There is no question that the United States is a major trade and investment partner for the United Kingdom; it is both our largest single trading partner and largest single export market, outside the European Union, accounting for £114bn in the year to September 2018. From goods such as vehicles, machinery and pharmaceuticals to services including financial, transport and insurance, a significant proportion of our goods and services make their way across the Atlantic every year.
The numbers speak for themselves. In 2017, the UK attracted £351bn of Foreign Direct Investment from the US, 19.5 per cent higher than in 2016. In the same year, the UK and US had a combined £609bn’s worth of stock invested in each other’s economies, and there are currently 35,600 UK businesses exporting goods to the US.
There is an underlying assumption that the US and UK have roughly the same kind of culture, especially in business. When you view us both from abroad, that isn’t too surprising. We are, by a wide margin, the two countries with the most native English speakers, our economies have a similar structure – primarily services-based – and we both have similar attitudes towards business and regulation, ranked eighth and ninth respectively in the World Bank’s Ease of Doing Business Rankings. Add to that historical links and a host of intangible similarities, and take into account the sheer size of the US and its easy access to finance, and you can understand why British firms are so successful exporting there.
Yet whilst we do well, there is still more to be done. At the Department for International Trade, we often help businesses who have tried two or three times to break into the US on their own. The US is a large economy, but its geographical size means that sustained expansion can require significant work and its federal structure means that laws and regulations can vary from place to place. So, how can firms meet these challenges?
Our first piece of advice would be that no one route is the right one. However, many small to medium-sized enterprises have found success by growing incrementally; starting small, rather than trying to “crack America” in one go, aiming for a regional foothold instead of immediately going for the biggest cities. Richmond, capital of Virginia, is now home to a number of British logistics and manufacturing firms thanks to its proximity to the Washington DC area, for example. Local areas have Economic Development Organisations that compete to attract business investment, so it is also worthwhile seeing what incentives they offer. Atlanta, for instance, has attracted a number of UK fintech companies as well as film and TV companies such as the iconic Pinewood Studios.
My second piece of advice is to prepare as much as possible, take the time to get to know your target market and understand any challenges in order to make the most of businesses opportunities. This is something my department can help businesses with. DIT is an entire government Department, with over 3,900 staff and a £400m budget, whose ultimate job is to help businesses thrive. We have 132 staff in nine cities across the US, and sector-specific and regional advisers here in the UK.
We provide the latest advice businesses need to start exporting, both through our advisers and our online guidance. We also have an established network of contacts the length and breadth of the country and can give firms the introductions they need to tap into US markets. We don’t just focus our support on large exporters, either. We are proud to help firms of all shapes and sizes, from all sectors and all areas of the country. Since launching the government’s Export Strategy last year, we have begun building out a network of Export Champions who can provide peer-to-peer advice for SMEs – we estimate there are some 400,000 UK companies who could be exporting but are not.
Take the drinks company, Fever Tree, who are now the US market leader in premium tonic water. DIT helped with its initial market research and setting up its first US facility, and connected Fever Tree to its initial distributor. Or the Newcastle-based app developer, Hedgehog Lab, which first visited the US on one of our trade missions and now has a major presence there.
Businesses can also get grants from our Tradeshow Access Programme, join a business delegation on one of our regular ministerial visits, or just look at our opportunities listed in our Export Opportunities tool on great.gov.uk, from investment consultancy to TVs. At this point people often ask us: well yes, but is now the right time to sell to the US? My answer is an unqualified yes, and not only because of the underlying strengths of the opportunities there.
After we leave the EU, we will be able to negotiate and sign a Free Trade Agreement with the US – something which the President has called for. Already, we have made good progress with the US government on areas of mutual interest, such as through our regular Trade and Investment Working Groups. And I am delighted to say that they recently agreed to carry over the EU-US Mutual Recognition Agreement after Brexit, and notified Congress in October, ahead of schedule, of their intention to negotiate a full Free Trade Agreement with the UK.
There is so much potential but more still to do to develop our trading relationship with the US even further. I’d urge any and all businesses with a desire to grow to consider exporting, and to get in touch with our teams across the UK. It could be the helping hand you need to establish yourself in the world’s largest market.
Rona Fairhead is Minister of State for Trade and Export Promotion at the Department for International Trade.