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.
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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
Subsidies granted by third states
The Foreign Subsidies Regulation (FSR)
The definition of a concentration
Ex ante mandatory notification: qualifying thresholds
An actual or potential distortive effect on the EU internal market
The definition of economic coercion
Compatibility with international law
Cosmo Rana-Iozzi October 12th, 2022
Posted In:
Share this article: 23 May 2022
Peter Holmes is a Fellow of the UK Trade Policy Observatory and Emeritus Reader in Economics at the University of Sussex Business School
UK trade with Europe has significantly fallen off (see UKTPO BP 63 for an early assessment). UK GDP has fallen by 4%. If we cancel the Northern Ireland Protocol (NIP) – which is all the talk at the moment – the economic consequences of Brexit will get worse and let’s not even think about the political consequences. Is any of this fixable? Yes, if we look ahead to 2025 when the Brexit agreement with the EU—formally known as the EU-UK Trade and Cooperation Agreement (TCA) —is up for its 5-yearly review. UK stakeholders, including political parties planning their manifestoes ahead of the next UK general election in 2024, should consider their Brexit positions now – but it’s not a case of leave or remain, rather a case of ‘tweak the Brexit agreement to something that better suits us’. (more…)
Cosmo Rana-Iozzi May 23rd, 2022
Posted In: UK- EU
Tags: Brexit, Frictionless trade, Irish border, Northern Ireland Protocol, TCA, Trade and Cooperation Agreement
Competition Provisions in International Trade Agreements
New Directions for the Use of State Aid in the UK
What Kind of State Aid Scheme Will the UK Implement?
A State Aid Plan for Domestic Policy
George Meredith June 19th, 2020
Posted In:
Share this article: 8 June 2020
Professor Erika Szyszczak is Professor Emerita and a Fellow of UKTPO, University of Sussex.
Control over state aid is a stumbling block for the future of a EU-UK trade agreement. The EU is seeking dynamic alignment of any future UK state aid rules. This is a bold demand, especially since the EU state aid rules will be in a state of flux in the forthcoming years. But if no agreement is reached there are implications for domestic UK policy. (more…)
George Meredith June 9th, 2020
Posted In: UK- EU
Tags: State aid
Share this article: 12 December 2019
Michael Gasiorek is Professor of Economics at the University of Sussex and a Fellow of the UK Trade Policy Observatory. Nicolo Tamberi is a Research Assistant in Economics for the UK Trade Policy Observatory.
Following Brexit, and assuming the UK is no longer part of a customs union with the EU, the UK will be able to sign free trade agreements (FTAs) with third countries. Indeed, the Conservative manifesto aims to have 80% of UK trade covered by FTAs within three years. This is clearly unrealistic, because it would require signing agreements with more than 12 countries within a time-scale which has rarely been achieved for a single agreement. The objective, however, highlights that, post-Brexit, there will be a lot of focus on trying to sign FTAs. Other than the somewhat significant matter of signing an agreement with the EU, top of the UK’s FTA wish list is an agreement with the US. (more…)
Charlotte Humma December 12th, 2019
Posted In: Uncategorised
Share this article: 11 December 2019
In the lead up to the General Election, we have analysed the manifestos of the five main political parties and what they imply for future UK trade.
Overall, we find that the manifestos in this General Election are incoherent and vague on trade and contain several unachievable targets. (more…)
George Meredith December 11th, 2019
Posted In: UK - Non EU, UK- EU
Tags: Election, Manifesto, trade policy
Share this article: 4 December 2019
L. Alan Winters CB is Professor of Economics and Director of the Observatory.
The Prime Minister seems to think that an ‘oven-ready’ Brexit deal is the best that we can choose from the menu of policy alternatives. It sounds neither appetising nor nourishing, but if it really were quick and easy, maybe it would be worth it.
But it’s not quick or easy: ‘oven-ready’ is just not true. (more…)
Charlotte Humma December 4th, 2019
Posted In: UK- EU
Tags: Brexit, oven-ready, Regulations, tariffs, withdrawal agreement
The nature of inward FDI to the UK
What are the most common source countries of investment in the UK?
Why do different firms want to invest here?
How strong is the UK’s performance in attracting FDI compared to other European countries?
The impact of the Brexit vote on inward foreign investment to the UK
Political uncertainty: timeline of Brexit
FDI in the lead-up to and after Brexit: performance of the ‘real’ and ‘synthetic’ UK
FDI cost of Brexit to date across sectors: manufacturing and services
Has the Brexit vote disrupted investment by supply chain multinational firms?
The UK continues to perform strongly in attracting inward foreign investment, and remains one of the largest recipients of Foreign Direct Investment (FDI) in Europe and globally. In 2017, there were close to 1,000 greenfield investment projects announced for the UK: these created approximately 60,000 new jobs and were valued at just over US$ 33 billion.
The UK’s strength lies in the services sector: the areas with the largest number of individual FDI projects include software & IT services, business services and financial services.
However, in 2017, the UK was overtaken by Germany as the largest European recipient of FDI, with France also gaining ground. The UK share of EU28 FDI has fallen from some 25 per cent in early 2015 to some 18 per cent in late 2017.
Since the EU referendum, inflows of FDI to the UK have followed a downward trend: the longest continuous decline since the beginning of the data series in 2003.
Our analysis shows that the Brexit vote may have reduced the number of foreign investment projects to the UK by some 16-20 per cent. For services FDI, the gap is even larger: investment may be some 25 per cent lower than if the UK had voted to remain in the EU.
While investments continue to flow into the UK, there is a decline in investment in sectors such as ‘software publishing’, ‘investment management’ and ‘retail banking’. These are high-value-added industries, so the threat of Brexit has put high-skilled jobs at risk. (more…)
Charlotte Humma October 31st, 2018
Posted In:
Section 1: Government Procurement After Brexit: The International Context
Section 2: Options for UK Public Procurement Law and Policy
Charlotte Humma February 13th, 2018
Posted In: