Competitiveness should not come at the expense of production capacity, wages and living standardsby Barry Gardiner / March 29, 2019 / Leave a comment
Leaving the European Union will see the UK assume responsibility for the management of trade policy and trade agreements for the first time in over 40 years. Brexiteers have argued that this is the prize that awaits us. Others have argued that it is no more than a consolation prize for withdrawing from the world’s largest free trade area.
Trade policy can be a tool for change and progress. Trade agreements should seek to elevate protections and standards. Labour’s trade policy will ensure that workers’ rights are protected and will prevent our producers being undercut by cheaper imports manufactured to lower health, animal welfare or environmental standards. If taking back trade competence is to be anything more than a consolation prize, we must restore faith in the global trading system by addressing these challenges and ensuring that the benefits of trade are more equally shared whilst mitigating the damage inflicted on our environment. At a minimum, we must maintain the status quo and start from a level footing. That is why Labour have called for a new customs union with the EU that ensures that British and European businesses can continue to trade with each other without the imposition of tariffs.
The stability of the rules-based system that has underpinned international relations and world trade is under serious challenge. The US-China trade war, the WTO’s inability to appoint to the appellate body and the US’s threat to withdraw from the WTO altogether along with its increasing protectionism are all seriously undermining the multilateral rules based order. Brexit is part of all this. After years of globalisation, disaffected populations have lost confidence that the system is fair. Greater competition has seen the relocation of jobs and the closure of businesses from developed countries like the UK. However many in the global south are paid poverty wages as their countries’ raw materials are exploited and their nascent manufacturing capacity stunted by the enforced liberalisation of their domestic markets under trade access agreements that were supposed to be in their interest.
All the while increased global freight movements compound climate change and add to carbon emissions. Surging demand for goods means manufacturers need more energy, more water and more raw materials extracted from our finite resources. And as forests are destroyed and seas polluted, it is once again the poorest in the world who suffer because it is the natural environment that provides 50 per cent of the GDP for those living on under $2 a day.
“Our export successes have been predicated upon the high standards and high standing of British-made brands overseas”
The true test of our internationalism in the Labour Movement comes in the way we develop our trade policy and cementing a positive relationship with the EU. Many of the current protections and regulations that we enjoy are a result of our membership of the EU. After Brexit there is real danger that a Conservative government will move to lower those standards and rights in a bid to raise our competitiveness, even where it threatens our own production capacity, wages and living standards and regardless of the irreversible harm their actions could cause to our environment. It is no coincidence that we saw Minette Batters, the president of the National Farmers’ Union on our television screens expressing huge concern that the government will use Brexit to get rid of so-called “red tape” and barriers to trade—meaning our food standards, animal welfare regulations, workers’ rights and environmental protection. A number of countries with whom the government are keen to fast-track trade agreements have sought “concessions” on our existing trade terms. This is likely to mean reduced or removed tariffs, expanding quotas and lowering marketing, labelling and regulatory standards.
Yet this is so foolish. Our export successes have been predicated upon the high standards and high standing of British- made brands overseas. People in China and India buy British goods not because they are cheap, but because they trust they are of high quality. Lowering standards threatens that and allowing a flood of imports produced to lesser standards will only undercut our own producers.
Our steel and ceramics sectors have felt this particularly keenly—competing with goods dumped below cost price on British markets. Other governments have introduced tough trade defence measures to level the playing field for their domestic producers and to protect jobs at home. Repeated Conservative governments have actively resisted European modernisation efforts and will erode them further when the Trade Remedies Authority is established—described as the weakest trade defence regime in the world. Labour’s proposed customs union with the EU would preserve the existing safeguards that are in place.
Making the most of global trade opportunities does not mean transitioning to a low-tax, deregulatory, “Bargain Basement” economy. It means developing a robust Industrial Strategy intertwined with a strong trade agenda. We need to broaden our export base and ensure that trade growth benefits all the nations and regions of the United Kingdom whilst continuing to attract investment into those regions. It means giving our domestic producers a chance to compete on a fair basis. Our efforts to ensure that the Trade Remedies Authority is fit for purpose were rejected outright at every turn by the Conservatives.
It is why some Conservative cabinet members and their right-wing backbenchers have so vehemently opposed Labour’s proposal. They know that it is a workable solution which would preserve rights and protections, jobs and the economy. They want to remove those rights and protections and unilaterally remove tariffs. A Labour government would negotiate a customs union and a trade agreement that ensures our hard- won workplace protections are not eroded and that the spirit of the Good Friday Agreement is respected as customs checkpoints on the Northern Ireland border would not be required.
“Making the most of global trade opportunities does not mean transitioning to a low-tax, ‘Bargain Basement’ economy”
Labour’s proposal would ensure that the UK has a say in trade negotiations with third countries. That say needs to better reflect the needs of business, workers and civil society. That is why we want to see greater participation in setting our country’s trade agenda. We believe that all stakeholders should have a say in shaping trade agreements and we have called for a network of regional trade commissioners representing all parts of our country at trade shows overseas and feeding into trade negotiations to ensure a whole-of-country approach. A Labour government would redesign our approach to trade agreements, seeking to prevent the more egregious aspects of modern trade agreements from becoming the default standard. We have opposed Investor- State Dispute Settlements that could allow foreign investors to sue the UK government for public policy initiatives to protect public health. We want trade agreements that aid development and increase prosperity, growth and productivity at home and in our trade partner countries. The richer consumers are in our trading partner countries, the more this will unlock increased demand for high quality British exports.
Labour would ring-fence Tradeshow Access Programme funds to support British exporters getting in front of customers overseas and would develop UK Export Finance’s offer to attract a broader mix of industry sectors and projects, moving away from a focus on arms sales and support for fossil fuels.
Whatever happens in the coming weeks, we are presented with a unique opportunity for Britain to take a pivotal role on the world stage and to be a leader in next generation trade agreements that boost trade and tackle the significant, if not existential, challenges that face us. We absolutely must get it right.