Last week the Government announced it was to start negotiations for a trade deal with Greenland. Right on schedule, the continuity remain crowd went into meltdown, pointing out that Greenland has a very small economy and that we already had a deal with them when we were members of the EU. The outcry was so great that Greenland began to trend on Twitter on Saturday – possibly for the second time only (the first was when Donald Trump said he wanted to buy it).
These diehard Europhiles –invariably to be found with #FBPE (follow back pro-EU) in their online profiles – are, in many ways, correct. In economic terms Greenland really is a minnow and any trade deal would be small fry. It’s also true that we did have a deal with Greenland as part of our EU membership. A new trade deal will have practically no benefit in economic terms and make no real difference to most of our lives, merely returning us to a position we once held.
However, the FBPE lot needs to get a sense of perspective. Yes it’s not a major new trade deal, but far from being an embarrassment or a sign of the UK in decline, a continuity deal is still worth doing.
For a start, it could result in high tariffs (up to 20% in some cases) being removed from seafood. Slashing tariffs on products such as cod and prawns will reduce costs for seafood processing businesses in Scotland and Yorkshire. As such, some small businesses and the communities they support – many of which have been in a very precarious situation – will potentially be better off than without a deal. Rightly, we don’t shape our trade policy around fishing given how insignificant it is in the grand scheme of things, but it does matter to those people whose livelihoods depend on it.
It also demonstrates the importance of imports. It’s often tempting to focus on exports when it comes to trade, seeing them as the big win in any negotiation. Exports make good headlines for politicians who can claim big boosts for domestic industries. From this perspective, a deal with Greenland might look like a ‘loss’ if it doesn’t improve our balance of trade.
But nothing could be further from the truth. Imports tend to increase competition, improve productivity, and ultimately lead to greater choice and lower prices for consumers. As I’ve explained on this site before, slashing tariffs may not tackle inflation, but given that tariffs on seafood are pretty high and we’re in the middle of a cost of living crisis, it’s still worth doing – every little helps.
It’s also not all about the price of fish. Some people tend to just view trade deals in strict economic terms, but we should also see them as diplomatic tools. Trade deals can help to strengthen relations between nations, some of whom were once enemies. Whatever one’s views of the EU, it can’t be denied that one of its greatest successes was the realisation that nations who trade with each other don’t tend to fight each other, bringing about not only economic growth but peace as well.
Given its geographic position, Greenland has the potential to become more important both now and in the future when melting arctic ice opens up a northern maritime trade route. As such, it makes sense for the UK to be on good terms with Greenland. Striking a deal with it will help to strengthen ties.
Given the importance of trade as a diplomatic tool, the Government needs to take this aspect more seriously. A Global Britain attempting to forge a new place for itself on the world stage needs to recognise trade and our economic power as part of this. As such, it should consider closing down the Department for International Trade and having the majority of its functions subsumed by Her Majesty’s Treasury and the Foreign, Commonwealth, and Development Office with the FCDO being responsible for setting trade policy and negotiating deals.
Finally, the deal with Greenland shows us the importance of the continuity agreements the UK has already signed. Again, it was easy to disparage them as ‘copy and paste’ deals requiring very little real work. But this was not the case for many of them – a huge amount of effort was put into many of the negotiations by ministers and hard working officials, sometimes for very similar terms, but with real progress made with other countries, especially with Japan.
Thanks to the continuity agreements, businesses that relied on them could continue to trade, supporting jobs and livelihoods. They also give the UK a base on which to build, allowing for future agreements which remove more barriers and boost trade even further.
Will a deal with Greenland bring huge economic benefits and does it represent a major win for Global Britain? The answer to both questions is no. However, it will make a difference to some communities and demonstrates just how important free trade is, so we should do it anyway.
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