Algeria
Countries have benefited from mutual interdependence with each other over the years to bring about economic and physical development. No country can sustain itself without depending on others since they cannot produce every commodity they need. International trade is a vital activity that facilitates the exchange of goods and services between worldwide countries. Any country that engages in imports (goods or services brought into the country) or exports (goods or services sold to another country) has dealt with international trade.
The United Kingdom is a key factor in international commerce, with economic ties to over 50 countries. According to the World Trade Organization, the country is the world’s fifth largest importer and eleventh largest exporter of products, and the world’s second largest exporter and fifth largest importer of commercial services. Despite its economic development and trading contacts with other countries, the United Kingdom still requires new trade agreements in order to enhance its financial position and expand its worldwide opportunities.
There are various countries that the United Kingdom can enter into a new trade agreement with; however, they stand to benefit most with few countries. Algeria, Bosnia and Herzegovina, Greenland, and Montenegro are countries that the United Kingdom should consider signing trade agreements. The country benefits from petroleum, natural gas products, leather footwear, marine imports, and machinery when they sign a trade agreement with the nations.
Algeria is the largest country in Africa, located in the northern part of the continent since the partition of Sudan. Its size quadruples that of France with a sum of 2.4 million Km squared. Most of the country is arid, with ninety percent of the population living in the northern coastal area. Additionally, Algeria is a major player in international commerce despite being located in Africa, with most of its land covered in the Sahara desert (European Commission, 2021). Its success in international trade is the utilization of the free trade area that grand preferential treatment for Algerian exports. There is also a deduction of import duties that Algeria benefits from any products coming from European Union countries considered developing and vulnerable. Algeria is also a major league player in exporting oil and gas products to countries with trade agreements.
The United Kingdom gains significantly from a trade deal with Algeria, owing to the country’s sizable export community and the availability of foreign markets for its products. Additionally, conducting business with the country is simplified since they receive financial and political support from the European Neighborhood policy, which maintains cordial connections with the United Kingdom. According to Santander trade (2022), the EU allocated €125 million to Algeria’s bilateral aid between 2018 and 2020 through the European Neighborhood Instrument (ENI). Algeria’s economic governance is a priority, as is supporting economic diversification, territorial development, participatory democracy, and energy/environment and climate action.
Bosnia and Herzegovina
Oil and gas are critical to the United Kingdom’s economy, providing for almost $40 billion in revenue. The few countries that supply oil benefit from the monotony and so have the ability to change prices in accordance with their economic aims. Having a pool of countries that supply the United Kingdom with oil and gas products protects the country’s economy and eliminates any inconvenience caused by a scarcity of oil and gas goods. Additionally, the oil and gas business directly supports 330,000 additional employment, with 207,000 people employed in the broader supply chain and an additional 100,000 jobs supported by economic activity generated by employee spending (OEC, 2022). As a result, diversifying the oil and gas trade agreement countries benefits the United Kingdom’s economy, which is one of the exporting countries.
The country lies in the Balkan Peninsula of Europe. Bosnia and Herzegovina share the northern and center sections. The country is bordered by Croatia to the south, Serbia to the east, Montenegro to the southwest, the Adriatic Sea, and a thin extension. The government has engaged in the Central European Free Trade Deal and an EU trade agreement. Its main exports include low-value natural resources including mineral fuel, aluminum, iron, and steel, and industrial supplies like lights. Bosnia and Herzegovina are endowed with natural resources that the country cannot effectively exploit due to their technical inability with limited machinery resources. The United Kingdom signed a new trade agreement with the country standing at benefiting the most considering all the opportunities presented to the country. First, there will be minimal interruption with the international community, such as the world trade organization, since Bosnia and Herzegovina are not part of them. Additionally, the United Kingdom has good machinery and the technical know-how to mine the natural resources that the country has. Department of international trade in both countries can collaborate and set up support to the United Kingdom’s companies to succeed in Bosnia and Herzegovina and the same to the other country. Bothe country thus stands to benefit from the international trade agreement; however, the United Kingdom stands to benefit more from taking control of the mineral mining, processing, and utilizing the finished products. Moreover, new companies from the United Kingdom will spring up due to the additional market where they can sell their goods and services. Therefore, the United Kingdom’s company’s sales, growth, and stability will increase by selling their products to Bosnia and Herzegovina.
Greenland
The country is the largest island globally, is located in the North Atlantic Ocean, and is characterized by its immense glaciers. Two-thirds of the land lies within the arctic circle explaining the existence of magnificent glaciers. The economy of green land has long been sustained through fishing, considering their global location. The overdependence of fishing is affecting the country’s economy with contemporary issues such as overfishing and fluctuating fish prices. However, the government is steadily diversifying its economy by concentrating on tourism, which has seen significant growth since early 1990. The economy’s growth can also be attributed to the financial aid received from various governments such as Denmark. Almost half of workforce in the country is in public sector, thus contributing to the steady growth of the economy.
The United Kingdom needs to take advantage of Greenland’s economy and enter into a trade agreement that will significantly improve both countries’ economies. The trade between the two countries will substantially benefit the United Kingdom with cold-water shrimp shipped from Greenland to the United Kingdom. The trade agreement will act as a platform that deepens the regional stability around the arctic region, focusing on science, technology, climate change, and development (BBC News, 2015). Greenland is very conscious of climate change since the ice melts significantly affect the island. The country stopped oil exploration due to the significant surge in climate change with increased drilling for oil. United Kingdom hospitality industry is set to benefit and increase its revenue due to the availability of cold-water shrimps, cod fillets, and prawns directly imported from Greenland.
Additionally, various British businesses rely on fish from Greenland, which will benefit since the cost will be cut once trade agreements are signed. The subsidized fish price will have a trickle-down effect on the British employees of businesses relying on Greenland fish and positively impact the United Kingdom. Moreover, public image is essential in international trade as it attracts other great partnerships with the powerful nation; thus United Kingdom needs to protect (GOV.UK, 2022). The trade agreement with Greenland will show solidarity to the Greenland people and support the Arctic region, rebuking any activities that may influence the melting of the glaciers and ice caps. The British economy and Greenland’s ares set to improve with the signing of the trade agreement.
The country is located in the southern end of the Dinaric in the west-central Balkans. The government is characterized by high mountains, krast region, and narrow coastal plain merely 4 miles wide. Despite the country’s domination of a limited area of suitable soil and climate for farming, agriculture dominates the country’s economy. Additionally, forestry contributes to the country’s economy, with more than two-fifths of Montenegro covered in woodlands. Significant commercial fishing also takes place along the narrow coastal area that the government has. The country has aluminum as its chief principle raw material characterized by hydroelectric power production at the Piva river plant.
The country’s exports mainly rely on natural resources such as aluminum, iron, steel, and mineral fuels. The country has a significant trade agreement with European Union, Serbia, Slovenia, Croatia, Bosnia, and Herzegovina. Most of the revenue from Montenegro that results from exports is contributed by the country they do commercial services with. Montenegro is not a member of the WTO thus has few countries that they can do international trade with due to hindrance of the market access. However, participation in the CEFTA, EFTA, and EU free trade agreements has bolstered the country’s revenue from trading with other countries.
The United Kingdom stands to benefit from trading with Montenegro and should push for a beneficial trade agreement to help its economy. Montenegro’s trade competitiveness continues to suffer due to its low productivity, cumbersome regulatory and business environment, and poor transport infrastructure. There is a broadened customer base from both countries when trade agreement is signed, thus contributing to the development of various sectors of both countries. The United Kingdom will have access to the foreign labor force and increase their access to the employee’s target market.
Discussion on the trade agreement needs to have explanations about the protection agreement while considering the feasibility of the venture. Additionally, the interests and economic benefits need to be tabled down in the contract before negotiations begin to avoid disagreements between parties. There can never be a trade agreement between countries if there is only one country benefiting from the coalition. Lastly, both countries must sign the trade agreement with witnesses to ensure enforcement of the deal signed.
Despite the glamor and benefits that international relations with other countries bring to the United Kingdom, there are various limitations that the country stands to experience when signing these trade agreements. First, supply chain issues top the list due to the increased scope of the field with increased international trade. Therefore, there are more potential opportunities for a potential crisis in transporting goods and services between countries. Additionally, the current economic conditions impact the currency, thus affecting the trade with nations whose currency is weaker than Britain’s. The country experiences difficulty monitoring and predicting its finances when the money of nations keeps fluctuating. Lastly, local taxes and laws are different from Unite Kingdom’s; thus, the disparity might be against the country. Finances can be more complex to manage with increasing local taxes and stringent laws.
Conclusion and Recommendation
In conclusion, participation in international trade has immense benefits to the United Kingdom. Most importantly, the country needs to make decisions that will benefit its economic wellbeing, including the recent debate on the Brexit exit. According to Tomljanovi et al. (2018), the efficiency of future trade flows and their adjustment to global trends will be largely determined by the selection of an appropriate trade model and the adaptation of economic and political power holders to new conditions. The United Kingdom may thus consider joining the Swiss Model in order to profit from the Model’s numerous benefits. Among the positives include free movement of products and people inside the European Union, the ability to establish economic links with countries outside the European Union, and the option to opt out of EU programs on a case-by-case basis. Additionally, the Rybczynski theorem states that increasing the endowment of a factor increases the output of the industry that uses it intensely while decreasing the output of the other sector (Lam, 2015). As a result, the United Kingdom should seek to create economic links with larger economies in order to avoid running a trade deficit with a smaller economy.
References
Santander trade. (2022). British Foreign Trade In Figures. Santander trade. Retrieved 23 March 2022, from
https://santandertrade.com/en/portal/analyse-markets/united-kingdom/foreign-trade-in-figures#:~:text=The%20United%20Kingdom%20is%20one,year%20earlier%20(World%20Bank).
OEC. (2022). Algeria (DZA) Exports, Imports, and Trade Partners | OEC. OEC – The Observatory of Economic Complexity. Retrieved 23 March 2022, from https://oec.world/en/profile/country/dza#:~:text=In%202019%20Algeria%20imported%20%2439.5,to%20%2439.5B%20in%202019.
European Commission. (2021). Algeria – Trade – European Commission. Ec.europa.eu. Retrieved 23 March 2022, from https://ec.europa.eu/trade/policy/countries-and-regions/countries/algeria/#:~:text=Algeria%20is%20the%20EU’s%2028th,(46.7%25%20in%202019).
BBC News. (2015). How important is North Sea oil and gas to the UK economy?. BBC News. Retrieved 23 March 2022, from https://www.bbc.com/news/uk-scotland-scotland-business-30831718.
GOV.UK. (2022). The seafood sector benefits as the UK starts Greenland trade talks. GOV.UK. Retrieved 23 March 2022, from https://www.gov.uk/government/news/seafood-sector-set-to-benefit-as-uk-starts-greenland-trade-talks#:~:text=The%20deal%20will%20provide%20a,technology%2C%20climate%20change%20and%20development.
Tomljanovi?, Marko & Cvecic, Igor & Malnar, Ana. (2018). The Potential Effects Of Brexit On The International Trade Of The United Kingdom. 283-293. 10.31410/itema.2018.283.
Lam, T. (2015). A Review of Modern International Trade Theories. American Journal Of Economics, Finance, And Management, 1(6), 604-614. https://doi.org/2381-6864 (Print)
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