Monday, May 30, 2005

NAFTA Anyone?

The EU is about to be consumed by in-fighting & isn't going anywhere good. Austin Bay re-raises the suggestion of offering the UK membership in NAFTA. It's aways been a good idea for all the long-suffering free-trade nations trapped in the EU - not just the UK but Holland, Ireland and maybe Scandinavia. It could also fix a chunk of the US trade deficit. Here's why.

The US trade deficit is now about
$500 billion and trending lower.

Here are the January to November 2004 trade numbers for the EU (excluding the UK), the UK and the US (Converting Euros to $ at 1.20):

$ billionUSUK
Imports from EU191226
Exports to EU125156
Surplus (Deficit) (67)(70)

So, if the UK joins NAFTA and switches its trade deficit to the US, the US gets a boost to its trade balance of $67 billion - over 10%. If, perhaps when the EU played tough, the US were also to shut down its trade deficit with the EU, that's another 10%.

Things are never this tidy. But a good rule in management is to head out to where things are better. And the UK in NAFTA is better for all parties. Same applies to the other nations I mention above.