Greg Abbott visited London in March to sign an agreement with the British government. The significance of this event seems to have passed most people by. I would go so far as to say most people don’t even realise that it happened or even know who Greg Abbott is. The reason for his visit was the culmination of a policy instigated when Liz Truss was Secretary of State for International Trade, and led to Penny Mordaunt travelling the USA as Minister for Trade Development.
That work has continued and there are now over 20 individual agreements with US States. Negotiations for a free trade agreement with the USA stalled under President Biden, and when it was clear that no progress would be made, the policy of reaching agreements with individual states was established.
This agreement with Texas is the latest, and its significance to both parties can be seen in Greg Abbott’s visit to London for the signing. He is governor of the ninth biggest economy in the world ahead of Russia, Italy, Canada, South Korea and Australia. Texas is by far the largest exporter State in the USA with more exports than California and New York combined, and with a population of only 30 million it has a very high GDP per capita.
Whilst this is a memorandum of understanding, and not a full trade agreement, the scale of the deal is akin to recent trade deals with Japan or South Korea and the opportunities that it presents are enormous. It is well known that Texas has a huge oil industry but it’s also a major agricultural state and is significant in aeronautics, defence and computer technology. Kemi Badenoch, Secretary of State for Business and Trade said “This MoU is designed to make it cheaper and easier for the UK and Texan businesses to thrive in each other’s markets. It will strengthen trade ties and help us work together on shared expertise like life sciences and professional business services.”
Greg Abbott’s visit is not surprising when you consider that the UK is the leading foreign direct investor in Texan projects and Texas is No.1 amongst the US States for exports to the UK. UK trade with Texas totalled $18.2 billion and is expected to rise further after this deal. But perhaps the most significant feature of this deal is that Texas is only one of 50 states in the USA. The scale of the US economy is phenomenal. With 25% of global GDP, it is larger than Japan, Germany, India, UK, France, Russia, Canada, Italy and Brazil combined. Few countries have a higher GDP per capita.
Why is this so important?
The USA is already the UK’s largest trade partner for goods and services accounting for circa £200bn a year, nearly double the exports to the 2nd placed country, Germany. Let me remind you that this is achieved without a much-vaunted Free Trade Agreement. When you hear the phrase in political circles “Special Relationship” it is clear that is multi-faceted. It is evident that the USA is a land of opportunity for UK exporters.
So, what do you need to know?
Well for a start, whilst the languages are very similar, they are not identical and you need to be open to the differences, but it is easy enough to get by. The USA is not a homogeneous market, you need to understand the opportunities that exist for your speciality and learn how that market works. Business etiquette is not always the same; as a generality, business meetings are far more direct than in the UK. The USA still uses Imperial measurements and not metric; this is essential to ensure that you are talking at the same scale!
It is obvious but still worth saying that the USA is a huge country and for a small business that can be daunting. Just remember that the giant country is made up of communities, towns and cities, just like in the UK and anywhere else. You don’t have to go nationwide to succeed.
Finally, when you are planning your American campaign, don’t forget Canada, another land of real and substantial opportunity!
Useful links:
gov.uk/exporting
Made in the UK, Sold to the World
export.org.uk
britishchambers.org.uk
Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com
