Trading Nation – Is the UK Ready For the World Trade Organization?

A trading nation is simply a nation where international commerce constitutes a large portion of its Gross Domestic Product. For example, when you look at the gross domestic product for many nations around the world, the United States is one of the highest in the world and second only to China. But, because our nation is primarily an exporter of goods to other countries, we are often counted as a trading nation even though we do not have a huge foreign trade balance. Indeed, we are a trading nation and yet we spend a small fraction of the money our competitors spend on their goods and services.

One reason for this is that many people think of the United Kingdom as being a trading nation and therefore we do not receive credit for the amount of money we export to the rest of the world. That means if you were to calculate the figure for British exports of goods and services, you would find that our currency was quite a bit higher than the dollar spent by the rest of the world on the same goods and services. It is not fair to Britain to be given credit for the export of goods and services we don’t even consume ourselves. In fact, this can be viewed as a form of theft or embezzlement of funds by our trading nation.

By definition, a trading nation is any nation that has a fully functioning monetary union. The monetary union in the United States is the Bretton Woods system. This means that currencies are recognized internationally and there is a fixed interest rate and a central political and economic structure. All of this information leads to the conclusion that the United States is not a trading nation and should not be treated like one. On the other hand, if you read the newspaper from the United Kingdom, you will see that the Bank of England does indeed give its central bank license to buy and sell British bonds and other monetary assets in the UK without having to report its transactions to the Bank of America or other global banks.

There is no doubt that the UK could become a more progressive, efficient and stable nation if it was to ditch the concept of the Single Market and re-establish its own independent financial services sector. However, the British political establishment would never risk the loss of important devolved governments such as the Scottish National Party (SNP), the Welsh Assembly, and Northern Ireland Assembly through a hard right wing majority due to the threat of a vote of no confidence in the current government. The last thing the British people want is another round of damaging and divisive politics. The last thing the United Kingdom needs is another “coalition of the rebels” against the progressive government. The idea that the UK needs to protect itself from the rising powers of the European Union or the global giant of Wall Street is not based in reality or logic.

There is absolutely no reason that the UK needs to stay in the narrow economic basket of the Single Market. The UK can continue to be a dynamic trading nation and at the same time, export more jobs, goods and services to the rest of the world. Globalization has been beneficial to the United States, European Union (EU), and Japan but not to the UK. The truth is that the Single Market has been killing the manufacturing base of the UK and its middle class. The United Kingdom needs to start thinking about how to develop itself into a world leader in high tech, advanced services, biotechnology and a truly ” globalization ” powered economy.

It has been said that protectionism does not work. In fact, it is the exact opposite of what ” globalization ” stands for. Free trade around the world brings together the economies of nations, increases their income levels, and allows them to compete successfully on a true level playing field. The free trade mantra of the World Trade Organization (WTO), the European Union ( EU), and the United States (US) is something that we should aspire to follow. A successful trade environment will allow the UK and other nations the freedom to choose to invest in advanced infrastructure, research and technology, and let the inward investors take their chance in the UK stock market without having to worry about protectionist politics.