British trade: what next?
A panel of experts discussed the question at the Conservative Party conference
There is enthusiasm abroad for trade with Brexit Britain. We will strike good deals with both the US and the Association of south east Asian Nations. But there will be challenges: if we do not strike a good deal with the European Union we will end up falling back on the basic terms of a World Trade Organisation that is faltering.
These were some of the key points made at Prospect‘s Conservative Party Conference event “What is the Future of British Trade?”, chaired by Prospect Editor Tom Clark on 4th October.
Richard Graham, MP for Gloucester and the Prime Minister’s Trade Envoy to the ASEAN Economic Community, said that “I think the appetite is high for… more free-trade agreements with us. In Hong Kong, the Philippines, Indonesia” and the ASEAN community more widely. But he warned of a global “rise of nationalism and protectionism.” Francis Maude, former Trade Minister, said he had asked former cabinet-level US trade representatives whether Britain will be “at the back of the queue” when it comes to trade deals, and had been told that was “rubbish.” He also argued that an imperfect trade agreement with the European Union now “beats the hell out of a perfect one in 20-years time.” Adam Marshall, Acting Director General of the British Chambers of Commerce, said that fixing infrastructure at home is more important than securing better trade deals. James Cooper, CEO of Associated British Ports, firmly disagreed. In what could be seen as a distinctly upbeat view of Brexit’s implications, Cooper also admitted “I quite relish uncertainty. I think it comes with the job.”
“Leaving the European Union opens the possibility of being a formal dialogue partner with ASEAN, which is a significant goal to go for,” explained Graham. Countries within it are “extremely enthusiastic about the prospect of doing more bilateral trade with us.” He also argued that post-Brexit Single Market access is very important—and that those who disagree, on the right of the Conservative Party or in a “faraway pub wearing UKIP ties,” should be ignored.
He noted that we “doubled our trade with China in the five years between 2010 and 2015, but stressed we should “not bank everything on China. The possibility of those trade figures looking less successful if, for example, Jaguar-Land Rover’s sales dipped would be significant.”
But Graham, who had a few months ago backed “Remain” in the referendum, cautioned that optimism about the future of British trade “should be tempered by the fact that not all our sectors, not all our industries, are actually in great shape…. I’m actually particularly concerned about the state of our finance sector,” Graham said, before warning that “we should not take for granted the concept that liberal democracies and free-trade are [viewed as] the obvious way forward.”
A sensible overall approach to trade would involve working out “where the government can play a role and where business can just get on with it,” he concluded.
Asked by Clark whether Brexit will mean Britain retreats from the world stage, Maude insisted not, setting out his stall: “I am an unashamed proponent of globalisation. I think the biggest danger for us in the world post the referendum decision is that it’s taken as a signal we’ll close in rather than reach out.”
Rebutting President Obama’s comments in the run-up to the referendum in June, Maude said: “In my last week in office as Trade Minister I was… at a dinner with a bunch of senior trade experts from Washington, including several former cabinet-level US trade representatives from both sides of the aisle; I did ask the question, I said ‘we’re being told ‘back of the queue, no-one’s interested in doing a trade agreement,’ is this right?’ With one voice they said ‘rubbish, if there’s a vote to “Leave” a new administration will do a free-trade agreement with Britain quickly.”
Maude made clear his own long experience: “I was… a signatory of the Maastricht Treaty, whose 25-year anniversary comes in December of this year. I’ve been invited to a reunion in Maastricht which is going to be far too hilarious an event not to attend.” He then sounded some cautionary notes of his own.
“The ideal is that we have proper multilateral World Trade Organisation [once we leave the EU], but the Doha round [the latest set of negotiations between the WTO’s members] is, if not dead in the water, having a very, very long rest, and it’s not looking very perky.”
“The danger is that… the authority of the World Trade Organisation is damaged, and that is very bad news for global growth.”
Given the problems with defaulting to WTO rules, we should strike a free-trade deal with the European Union now, and be careful that we don’t want “so much from every free-trade agreement that actually they never happen.”
Maude shared Graham’s worries about the rise of protectionism, and said that “It is distressing to see how, particularly in America, [free trade] is under threat. I hope and believe that whoever wins the presidential election hasn’t been meaning what they’ve been saying.”
Marshall argued that trade deals with international parters are not limiting us—our own poor infrastructure is. “When it comes to our ports and our airports we’re not in a position where it’s easy for businesses to get their products to market.” As “Any free-trade agreement… is something that involves painstaking negotiation with an opposite party” while infrastructure “we can improve ourselves,” the latter should be our priority.
Cooper agreed with several of the other panellists that Brexit presents trade opportunities. “I think that we do have a vast untapped capacity for trade, particularly exporting, which needs to be exploited and Brexit may provide the impetus for that.”
But he disagreed with Marshall, arguing that we already have the infrastructure to trade more than we are. “For every five containers that come into this country, two to three go out empty. They go out empty on a truck that is carrying fresh air, on a road that is carrying fresh air, to a port where there is still fresh air… All that’s missing is something to go in the box.”
Cooper also, in a positioning of principle over self-interest, said: “Let’s differentiate between the commercial, my life at ABP, and my personal views. So I’ll express my personal view because I’m completely relaxed about import substitution [substituting foreign imports with domestic production] if that’s what happens.”
Summing up the future of British trade, Maude argued: “One of the things we talk about now is the digital Single Market. Well, in the late 80s there wasn’t such a thing… because there wasn’t a digital economy. So all of this is going to change and evolve, which makes it a very exciting world, full of opportunity.” Clark replied: “If there’s one thing that won’t change, it’s the change.”
With the support of Associated British Ports, Prospect hosted a panel discussion at the 2016 Conservative Party Conference on the future of British trade. The discussion was chaired by Tom Clark, Editor of Prospect. Speakers included: Richard Graham MP, Trade Envoy to the ASEAN Economic Community; James Cooper, CEO, Associated British Ports; Lord Maude of Horsham, Former Minister of State for Trade and Investment; and Dr Adam Marshall, Acting Director General, British Chambers of Commerce.
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