Building a Mature UK Trade Policy

Global Britain has not delivered according to the hopes expressed by supporters of leaving the EU. Trade with the rest of the world has not grown to make up for leaving a bloc with seamless trade, early Free Trade Agreements with Australia and New Zealand are of minor economic significance, and it is hard to discern much of a strategy beyond completing a few more similar deals. Meanwhile the world of trade policy is transformed since 2016, negatively. The US has essentially declared its national interests to be more important than global rules, while the EU wants to act unilaterally as the global regulator. In both, the climate crisis is being used as an excuse to reintroduce protectionist measures threatening economic damage and global stability. Expectations of what a UK outside of the EU could achieve were exaggerated, but nonetheless the country could be doing a lot better in its trade policy. There is no good reason for such tensions as exist with a broad range of frustrated stakeholders, the absence of clear purpose on UK strengths such as services, or the defensiveness that seemingly takes pride in secrecy and resistance to proper scrutiny. Adjustment time was inevitable, but six years should have been enough. UK Trade Policy needs a reset, and three foundational principles can help achieve this: Embracing the complexity of the modern inter-dependent economy. Trade policy needs to achieve multiple aims including economic growth, domestic distribution, tackling the climate emergency, and supporting international relations, based on a sophisticated understanding of modern supply chains, economic strengths and weaknesses, geopolitics, and levers available to government. The new UK trade policy should work across the public sector in particular with regulatory, migration, and foreign policy, and with fellow mid-sized powers, all aligned to a revamped industrial strategy. Understanding that results will be incremental. No single trade policy instrument is likely on its own to deliver more than marginal economic benefits. All policies will have costs as well as benefits, and that therefore multiple actions must be grounded in a comprehensive strategy and a deepened understanding of how to measure results. Delivering with professionalism, above all pursuing the complex choices of UK trade policy in a true partnership with all relevant stakeholders including business, consumers, NGOs, parliament, and devolved governments. The UK should be gradually deepening expertise of all of those involved, discussing the rationale for inevitable choices in a way that strengthens the quality of decisions, and treating implementation of existing arrangements as important as delivering new ones. Within such a framework, there will in turn be numerous individual actions taken, for example targeting trade growth with key partners, ensuring regulatory changes take into account trade costs, and removing official hostility in visa applications. These should build on the UK’s diverse but not universal strengths across manufacturing and services, working with those delivering trade. Optimism in the UK’s economic prospects has been fading. The allure of the simple answer must be resisted as absolutely the wrong approach to restoring stability, and instead trade policy needs to show a country attractive to investors through a renewed ability to successfully navigate complexity.