UK Finds Its Trade Mojo As It Inks Deals From Delhi To DC

The United Kingdom is about to become the first significant country to agree to a trade deal with President Trump, in an announcement expected at a White House press conference later today.

Credit goes to a 2016 vote that first set off a global race for countries to untangle themselves from elaborate agreements with other member countries that promote social stability at the cost of economic innovation. Nearly 52% of the voters of the United Kingdom and Northern Ireland voted to leave the European Union and become truly independent again, able to chart the island country's own destiny.

Hurt by the Arab oil shocks and the Vietnam War, the United Kingdom was forced to join the European Union (and its predecessor, the European Economic Community) on January 1, 1973.

The most popular song at the time was John Lennon’s 'Imagine,' which envisioned a world of peace, free from borders and religion. The EU became Lennon's ultimate experiment as members of 28 nations moved freely across borders, studying, working, and living wherever they wished. A common currency, the Euro, made the experiment even more real as once-proud countries shed their vaunted currencies (like the Deutsche Mark, the French Franc, and the Italian Lira) in favor of a common currency. [The United Kingdom, however, refused to abandon the pound].

The Brexit vote took place on June 23, 2016. As I said in an opinion for The Hindu at the time, voters recognized that in a globalized world, the game was too rigged, the playing field was no longer level, and countries needed to look at their best interests to thrive. A common market model is too slow to react. The Brexit vote also jolted the political establishment and was the precursor to then-candidate Donald Trump's assembling an incredible voter coalition to defeat one of the Democratic Party's most qualified nominees, Hillary Clinton.

The rules regarding a member nation leaving the coalition are so tangled and stubborn that it took nearly four years for the UK actually to exit the EU. By the time the divorce finally happened, on December 31, 2020 (after an 11-month transition period during which the UK remained in the EU's customs union and single market while negotiating a new trade agreement), Trump's first presidency, with all of its ups and downs, was over, with the world gripped in fighting a once-in-a-hundred-year pandemic.

Buyer's remorse set in as political turmoil rapidly developed between two general elections in 2019 and 2024. Never before in recent memory did the UK see four prime ministers during this period:  Boris Johnson, Liz Truss, Rishi Sunak, and Keir Starmer (July 5, 2024—present). All leaders were staunch supporters of Ukraine and forced the UK to undergo a period of tremendous austerity as inflation rose, cheap Russian energy dwindled, and global markets tanked. This period left little room for the UK to make independent trade deals with nations, which was the hallmark of the Brexit vote.

Political leaders and the British Civil Service, who have ruled the country under the Monarchy since 1832, when the UK became a full-fledged democracy with elections and parliamentary representation, are finally back in power to craft whatever is best for the UK. The same organizational structure saw the rise of British colonial power to every corner of the globe, making the statement, "The sun never sets in the British Empire," an uncomfortable truth for the subjects of the Monarch.

It is also the same governing model that sought the assistance of the United States to liberate France during D-Day and help win World War II from the West, even as the Russians defeated the Nazis from the East. It is the same organizational structure that decided to grant independence to the countries that the UK had once colonized, leaving behind a global mess. Palestine/Israel and India/Pakistan continue to fight wars to this day, thanks to the arbitrary boundary lines drawn by civil servants of the erstwhile United Kingdom's Foreign Service.

Now, the British governing model is back.

Earlier this week, the UK finalized a Free Trade Agreement (FTA) with India, between the world's sixth and fifth largest economies, respectively. The agreement, which took three years of negotiations, addresses tariffs, services, and worker mobility, among other areas. The UK will eliminate tariffs on 99.1% of Indian imports immediately upon the deal's entry into force, covering textiles, clothing, footwear, marine products, leather, gems, jewelry, and organic chemicals, lowering prices for UK consumers on items like clothing and frozen prawns. India, forecast to become the world's third-largest economy by 2028, offers UK businesses access to a market with a growing middle class (95 million by 2035). The deal aligns with India's goal to boost exports by $1 trillion by 2030.

The UK already has new or enhanced FTAs with Japan (2020), Australia (2021), New Zealand (2022), and other Pacific countries, such as Malaysia.

On a roll, the UK will now appear with President Trump at the White House. It is a fitting celebration for both countries, given their deep bond, bound by a common language and a legacy dating back to the American Revolution of 1776. The two countries are strong partners in sharing intelligence and are permanent members of the UN Security Council, often voting alike. They are both founding members of NATO. The US and UK traded over $148 billion in goods and services last year. This year's data till March shows that the UK is the USA's fourth-largest export market and thirteenth-largest import source. They are each other's top sources of foreign direct investment, with over $1 trillion in two-way investment. UK firms employ 1.2 million Americans, and US firms employ 1.5 million Britons.

Thanks to Brexit, the UK is beginning to rediscover its dignity and independence, away from the bureaucratic mess of Brussels, the capital of the EU. Meanwhile, the EU struggles to stay relevant in a fast-changing world.

Rajkamal Rao is a columnist and a member of the tippinsights editorial board. He is an American entrepreneur and wrote the WorldView column for the Hindu BusinessLine, India's second-largest financial newspaper, on the economy, politics, immigration, foreign affairs, and sports.

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