A big moment for the UK’s trade agenda
With the UK about to launch a fully independent trade policy for the first time in 40 years, and the world economy battling its way through the COVID-19 pandemic, the CBI held its first International Trade conference on 12-13 October.
In her opening speech, CBI Director-General Carolyn Fairbairn described a moment of historic opportunity. “Now more than ever, thriving open global trade is fundamental not only to the global economy's recovery from this pandemic, but also to our identity, this country's identity as an outward looking world leader.”
Leading figures from government and opposition also emphasised the potential gains from this new era in UK trade. Trade Secretary Liz Truss promised that the UK-Japan FTA would set out the pattern for ambitious future trade deals, focusing on some of “our competitive strengths, like data, digital and services.” For Emily Thornberry, the UK had a chance to create a trade policy which “could be world leading and something to be really proud of.”
While focused on future opportunities, many speakers stressed that global success depended on securing a good Brexit deal. As Carolyn said: “the time for a new EU UK deal is now. […] And for the UK, it will enable firms to look forward to the global opportunities.”
Thoughts of the pandemic were also never far away. As a session with the conference sponsor, Visa, reminded us, COVID-19 is changing global patterns in global trade. Asia was recovering more strongly than Europe, multinationals were examining supply chains and digital trade was creating both opportunities and cyber hazards.
Success depends on a stronger partnership between business and government
The CBI’s Partnership for Prosperity report launched on the first day of the conference and set out its main theme: how business can work with government to take advantage of opportunities in global trade post Brexit, build back better after the crisis, and level up prosperity across the UK.
Over the two days, and watched by over 900 members, representatives of government and business sketched out what this partnership should mean in practice.
Carolyn and Liz Truss discussed how business could help shape better trade deals through DIT’s consultative architecture. Drawing on his experience as UK Cabinet Minister and EU Trade Commissioner, Lord Mandelson argued that business needed to come to government with solutions rather than just problems. Alex Cruz, non-executive Chairman at British Airways, called for the partnership to tackle the immediate crisis: we had to work together to show the UK is open for business.
A session on China concluded that business and government needed to be talking more about the world’s second largest economy to balance opportunities and risks. Discussion of UK-US trade talks with the Lieutenant Governor of California and the UK Trade Commissioner to the US showed how UK government and business could work together to reach into state level.
Throughout the two days, speakers from both business and government stressed the importance of partnership to rebuilding public trust in trade.
Sharing the benefits of trade and investment more evenly across the UK
As CBI Deputy Director-General Henrietta Jowitt put it, it cannot be right that 50% of the UK’s foreign investment has landed in London for the last 20 years. Speakers from four corners of the UK drew practical lessons in a discussion of trade as a vehicle for regional prosperity:
- For export support, CBI members could turn to the DIT network, their local ecosystem of fellow exporters and universities, or the contacts and peer learning provided by CBI
- Trade and investment success would take time and cultural sensitivity: investment deals aren’t landed overnight and there’s a world of difference in different markets
- The UK needs to tell its story better – too often, the British didn’t appreciate how strong their global brand is, especially in manufacturing and science
- London’s success in attracting inward investment was an also an opportunity for UK regions and nations
- The sweet spot for export promotion was larger SMEs – companies with the capacity to export who can be introduced to new markets.
Making trade policy work for those who trade
As several speakers repeated through the conference, politicians sign trade deals but it’s business that puts them into practice. A session on trade liberalism chaired by CBI President Lord Bilimoria prompted CBI members to spell out their top priorities in UK trade policy. Wilson Del Socorro of Diageo stressed the importance of market access work – breaking down individual barriers in markets often yielded benefits earlier than comprehensive trade deals.
Sally Jones of EY and Ian Howells of Honda argued that services needed to be front and centre in UK trade policy. With services nearly half of UK exports, the UK was well placed to benefit from the rapid growth in global services trade – predicted to grow by 50% over the next 10 years. For UK manufacturers, service contracts bundled with manufactured goods were often the most profitable part of the deal.
With G7 and COP26 and a new WTO seat, the UK should step up at the global level
Finally, there was a strong sense at the conference that the UK needed to play a greater role in global trade. As the UK’s Ambassador to the World Trade Organisation, Julian Braithwaite, pointed out, the WTO was ‘beset with political problems and difficulties’ just when we needed it most. Katherine Bennett of Airbus gave a historical perspective – the global trading system dramatically lowered tariffs over thirty years ago. It now needed to do the same for the modern economy in areas like services or data – which was critical for high value manufacturing.
Antonia Romeo, Permanent Secretary of DIT, felt that the UK had a chance to strengthen the WTO with the UK G7 Presidency next year. Business has shown what it could achieve through international co-operation in areas like vaccine development. It now needs to do more in trade politics.
Next steps – a big international year for CBI
The conference has created a strong platform for CBI’s international priorities: deepening our partnership with DIT on market access and trade deals, extending that partnership with government into wider areas like foreign policy, using next year’s B7 and COP26 to tell a stronger story about the UK and influence the G7, and working with national and regional government to raise exports and investment across the UK.
As we approach a big year for our international work, we want to step up our member engagement. If you want to engage with CBI’s International Trade team either in London or our international offices in Brussels, Washington, Beijing, and New Delhi, please get in touch.