A former Assistant Director at the Department for International Trade sounds a warningby David Henig / April 24, 2018 / Leave a comment
If you travel around the UK meeting exporters—as I did as a trade policy expert working for the UK government over the last few years—you can’t help but be impressed. Across the country there are innovative businesses selling goods and services across the world, showing there is still a flair for trade in the UK. Whether a member of the European Union or not, a major focus of UK trade policy should be supporting these businesses and assisting in their growth.
Listen to the debate about Global Britain that takes place in parliament and the needs of business or anyone else seem distant. To some proponents of leaving the EU it appears that the UK will bestride the globe doing trade deals with anyone we like to achieve everything we ever dreamed. To opponents the UK is so diminished that no other country will be remotely tempted to ever do a trade agreement with us.
Let’s try to push the reset button on this sterile debate. There’s no shortage of countries who would like to talk trade with the UK, and never will be. But it isn’t just because they’re supporters of free trade, whatever they may claim. Countries will talk to us because they want something from the UK. If Global Britain means trade agreements we’re going to have to work out whether to give the other party what they want. In exchange we can get some of what we want. A trade agreement is a trade in itself.
Last week the organisation I now work for, the European Centre for International Political Economy published a report “Assessing UK Trade Policy Readiness” against a number of criteria essential to success in trade policy. In many cases, including in the clarity of what the UK wants, we could see that work had started, but no evidence of a stable public position. Without this Global Britain is just something business will have to try to do without government support.
Let’s start with what we want from trade agreements. At present all we know is that we want them with the United States, Australia and New Zealand, or perhaps we’ll join the Trans Pacific Partnership, which includes the latter two countries. As an answer “US, Australia and New Zealand” feels rather like “42” in the Hitchhikers Guide to the Galaxy, in that it would be helpful know what the question is that produced those three countries as a list. It presumably isn’t about the markets that UK business has the most interests with, it’s not obviously about sectors we want to push, all we can see is that they are three countries with which the EU doesn’t have an agreement.
We can be sure that the other side has the detail, and know what they want. They publish the detail. The US Government “2018 National Trade Estimate Report on Foreign Trade Barriers” contains nearly 50 pages of detail about the barriers they perceive in the EU market, many of which will be applicable also to the UK market. So for example US asks could well include changing our approaches to chemicals, food labelling, the definition of whisky, chicken treated with chlorine, pesticide residues in food, pharmaceutical pricing, product testing, broadcasting, subsidies, and data among others. Whether or not US complaints are justified, the UK is going to have to be ready to potentially make these changes if we want a trade agreement.
Even smaller countries such as New Zealand and Australia will have asks without which trade agreements will not be possible, and they will also be about a lot more than tariff reductions. Australia is reported to want changes to UK food standards in terms of accepting beef treated with growth hormones, and changes to our visa regime. New Zealand’s interest in agricultural exports is well-known, and asks like the removal of quotas on agricultural produce could cause concern in the UK for example among sheep farmers.
At this stage there has been no suggestion from the government that such trade-offs could exist, still less about how they will be handled. For a start the UK is going to need this level of detail in terms of our interests, what we want to see in the other market, which will need primarily to come from the businesses. We will then need to decide whether we are prepared to pay the price of what the other country wants in order to achieve these goals.
Not surprisingly this can easily get controversial. Governments have to find a way to generate a consensus on which interests should be prioritised, whether to be protected from the other side’s asks, or promoted through our own asks. We can see no sign that a secretive government has yet even considered this issue.
The UK can have a successful trade policy, and that can contribute to building Global Britain. But as any long time trade negotiator will advise, if it involves trade agreements it won’t be easy.