Trade and Monetary Union – The Benefits
A trading nation is essentially a nation in which foreign trade constitutes a high percentage of its gross domestic product. The key to a successful nation economically, politically, and socially is maintaining a strong relationship with the rest of the world. Trade fosters this bond because it exchanges one form of wealth for another. For example, if a nation has poor infrastructure, then it will take longer and cost more to produce goods and services that can be shipped over seas.
However, by trading with other nations, Britain benefits in various ways. First, as an independent nation, it can maintain its competitive edge by developing new technology and finding inventive uses for old ones. Second, Britain can become a powerhouse in international trade by becoming a leading creditor and exporter of goods and services. This not only brings jobs back to Britain, but also enables it to become a more progressive and tolerant society overall.
The United States has long been a world leader in exporting products and services. However, the United Kingdom has long been a dominant exporter of services to the United States. One of the reasons why the British have enjoyed such a stellar success story as an independent nation is because they have developed a strong trading relationship with the rest of the world. In fact, it has been British exporters who have helped the United States has become the largest single export provider of goods and services to the European Union. Therefore, the United Kingdom enjoys a net surplus when it comes to global trade.
As a trading nation, however, Britain must continue to work on expanding its economic base. China, for example, is now competing with the United States for global markets. China’s recent experience with its economic growth has been nothing short of remarkable, but it appears that Britain needs to do more to maintain its dominance over other nations. In particular, the failure to develop a substantial, diversified industrial base has been a major cause for concern among UK policy makers. Consequently, even as China continues to expand its economic footprint and turn into a more democratic nation, Britain must continue to promote its exports to the rest of the world and promote bilateral trade relations with each of the other nations in order to maintain its preeminence in international trade.
Moreover, Canada has much to gain by continuing to increase its exports to the United States. While the United States has traditionally been one of the largest sources of imports for Canada, this trend is changing. For example, in recent years the United States has become a major importer of automobiles. Thus, in order to remain a leading trading nation, Canada must increase its exports to the United States and re-establish itself as a strong middle-income country.
Overall, the benefits derived from Canada’s current status as a nation-state and its ability to promote its own interests around the globe are enormous. These include the ability to successfully negotiate trade deals, maintain its economic strength, and maintain its status as a key player on the global stage. To be successful, Canada needs to continue to improve its management of its external trade deals, enhance its capacity to promote and enforce free trade, and become a more open and flexible trading nation.