The deal announced on Christmas Eve has lifted both the US dollar and the pound sterling. Economic experts are urging Thailand to step up its talks with the UK to conclude a free trade agreement with London as both Singapore and Thailand’s arch competitor, Vietnam, did so on December 11th when Liz Truss, the UK International Trade Secretary visited the city-state.
The completion of Brexit in its fullest sense is now assured with the trade deal unveiled on Christmas Eve between the EU and Boris Johnson’s government in London. The UK had already signed a free trade agreement with both Singapore and Vietnam on December 11th last as Thailand is being urged to also get in on the Brexit action to help boost the country’s future exports.
News that the UK and European Union had finally agreed on a trade deal in advance of the final Brexit step on January 1st 2021, when the UK finally sunders its old trading relationship with the EU and takes on the mantle of a fully sovereign trading partner, has given a boost to markets and the pound sterling after it was announced on Thursday, Christmas Eve.
A visibly relieved and bullish Boris Johnson, the British Prime Minister, spoke at a Downing Street press conference in the afternoon.
‘We’ve taken back control of every jot and tittle of our regulation in a way that is complete and unfettered,’ he said. The deal was surprisingly well-received even by arch Brexiteer Nigel Farage who, while admitting it was far from perfect, looked forward to the completion of the Brexit process.
The most significant aspect of the outcome on Christmas Eve is that both sides rejected the idea of a further delay and opted for a decisive conclusion.
Deal being scrutinised by experts
The deal, reported to be up to 2,000 pages long, although it is still being scrutinised word for word by experts and analysed by particular sectors, especially the UK’s fishing industry, seems to suggest a clear break between the United Kingdom and the European Union which will be welcome news for the many Britons who voted for Brexit. This is what they wanted to see.
Even those who voted to remain in the EU are relieved that the matter is now fully resolved without further obfuscation or conflict, such has been the acrimony and sense of malaise generated by the delays since June 2016 when the referendum result was 52% for leaving to 48% for remaining.
This is a full Brexit and not the ‘Brexit in name only’ that many had feared and some had secretly urged.
However, already, concerns are being raised about concessions the UK government may have given on the issue of EU access to British fishing waters and how the country’s exporters and importers will cope with the adjustments that will kick in on the first day of 2021.
Less welcomed by senior industry and retail figures in the UK who, in any event, face more red tape in 2021
The deal will be less welcomed by large sections of British industry and in particular the UK’s retailers although the definite nature of the pact will help them adjust rapidly.
The deal and the implementation of Brexit on January 1st will reintroduce customs procedures not seen in the UK since the 1970s and is something which will also impact the EU’s key trading partners, most particularly, France and Ireland.
The pound gained after news of the deal emerged on Christmas Eve while the US dollar also gained ground on international markets.
Boost to the dollar and pound sterling welcome in Thailand as is the sense of certainty it brings
This, in itself, will be welcome news in Thailand where the strengthening baht is a growing threat to continued export growth.
Earlier in the week, in Bangkok, many financial analysts had been predicting a 3-month extension because of the Covid 19 outbreak but this outcome has been avoided and so gives the markets more certainty.
This was emphasised by Prime Minister Johnson in his address: ‘This deal means a new stability and a new certainty in what has sometimes been a fractious and difficult relationship.’
UK not a significant export market for Thailand
The UK is not a significant market for Thailand with only 2% of the kingdom’s exports heading to the country. There have already been tentative discussions between the United Kingdom and Thailand towards a potential trade deal.
On the 11th December, the UK surprisingly announced trade deals with both Vietnam and Singapore signed by International Trade Secretary, Lizz Truss. The UK, earlier, had concluded significant pacts with South Korea and Japan in record time
The speed at which the UK has been advancing trade negotiations and talks suggest a more pragmatic approach to trade than the European Union although the UK has always had a strong trading relationship with Singapore, a former colony, with $18 billion worth of bilateral trade in 2019 and Vietnam already had a free trade deal with the European Union, a significant head start.
‘Thailand should seek to sign a free trade agreement with Britain to boost exports,’ Phacharaphot Nuntramas of the Krungthai Compass research centre in Bangkok, said this week
Ministry of Commerce team already preparing to negotiate with the UK on a free trade deal
In February this year, Auramon Supthaweethum, the Director-General of the Trade Negotiation Department at the Ministry of Commerce indicated that Thai officials were preparing the ground for talks with counterparts in the UK towards a trade deal.
At the time, she pointed out that UK Thai trade was worth $6.3 billion or ฿190 billion last year with Thailand exporting more to the UK and maintaining a healthy trade surplus.
A trade deal would focus on eliminating tariff barriers to help boost two-way trade between the two kingdoms and ideas were being studied on how to do this, she said.