HAMISH MCRAE: Growth issues greater than proximity with regards to commerce

It is not the greatest trade deal on earth. Forget about that. But the fact that the UK has reached agreements with both India and the US in the past week points to something important. We should try to realign our trade with the fast-growing countries of the rest of the world rather than the slow-growing ones of Europe. Growth matters more than proximity.

As far as the US is concerned, this is fine. It’s a limited agreement and in any case the devil is in the detail. The substance was thin, but the tone was great.

There will be lots of squabbles with the US in the months ahead. Setting off with a cheerful, optimistic line will make it easier to make our way through that detail.

We are in a world where offshoring has been replaced by near-shoring and friend-shoring.

We can’t do the first but we can do the second. The US is our biggest trading partner; it will become a bigger one still. The India deal was important too. The numbers are far smaller, but it is the fastest-growing large economy in the world. The International Monetary Fund forecasts that it is on course in 2028 to pass Japan and Germany to become the world’s third largest economy after the US and China.

We made concessions to get that one over the line. It’s a bit rum to be exempting Indian workers who come here from National Insurance, while clobbering our own enterprises with all the stuff in Chancellor Rachel Reeves’ Budget last year. But on a long view the deal should be good for us. No excuse if it isn’t.

Self-interest: We are in a world where offshoring has been replaced by near-shoring and friend-shoring

So that’s number one and number three. What about China? Here, we should not be looking for any special treatment because we are not going to get it. What we can do is to show where our mutual interests coincide.

We educate a lot of Chinese students at our universities – second only to the US. We also can differentiate ourselves from the EU, as we are currently doing over electric car imports.

This is not to play down the difficulties of the relationship, which will get more fraught as US pressure mounts. It’s just to say that we need both to be nimble and to be aware of our self-interest.

So that’s a start. There is lots of growth elsewhere in the world, in the Middle East, in Africa, Latin America and beyond. We need to look there too.

It’s not headline stuff, just dogged attention to the things that are gumming up trade and figuring out ways to unblock it. Our negotiators seem to be rather good at this, so hats off to them.

There is something else. We can’t know how this rumbling trade war triggered by Donald Trump will develop. The UK now seems to be out of the firing line, and the next few weeks will show how well other partners can negotiate with America. But physical trade – shipping goods around the world – will end up being more restricted than it was before ‘liberation day’ last month.

However, while trade in goods will shrink, trade in services will continue to grow. The simple point is that it is in the self-interest of the US to boost trade in services, because it is the world’s largest exporter of them.

There are two ways for the US to narrow its current account deficit. One is to try to bring manufacturing back onshore, and boost exports of cars, aircraft and so on. That’s the focus now.

The other is to look at services and see how exports of those can be increased further, and maybe try to cut imports of services too.

This last point is tricky for the UK, because we sell a lot of services to America. The threat to bring back film production to California instead of doing a lot of the work overseas could do really serious damage to our movie industry.

So must use the positive mood of the trade talks to work with the US to increase services trade in general – to increase the size of the cake rather than fret about who gets the bigger slice of it.

I see this past week as the start of an adventure. We are moving the focus of our international trade away from Europe and towards the rest of the world.

That’s not to turn our backs on the EU, for it still matters a lot. But the thrills, and the spills, will be further afield.