Why did the UK not trade more with countries outside the EU?

Question

The UK is leaving the EU in the process called Brexit.

For companies in the UK, the interaction with customers in the EU will become more difficult for the customer. I suspect that it also becomes more difficult for the company in the UK, but that is not relevant here.

That would reduce trade between UK and EU.

There is an argument that this can be mitigated by increasing trade with countries outside the EU.

Assuming trade between UK and non-EU countries will be increased after Brexit:

Why was trade between UK and non-EU countries not increased before Brexit?

Answer 1

Trade with any country doesn't happen because governments say so (at least not in democracies). It happens because the conditions for trade are favourable. Democratic governments can restrict trade, but almost never mandate it.

Conditions for trade between UK and the rest of the EU have been very favourable for a long time, not just because of the barrier-free trading agreements but also because virtually all the close neighbours of the UK were EU members.

Leaving the EU does not make trade more favourable between the UK and other countries, it only makes it less favourable with EU countries. So there has been no direct incentive for companies to ramp up their trade outside the EU. You might argue that they should have been making an effort to at least prepare the ground for increasing trade outside the EU, but remember that it has been literally less than two months since it was certain that Brexit would actually happen. Companies rarely put a lot of effort into preparing for something which might not happen. And they don't make that effort because "it would be good for the economy", they make if it would be good for the company.

And again remember that trade outside the EU hasn't got better. Some companies may find that trade outside the EU simply isn't worth their while - they can't make a profit doing it. And some are going to look at where they produce their goods. If they have a lot of trade with the EU it may be better for them to relocate their production to the EU.

Answer 2

As long as the UK is in the EU, it is not allowed to make trade agreements. Only the EU can do that, in an "one size fits all" approach.

• Proponents of the EU point out that only the EU can meet economic powers like the US or China on a remotely level playing field and get a good trade agreement for all members.
• Opponents of the EU point out that UK trade priorities are quite different from Romania, Spain, or Germany, and that the UK can get a better trade agreement by itself.

As DJClayworth pointed out, trade agreements don't make trade happen, at least not in democracies, but they can help or hinder.

Answer 3

First, the UK was part of the single market, and no other trade deal was as favorable as that. So, EU countries make more natural trading partners. Second, an overwhelming amount of economic research has demonstrated that, while trade deals can be helpful, the single largest determinant on trade flows is proximity. the EU is close.

Simple as that. Yes, the EU prohibited the UK making its own trade deals, etc, etc, But nothing would have changed the fact that EU was the best trading partner. It is extremely likely that no matter what kind of trade deal is finally agreed upon between the EU and UK, the EU will remain its biggest trading partner, even if the total amount of trade decreases.