Fox hopes for dramatically increased trade with far flung nations post-Brexit—but there's a problem with this strategyby Matthew Bevington / January 10, 2018 / Leave a comment
Geography no longer matters in international trade. This is the view of International Trade Secretary Liam Fox, who has said that we now live in a “post geography trading world.” New technology in transport and communications “has reduced the barriers of distance and time,” making proximity less relevant in the modern trading era.
What is more, goes the Fox view, the UK is a mainly services economy, and exports of such services, like accountancy, advertising and consulting, are more mobile than traditional goods. This is because these services can often be delivered remotely, so geographical location is less of a barrier. The UK’s comparative advantage in many services means it is ideally placed to export more of them when freed from the regulations of the EU single market.
The theory goes that the fast-growing regions of the world have demand better suited to UK services expertise than Europe, whose services-based economies are similar to the UK’s. Developing economies may have an advantage in manufacturing and production, with cheap labour and natural resources, but they lack the services expertise in which the UK specialises.
In particular, Liam Fox has his sights set on the economies of Asia. Indeed, the IMF’s latest World Economic Outlook report projects emerging and developing Asia as heading for 6.5 per cent growth in 2017‑18, falling to only…