The new UK government should have a trade policy agenda that coheres with its wider industrial strategy, deepens EU cooperation and supports it as it addresses “wider diplomatic challenges” overseas.
That was the view of the panel on a free webinar hosted by the Chartered Institute of Export & International Trade this week about what Labour should be prioritising when it comes to trade, now that it is in power.
Ambition needed
Marley Morris, an associate director for migration, trade and communities at the Institute for Public Policy Research (IPPR), said that the UK needed an “ambitious” new strategy for trade, having “missed out on the post-pandemic boom in trade in goods” experienced by other G7 countries.
“Our view is that the UK is in desperate need of a new ambitious trade strategy which helps to stimulate economic growth and at the same time helps to strengthen supply chain resilience,” he said.
He said not having this could risk the UK becoming “out of step” with partners like the US and EU, and that the country ran “the risk of following trends set by them, rather than setting the agenda ourselves”.
Three key areas
Morris said the new trade strategy needed to achieve three core aims.
Firstly, he said that it should “complement a domestic UK industrial strategy”. This should involve strategically identifying “strength industries” where the UK has or can develop a “competitive advantage”, while also bolstering supply chain resilience in “critical sectors that will be essential for our domestic strategy going forwards”.
Secondly, he said the UK should deepen cooperation with the EU, building on the post-Brexit Trade and Cooperation Agreement (TCA) by securing deals around sanitary and phytosanitary (SPS) controls, mutual recognition of conformity assessments and labour mobility.
Thirdly, he noted that the UK needed to fit its trade policy agenda within the “wider diplomatic challenges” that the UK faces overseas, particularly around supply chains resilience and broader global economic security.
Momentum generated
Grace Thompson, the Chartered Institute’s UK public affairs lead, added that there are already signs that the third of these aims is being carefully considered by the new government, saying that Labour’s manifesto pledged “closer working together” between the Foreign, Commonwealth & Development Office (FCDO) and Department for Business and Trade (DBT).
She observed that Sir Keir Starmer’s administration had set about its business quickly, saying that it had come in with a clear “momentum” and that there was more legislative detail in the King’s Speech than “people expected there would be”.
She said there is a “lot of opportunity for businesses to feed in” to the new government’s industrial strategy, while border security and systems were “another thing to watch”.
The background
Matt Vick, trade and customs expert at the Chartered Institute, spoke on the changes that have impacted trade in recent years, and which form the background of the new government’s approach to trade.
Particularly notable has been the UK’s exit from the EU, its largest trading partner. The move from EU membership to the TCA changed the rules and processes for UK-EU trade and the new government is reportedly seeking a new veterinary agreement that could ease friction around the movement of foods and other goods.
Vick noted that, while some aspects of that agreement can be “tinkered [with] around the edges”, the Labour Party’s promise not to rejoin the single market or customs union means there is a “much more specific, smaller remit” for changes to the TCA. The effect of the TCA itself, he added, is “hard to disentangle” from other changes affecting trade such as the Covid-19 pandemic.
‘A new set of people’
Speaking as a former permanent secretary in the Department for Business and Trade, Chartered Institute trustee director John Alty explored how the civil service will be adjusting to the change in government following the general election.
“This is a new set of people,” Alty noted, explaining that civil servants are largely “very wary” of engagement with opposition politicians, owing to rules restricting such interaction.
The level of discussion between the civil service and Labour prior to the latter winning power is likely to have been limited, meaning a period of adjustment will be needed – though civil servants will have some idea of what to expect from party manifestos and thinktank input, he explained.
The civil service will also have been preparing incoming briefs for ministers, including secretary for business and trade, Jonathan Reynolds.
Their other responsibilities, Alty explained, include “asking questions as well as making recommendations” on how to achieve goals, while also bringing ministers up to speed on the “inherited agenda” – in the case of trade, this means issues including the ongoing disputes between Western nations and China over electric vehicles (EVs).