Global Britain, the collective worth of the CANZUK nations currently represents over $5.7 trillion USD in GNI and holds 10% of the world’s wealth. Should the UK strike successful deals with New Zealand, Australia and Canada, it could potentially remove trading barriers for other major economies within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Which industries could benefit most from each deal?
The value of the UK’s trade with Canada is estimated at £19.7bn annually, with the UK’s top exports including minerals, chemical products, food products, vehicles and machinery. Under the current transitional deal (similar to the existing CETA deal), most tariffs are abolished but not those for poultry, meat or eggs. Quotas are higher and regulatory requirements are still strict.
The UK government is hotly negotiating access for services suppliers, which is a current strength for the UK economy. They also want access to Canada’s financial sector (particularly the insurance industry). Read our guide on doing business in Canada for more information.
British exports are hugely important to Australia — it as their seventh largest two-way trading partner. A strong deal could see the value of British exports increase to £900 million and would diversify supply chains for UK businesses, helping to promote resilience and ensure a sustained global economic recovery. Trade will be easier and cheaper for UK businesses, especially considering the focus on tariff abolition for financial services, telecommunications, food and drink, vehicles, and technology.
A strong free trade agreement with New Zealand could increase UK exports by an estimated £100 million. The automotive industry is the largest sector for NZ exports and could stand to see the most benefit with regard to reduced trade costs and regulatory restrictions involved with tariff elimination.
New Zealand have stated that they hope to remove trade restrictions for agricultural products. Lower trade costs on popular imports (such as animals and products) from NZ could help UK businesses drive efficiency gains and could also lead to cheaper consumer goods.
Utilising CANZUK free movement
One of the main focus points for CANZUK trade deal negotiations is commonwealth free movement. With more relaxed living and working restrictions for all parties, businesses could enjoy the opportunity to upskill staff by sending them overseas and may even find it easier to establish offices abroad for smoother trade.
So far, New Zealand have pushed for free movement as part of their FTD with the UK, by establishing skills recognition for trained professionals. Negotiations for UK Australia free movement is much more evolved and directly aims to enhance the abilities of professionals within engineering, architecture, legal and accounting. Architects, engineers and construction companies are in high demand in the Australian market due to Melbourne housing plans and various upgrade projects for public spaces, including the Sydney Metro.
As negotiations for a CANZUK deal continue, businesses with interests in Canada, New Zealand or Australia should consider working with currency exchange specialists to help traverse potential changes to the FX market. Our experts can help save you time and money through a moneycorp business account. Get in touch today and find out how we can help.