If we leave the EU, who will buy what we have to sell?

Conference season policy special: Trade

Conference season is here, and Brexit will dominate. But the big policy questions haven't gone away. Prospect asked politicians to set out what they had to say on the practical issues—here, two MPs give their trade prospectus
September 13, 2018
Post-Brexit trade policy “will not be easy”

Julia Lopez  Conservative MP for Hornchurch and Upminster, member of the Trade Select Committee

To Brexit’s dreamiest proponents, the UK’s decision to leave the EU will reignite the Commonwealth as a trading bloc and herald a glorious new era of global free trade. To its fiercest sceptics, it will leave us a minnow with neither the regulatory heft nor market size to negotiate decent free trade agreements (FTAs). 

As ever, reality nestles somewhere between the hyperbole. Our urgent priority must be to define our future relationship with the EU in a way that leaves room for an independent trade policy. The prime minister laid out her own preference for those ties in the Chequers plan, proposing to bind the UK by treaty to EU rules on goods and agriculture in exchange for frictionless trade. This would severely limit the scope and value of any new FTAs we might strike.

We must return to the option of a comprehensive EU-UK FTA. The Trade and Customs Bills make way for a UK Trade Remedies Authority to oversee future trade arrangements and offset any potential increase in post-Brexit tariffs. We are submitting our schedules as an independent member of the World Trade Organisation. However, we face a challenge from nations like the US and New Zealand over the divvying up of tariff rate quotas, which affect the volume of goods third countries can export to the EU tariff-free. 

The government rightly sees Australia and New Zealand as good places to start with deals. New Zealand was the first country to strike an FTA with China. Both Antipodean nations have suggested smarter ways to work together, for example in fulfilling the demands of the burgeoning Chinese middle classes. 

We can also give fresh impetus to the dismantling of barriers to digital trade, playing a more active role in the development of global standards for the kinds of services that now account for 80 per cent of the UK economy. 

The US and UK have already set up a working group to discuss stronger trading ties post-Brexit. This work needs to be accelerated. Without transparency and informed public debate, intelligent analysis of the pros and cons of any US-UK FTA will be suffocated by panic over chlorinated chicken and an Americanised NHS. 

Finally, we should replace agreements with some of the least developed countries, with trade policies that fulfil broader security, diplomatic and development objectives. The UK could offer unilateral preferences and move away from policies that protect European farmers from competition.

Charting our new path beyond the EU will not be easy and it is important that we take a clear-eyed, nostalgia-free view of what contemporary Britain can offer the world—and vice versa. Those who believe the UK is an irrelevance in international trade are wrong. Get our strategy right and Britain can be at the forefront of the trade in new technologies, products and services that will be changing people’s lives in the 21st century. 


Labour will not let trade agreements jeopardise public services

Barry Gardiner  Labour MP for Brent North, Shadow Secretary of State for International Trade

The rules that have governed world trade for 70 years are at breaking point. Globalisation has created international companies with revenues that exceed the GDP of many countries. China has labour and utility costs that enable it to undercut western markets. Meanwhile, Trump’s America is a unilateral wrecking ball: imposing arbitrary tariffs on aircraft, steel and aluminium and tearing up its trade agreements. 

Last month in an interview with Bloomberg News, President Trump threatened to take the United States out of the World Trade Organisation; while in the UK, our government is pulling us out of the largest free trade grouping in the world. It has never been more important for Labour to support an open and fair trading system.

I want to see a trade policy aligned with our domestic industrial strategy and that focuses on growing our small and medium-sized businesses (SMEs). We want export finance and export incentive schemes for SMEs. We want to create a network of regional champions who work on our international trade missions to promote export and investment interests across the whole of the UK, growing jobs and spreading prosperity around all of our regions and nations.

We must not be blind to the potential downside of bad trade agreements. Labour will not let trade agreements jeopardise public services or the capacity of government to regulate. Trade policy must also protect our industries from unfair competition and dumping. 

Just as Labour will develop a trade policy that supports and complements our industrial strategy, we are developing a trade policy that aligns with our international development agenda. Labour trade policy would promote human rights—it would not provide export finance to sell arms to countries that violate human rights. 

Our trade policy in the United Kingdom cannot be at the detriment of vulnerable people in the developing economies of the global south. Trade agreements help to create global supply chains which provide economic opportunities to people in developing countries. 

However, these supply chains should not become a source of exploitation. That is why we are determined to work with businesses to tighten the rules around corporate accountability in global supply chains. 

Trade policy cannot ignore international obligations on environmental protection. It is extraordinary to think that  99.4 per cent of all UK export finance for the energy sector from 2010-4 was given to fossil fuel projects. Instead of supporting the renewable energy industry, the Conservative-Liberal Democrat coalition supported carbon-intensive projects that undermine our environmental commitments. 

The multilateral global order is under threat. Trade can be part of our armoury to build a progressive rules-based system. We must not allow Trump to wreck our chance to stand together as a global community. 

We have an opportunity to tame globalisation and to make trade a means of delivering not just wealth to the already global rich, but of providing security, rights, protection and wealth to the many.