30 May 2024 – I
ngo Borchert is Deputy Director of the UKTPO, a Member of the Leadership Group of the Centre for Inclusive Trade Policy (CITP) and a Reader in Economics at the University of Sussex. Michael Gasiorek is Co-Director of the UKTPO, Co-Director of the CITP and Professor of Economics at the University of Sussex. Emily Lydgate is Co-Director of the UKTPO and Professor of Environmental Law at the University of Sussex. L. Alan Winters is Co-Director of the CITP and former Director of the UKTPO.
A general election is underway, and the parties are making various promises and commitments to attract voters, and both the main parties – the Conservatives and Labour – are keen to persuade the country that they have a credible plan. Now it might just be that the authors of this piece are trade nerds, but one key aspect of economic policy has not yet been clearly articulated, or even mentioned – and that is international trade policy.
In our view, this is a mistake. As a hugely successful open economy, international trade constitutes a significant share of economic activity, supports over 6 million jobs in the UK, spurs innovation, and enhances consumption choices. In short, trade and investment flows are an important element in leading to higher economic growth and welfare. In addition, trade and investment relations intertwine considerably with increasingly fraught geopolitics. Against this backdrop, the UK cannot afford to give trade policy short shrift.
Admittedly, though, trade policy is complex. It is also, more than ever, linked to other dimensions of public policy – and that does make it harder to have simple soundbites. That is no doubt part of the explanation why trade hasn’t been mentioned. The other part is that discussions of trade policy are closely intertwined with the ‘B’ (Brexit) word, and those discussions have become somewhat toxic.
Nevertheless, we argue that sound trade policy is a high priority for the UK. Listed below are some practical, feasible, and specific policy proposals that would help to ensure a better and more coherent UK trade policy, and thus lead to more equity in trade outcomes as well as higher rates of economic growth for the UK.
Process and consultation
1. Publish a Trade Strategy, which should elucidate principles as well as concrete policy objectives and intentions. Recognise the importance of both goods and services trade policy for the UK economy, nationally and across the regions.
2. Reduce executive power over trade policy, through establishing an independent Board of Trade, strengthening Parliamentary oversight over Free Trade Agreements (FTAs) and improving consultative processes with devolved nations and with stakeholders in trade.
3. Ensure and commit to transparency in UK trade data, good access to data for researchers and be transparent about the analyses undertaken by government.
Policy Areas:
4. Plurilateral / Multilateral / World Trade Organization (WTO):
a. Ensure that UK trade policy remains consistent across its various partner countries and across the different free trade agreements notably with regard to regulatory approaches.
b. Ensure that trade policy supports the rules of the multilateral trading system. Work on policy areas, such as supply chain security, bilaterally and multilaterally in ways which are at a minimum consistent with this, if not designed to strengthen multilateral cooperation.
c. In the absence of an effective WTO dispute settlement mechanism, join the Multi-party Interim Appeal Arbitration Arrangement (MPIA).
5. Bilateral trade relations:
a. Do not expect too much from further, notionally comprehensive, free trade agreements with more countries. Focus more on improving the workings and utilisation of existing agreements.
b. Work to reduce costs of trade with the EU in both goods and services, e.g. by mutual recognition agreements on standards, qualifications and certification and negotiating an EU-wide youth mobility scheme. As a first step seek a veterinary agreement.
c. Seek to cooperate with the EU on environmental regulation that impacts upon trade, most immediately by linking ETS schemes with the EU and introducing a compatible CBAM.
d. Review rules of origin with the EU and seek improvements where there may be benefits to both parties (eg. Electric vehicles and car batteries).
6. Domestic:
a. Provide better resourcing and introduce more robust border checks to uphold the UK’s high food standards and prevent the introduction of pest and animal diseases.
b. Work closely with industry to make sure that the implementation of new border arrangements, including the Border Target Operating Model and the Windsor Framework/UK internal market, are understood by businesses and don’t create perverse incentives to UK internal trade, imports or exports. SMEs are likely to face particular challenges.
c. Have a clear digital strategy which deals both with the digitisation of trade transactions and processes, and the rise in digital trade. This strategy should set out the balance of objectives with regard to consumer protection, cyber security, and competitiveness.
This is by no means intended as a comprehensive list, but focusses on some key principles, and specific priorities which are feasible, would make a difference, and could be immediately focussed on. When the manifestos are published it will give an opportunity to assess the parties’ approaches to trade policy and to see whether proposals go beyond broad statements of intent by providing practical details and commitments in line with any of the above.
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or the UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher May 30th, 2024
Posted In: UK - Non EU, UK- EU
Tags: Brexit, General Election 2024, trade policy, UK Election
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22 May 2024
David Henig is Director of the UK Trade Policy Project at the European Centre for International Political Economy (ECIPE). He has written extensively on the development of UK Trade Policy post Brexit, in the context of developments in EU and global trade policy on which he also researches and writes. L. Alan Winters is Co-Director of the Centre for Inclusive Trade Policy (CITP) and former Director of the UKTPO.
One of the most heralded claims for Brexit was taking back control of UK international trade policy. Four years later, this is not widely seen as having been a success. Trade growth has been disappointing, the UK has become less open, exporting is still heavily concentrated in the Southeast of England, and there is little trust in Government pronouncements on trade. And yet there is almost no coherent discussion of trade policy and no evident strategy guiding future policy objectives or the signature of new trade agreements.
Part of the issue is that thinking about trade policy is trapped in the remnants of the Brexit debate and substantially seen in party political terms; it is consequently lacking any broadly accepted understanding. This is unsatisfactory and as part of the solution we propose to return the UK Board of Trade to its former status as a centre of excellence offering advice to the government and a source of impartial public information on international trade policy. Our paper is not the first to suggest that the Board of Trade be revived from its current somnolence, but it is the first to propose some details and a road map for that revival.
Our restructured Board of Trade would be a non-departmental public body – a well-established form for similar functions offering public service where there is a significant advantage of operational independence. It would be largely independent of government but nonetheless, work alongside government and all stakeholders to significantly elevate the UK’s trade policy debate and trade performance.
What would a restructured Board of Trade do?
The Board’s most prominent task would be to produce an annual report on UK trade performance and assess major new trade-related policies including trade agreements. This would be produced after extensive consultation with stakeholders and would be made public in an accessible form and debated in Parliament.
The Board would provide two impact evaluations of major prospective free trade agreements (FTAs), one at the stage of conception to see if it was worth pursuing and what the negotiating mandate should be (as the government currently does), and one close to completion of the negotiations, which would provide public information and sufficiently detailed analysis to allow Parliament to have an informed debate about whether to ratify the agreement. (Improved Parliamentary scrutiny of FTAs would be a second element of our improvement plan.) The Board would also conduct ex post evaluations of previous agreements in order to optimise them and learn lessons for the future.
Many modern trade problems concern regulation and trade, particularly in services. For example, there is a growing body of trade and climate change regulation, where there will be impacts both on trade and wider policy objectives. The Board would be required to consider major interfaces between trade and regulation, explaining them to the public and policymakers and helping with solutions.
Finally, we envisage a series of reports on specific trade and trade policy developments. These may include both detailed exercises to underpin future policy and simple explainers for the interested public.
Underpinning the Board’s work, there should be substantial and substantive engagement with Parliamentarians, stakeholders and the public. This would be partly aimed at improving policy and policymaking by encouraging a broad range of inputs, but also at building confidence that the UK had a satisfactory and inclusive approach to trade.
A model for a restructured Board of Trade
The challenge in designing a new Board of Trade is to create a balance between expertise/experience, independence from government, stability in the long-term policy vision and the fact that government, and to a lesser extent Parliament, must have a material role in the composition of a body with which they are intended to work closely. We suggest one model but recognise that others are possible.
Maintaining good relations between the Board and the government will be necessary for the former’s success. Hence, in our model, the relevant Secretary of State would continue to be termed the President of the Board of Trade and should appoint the members of a small politically balanced Board. These would have input to the Annual Report and formally receive it.
The main leadership of the Board’s work, however, would come from a Trade Council, with broad representation and expertise/experience in trade (not just exporting!). The Secretary of State would appoint the Council Chair in consultation with the relevant Parliamentary Committees and also a few members of a Trade Council. The majority of the Council would be nominated by the Chair and the whole Council approved by the small formal Board. The Chair would also appoint a Chief Executive Officer to lead the day-to-day work having consulted the Chairs of the relevant Parliamentary Committees.
The reconfigured Board of Trade should be established in legislation and have a guaranteed role in informing Parliament. It could, however, be created in shadow form virtually as soon as a government desired it, with formal statutory establishment following later.
By looking at similar UK institutions and the Swedish National Board of Trade, we estimate that the Board might require a staff of around 90 and an annual budget of about £10 million. At least some of these would come from the transfer of existing functions and staff from inside government. Lest this seems like a lot in our current straitened circumstances, recall that around one-third of UK consumption and investment comes from imports and around one-third of output is exported.
Getting trade right is important! Our proposal fills what is an obvious gap in current arrangements, with a view to building the broad consensus that is essential to a successful trade policy.
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher May 22nd, 2024
Posted In: UK- EU
