Post-Brexit Britain will be “a great, global, trading nation”, the Prime Minister has promised. However they voted in the referendum, there are few in the business community who would disagree with this ambition. And while companies in general do not think the process of unravelling ourselves from the EU will be easy, it is an opportunity to think strategically about our place in the world.
“Global Britain” should be about forging trade links with allies old and new, but policymakers have as yet given few substantive details to explain the slogan. The strategic overarching trade agenda is lacking – partly due to inevitable Brexit-induced uncertainty and partly through a lack of related decision-making. With less than a year to go until exit day, what can Britain do to truly “go global”?
The first idea to dispense with is that trade is about binary geographical choices. An outward-looking UK need not neglect the EU in favour of the rest of the world.
A recent study by the Institute of Directors has found that exporters have seen more growth for their business in the EU than any other regional market – more than Asia or North America. And for those deciding to trade internationally for the first time, the EU would be first port of call (more non-exporters chose this than all other regional markets combined), indicating that geographical proximity is still an extremely important pull factor.
This is not a basis on which the Government should prioritise EU trade over the rest of the world, nor should it be a catalyst for rehashing the Brexit debate all over again. It is, however, an important reminder that leaving the EU should not be an excuse mainly to focus on the rest of the world either. After all, Europe still counts as “the world” for business. When it comes to trade arrangements with our biggest trading partner, we really need Government to live up to the mantra that we are “leaving the EU, but not Europe”.
The Trade Secretary and the new Trade Commissioner for Europe to be appointed will both have to pay attention to this substantial market for British trade. The fact that another department (DEXEu) is handing the actual Brexit negotiations should not preclude this, as much of DIT’s work focuses on export strategy, investment and trade promotion.
With respect to the development of the UK’s future trade policy however, there is a need to focus more on consultation and strategic development rather than rushing off to do the first trade deal that becomes available during transition. We have a unique opportunity to reflect on the mistakes and successes of others in drawing up a comprehensive new trade policy strategy.
Most businesses still broadly feel in the dark over the “country working groups” that DIT has set up. These must be opened up further so that more companies can feed in, helping to identify barriers to market access and the priority areas that can make a practical difference to businesses. The work of these groups can then be fed into an overarching trade policy strategy. Crucially, the whole process should be clearly communicated in order to encourage stakeholder buy-in to trade liberalisation, which will provide a firm footing as we enter negotiations.
Going global must also involve a focus on facilitating labour mobility and the exchange of knowledge across borders, including a revised immigration policy that suits the needs of the UK economy. The skills, networks, and market knowledge that those from abroad bring to Britain are hugely important to professional, scientific and technical cross-border business services. This is particularly relevant to us, as around 80 per cent of UK GDP comes from the services sector.
Intra-company transfers, contractual service suppliers, and bespoke professional visa arrangements are all outlined in the General Agreement on Trade in Services as ways to liberalise trade in services. But Mode 4 of the GATS, aimed at facilitating the flow of temporary workers as service providers, has seen fairly limited advances through trade agreements to date. The UK has an opportunity to make an ambitious push in this area through its future trade agreements. Unfortunately, the Government’s approach in recent years – with the net migration target (which bizarrely includes students) and the eradication of post-study work visas – does not bode well.
Immigration is a sensitive policy area, of course. However, as post-referendum trips to India by the Prime Minister and the Mayor of London have demonstrated, Britain’s desire for free trade deals invariably provokes demands to relax visa rules for foreign workers. It seems the most feasible political response for now will be a set of incremental measures that include facilitating mutual recognition of professional qualifications. But be under no illusions – “Global Britain” cannot be a success without access to the right people for the right jobs.
The UK’s global ambitions also require a focus on its future digital trade agenda, as the role of data in the global marketplace will only continue to rise in prominence. E-commerce, the exchange of personal information and communications channels are just some examples of how digital trade features in international business practices.
Making it easier for data to flow across borders and facilitating wider take-up of e-commerce to access new markets is an exercise that will need to draw in multiple government departments and agencies. Some of this can and should be tackled through future trade agreements, but there are other cooperative channels through which this can be achieved. To this end, the IoD is currently engaged in a project with the Washington-based Centre for Strategic and International Studies on developing a digital trade agenda for the transatlantic market.
From immigration to its digital trade agenda, the Government must ensure it couples short to medium-term pragmatism with a long-term vision, and this isn’t sustainable without the input of the business community. “Going global” is an ambitious top-line idea, but its shift from rhetoric to policy requires reasoned, practical and business-friendly action.
There is an air of secrecy surrounding the Brexit negotiations, but the Government should worry less about the potential for missteps and more about what it loses by not openly drawing business into its thought process. Engagement is crucial to buy-in, and buy-in is needed to make a global vision of Britain a true success.