Read on Twitter
This is not about the EU, but about your claims that gravity matters less for services and my question over what type of services the UK can hope to export to Asia. As much as I wish the latter were true, I have to disagree and shed some light on the data you use.
(Thread)
1/ https://twitter.com/afneil/status/1346234692538933249
(Thread)
1/ https://twitter.com/afneil/status/1346234692538933249
Starting with the stats, a caveat. "Non-EU" includes Norway and Switzerland. If we look at the continent as a whole, service exports to Europe are over 50%. Of the rest, about half go to the USA and the rest goes to the "rest of world" - incl. Asia, but let's start with USA.
2/
2/
While the population of the USA is smaller than that of Europe, the fact that we sell more than 2x as much in Europe can be explained by 2 factors: proximity and ease of market access.
Language clearly isn't a factor. If you have another explanation, then please enlighten us.
3/
Language clearly isn't a factor. If you have another explanation, then please enlighten us.
3/
In terms of types of services, let's concentrate on "other business services" rather than financial services, etc, because a) this has most overall value and b) the subject is complex enough without bringing the rest into it.
4/
4/
Now let's look closer at Norway 
and Switzerland 
- 2 countries in the UK's proximity for which UK service providers have hitherto had no requirement for work visas - and compare them with New Zealand
and Australia
- 2 far away countries which share the same language.
5/
and Switzerland - 2 countries in the UK's proximity for which UK service providers have hitherto had no requirement for work visas - and compare them with New Zealand and Australia - 2 far away countries which share the same language.5/
Compare and contrast Norway (population 5.3M) with New Zealand (population 4.9M).
Why are exports of other business services to nearby Norway 10x higher than what they are to far away New Zealand? Proximity, ease of market access or something else (please explain).
6/
Why are exports of other business services to nearby Norway 10x higher than what they are to far away New Zealand? Proximity, ease of market access or something else (please explain).
6/
Now compare Australia with Switzerland. Australia's population (25M) is 3x greater than Switzerland 8.5M), but UK services exports to Switzerland are 6x greater than export sales to Australia.
Again how can you explain this?
7/
Again how can you explain this?
7/
Ok, at this point I expect you to say "but Singapore" - and at a glance it may appear you have a good point.
Singapore has a similar population size to Norway and the service export stats are broadly the same. You might claim distance makes no difference.
However...
8/
Singapore has a similar population size to Norway and the service export stats are broadly the same. You might claim distance makes no difference.
However...
8/
Singapore is rather special in that it is a services hub for the entire region + this is reflected in low stats for other South East Asian countries.
E.g. Indonesia has 268 Million people, almost 50x as many as
, yet stats show the UK exports 10x more to than Indonesia.
9/
E.g. Indonesia has 268 Million people, almost 50x as many as
, yet stats show the UK exports 10x more to than Indonesia.9/
The situation for Thailand is similar to Indonesia. UK service exports are tiny. Having worked there for 10 years (in various "other services"), I can explain that this is largely because business like to buy services from Singapore - a fellow ASEAN member.
10/
10/
If you look at China, which is a huge country (population 1.4 Billion), you can see that UK service export sales to it are about the same as Norway, a lot less than to Singapore and a fraction of what they are to Switzerland.
11/
11/
While UK sales to China are rising they are unlikely to rise exponentially, because the Chinese government doesn't like opening its economy to services from elsewhere. I know this as I worked on service sector liberalisation in the country and because I can read Chinese.
12/
12/
While we had great hopes for China’s liberalisation in the 90s and 00s, these were dashed when Xi JinPing came to power and by 2014 it was clear that the CCP did not want to liberalise further. They are communists and don't like capitalists, esp. foreign ones.
13/
13/
China also no longer needs foreign business to help it modernise. Not just for professional services, but also the other services you mention. It's a telecoms powehouse, creates more IP than the rest of the world combined and restricts foreign business activity in services.
14/
14/
As for financial services, the Chinese don't even let their own citizens set up private business. While there is some trade, this is very limited.
Other Asian countries are somewhat better, but most also don't want to let foreign business into their financial sector.
15/
Other Asian countries are somewhat better, but most also don't want to let foreign business into their financial sector.
15/
This is not to say that there is no scope for expanding exports of services into Asia, but the idea that it can become more important than Europe has been is most unlikely. Proximity and market access are the most important factors for services exports and that wont change.
16/
16/
