The UK is standing at the crossroads of history. The country’s atmosphere is overwhelmed with uncertainty due to Brexit chaos. Prime Minister Theresa May is making efforts to get an extension for Brexit execution date which will otherwise be March 29. If the EU doesn’t agree on a delay over Brexit, UK will crash out of the EU without a deal, resulting in a negative Post-Brexit impact that might jeopardize the entire world’s economy in general.
While Brexit is presenting the serious economic challenges for the UK it is also allowing the country to explore some opportunities independently. After its departure from EU, UK will be able to broadly shape its bilateral trade relations with countries of the world. The nature of such cooperation may vary with each country. For example, as in the case of Pakistan, there are several sectors that both countries can explore to further their post-Brexit trade dimensions. But, this again has challenges along with opportunities.
What Can be A Possible Post-Brexit Impact on Pak-UK Bilateral Trade?
It is a general opinion that UK’s separation from the EU will create more opportunities for other countries to improve bilateral trade. Such opinions do make sense only in case of a no-deal Brexit. Or, they are likely to substantiate when both UK and EU agree upon some tough trade regulations and non-preferential treatments. So, it is premature to simply say that the UK will have an increased trade relation with Pakistan or India only because it is exiting from the EU, unless both the parties strike a deal.
Even, in case of a no-deal Brexit or one followed by tough regulations, there are several challenges in the way a positive UK-Pakistan trade deal.
A Need for Pakistan to Increase Its Competitive Advantage
The United Kingdom is one of the major export partners of Pakistan and contributes to the 7.8% of its entire exports volume which is huge. The products that Pakistan exports to the UK include mainly textile goods like articles of apparel, clothing accessories, worn clothing, and leather goods etc. Unfortunately, from the last few years, Pakistan’s textile industry has become worse off. Further, it has lost its overseas clients to countries like Bangladesh and Vietnam. Therefore, an urge to benefit from post-Brexit impact must be powered by robust policymaking that strengthens export sectors in a way that the quality of produced good is competitive enough.
Possible Post-Brexit Shock for Pakistan
Pakistan is exporting these goods to the UK for zero tariffs as the country enjoys GSP plus (General System of Preferences) status by the EU (European Union). Once the UK exits EU there will be no such relaxation for Pakistan for the goods exported to the United Kingdom as it will not be a part of EU anymore. In such a situation Pakistan may see a tariff of more than 11% on textile products making them expensive for the UK market. Hence, Pakistan must be ready to face this likely post-Brexit impact.
Challenge of Rising Far Right Sentiments in the UK
There is no doubt that Pakistani diaspora in the United Kingdom is making a meaningful contribution to the country’s economy. Many Pakistani origin British citizens are holding prominent positions in the country. Well, that doesn’t mean that conditions in the UK are still favorable for Pakistanis, Muslims or brown people as they had always been.
The world knows that one of the reasons for Brexit is the rise of nationalist sentiments and immigrant crisis. UK’s exit from the EU may mainstream far-right nationalist rhetoric, making conditions less favorable for a diverse and inclusive society. In such circumstances, campaigns like London Is Open by Sadiq Khan may go in vain and Indo-Pak people or those from other nationalities may find it tough to offer their services as freely as they have been doing from decades.
How the UK Can Explore More Opportunities in Pakistan After Brexit?
The post-Brexit impact can see a change in the direction of bilateral trade between the UK and Pakistan in several ways. The Brexit will provide the UK with an opportunity to see how it can benefit from the countries like Pakistan that have huge growth potential.
The countries of the EU are developed enough and have already reached a point. The developing countries of the world that are looking towards lucrative foreign direct investment for developing infrastructure, industries and institutes can offer new prospects for the UK. In Pakistan, the ongoing CPEC (China Pakistan Economic Corridor) project and other developmental initiatives can open the door for UK corporates to find more business.
Briefly, Post-Brexit Impact on Pak-UK trade will depend upon the mechanism of the UK’s exit from the EU and the provisions of the deal. Even in case of no deal, the impact can be positive provided both countries are willing to benefit from each others potential and expertise in their capacities.