The world is facing a combination of US-China trade wars and new export restrictions on essential supplies thanks to Covid-19. Added to that the British government is in the process of Brexit. All that makes trade policy a central issue. It is more important than ever that the Labour Party, under new leader Keir Starmer, develops a considered and principled strategy for international trade so that it can effectively hold Prime Minister Boris Johnson to account.
A positive agenda
Under Jeremy Corbyn’s leadership, Labour’s approach to trade was informed by a general hostility to globalisation, political opportunism and, at times, blatant anti-Americanism. While this approach may have had political supporters, it is not sustainable in the long-run.
Openness to trade is not inherently right or left wing. The movement of goods, services, ideas and people is no obstacle to social democracy and low barriers to trade are entirely compatible with an efficient and substantial welfare state, stockpiling of essential provisions, government investment and an effective industrial policy. Within the EU it is notable that some of the most vocal proponents of free trade include countries which spend a larger proportion of GDP on social welfare than the UK, such as Denmark, Sweden and Finland.
Further afield, New Zealand, under the current Labour prime minister Jacinda Ardern, has both launched a trade initiative to ensure medical supply chains are kept open in the wake of Covid-19, and begun negotiations on the Agreement on Climate Change, Trade and Sustainability (along with Costa Rica, Fiji, Iceland and Norway), which aims to remove barriers to trade in environmental goods and services and, significantly, develop disciplines to eliminate fossil fuel subsidies.
With that in mind, beyond reacting defensively to every government pronouncement, Labour’s new leadership should be asking itself again how trade can be used to help deliver the party’s broader economic, environmental, development and social objectives. In short, it needs a fresh plan.
Protectionism ≠ resilience
The Covid-19 fallout has led many to question the make-up of the global economy, particularly the continued viability of international supply chains and just-in-time manufacturing, which sees companies attempt to reduce costs and production time by only producing products in precise quantities,…