With the trade transition, new export and import opportunities are becoming available for supply chains involved with the UK post Brexit
The Institute of Export & International Trade (IOE&IT) has published a Policy Platform paper that is designed to be a blueprint on how the country can maximise its first independent trade policy opportunity in 45 years.
Director General Marco Forgione is calling for trade and export policy to become an integral consideration in domestic economic strategy, so that businesses see a clear direction of travel, understand the priorities, know where they can get effective and well-resourced support, and have confidence in a stable policy and regulatory environment.
The ten recommendations are spearheaded by the creation of a UK Trade Committee led by the Prime Minister to give it greater focus and authority, the provision of simple integrated support tools for businesses and the importance of linking policy to wider industrial and regional levelling-up strategies.
There are also calls to prioritise urgent EU trade transition support to overcome initial issues around Brexit and to continue striking and indeed capitalising on Free Trade Agreements (FTAs) in markets where the UK has volumes of trade and potential for expansion. ITM presents the biggest takeaways from the policy paper, you can download the full paper from the IOE&IT website.
The UK is embarking on a truly independent trade policy for the first time in over 45 years. Having regained control of the whole range of policy levers that can support export performance and its contribution to national prosperity, the UK faces important choices and opportunities. It is the moment to take stock of past policy and performance, and to plan how to use the UK’s fundamental strengths and new flexibilities to succeed over the next decade. This paper is a contribution by the Institute of Export & International Trade to this work.
It is a manifesto and call to arms, assessing the outlook for UK trade and exports, identifying opportunities, and considering the obstacles the Government and UK businesses need to overcome. We present ten recommendations to the Government for a successful UK Trade and Exports strategy. But this is not a task for government alone; businesses conduct trade, and the role of government is to facilitate and support it. The Government and business should work together to promote the economic and social value of trade and investment, in the interest of people across the UK.
Realising untapped potential
The UK’s export performance is strong, built on a long trading history and bolstered in recent years by global trade liberalisation and dynamic growth in services exports. Trade now accounts for over half of UK GDP, but there is still great scope for growth, particularly amongst SMEs and in regions outside London and the South East, as well as by addressing new international markets.
COVID-19 has made it even more necessary for business and government to realise untapped potential from the UK economy. Like countries all over the world, the UK faces a long road to recovery. Trade should play a crucial part in driving that recovery, but faces significant headwinds.
Even before the pandemic, the pace of global trade liberalisation was slowing amid tensions between the major trading nations and blocs and a trend towards economic nationalism. Rapid technological change is altering the nature of trade, presenting previously unimagined opportunities but also calling for new regulation and creating potential barriers.
Now that the UK has left the EU, businesses face new challenges in a less open trade relationship with our nearest and largest market. But with this comes a once in a generation opportunity to lead by example in rebuilding support for multilateral trade rules, resisting protectionist impulses and using trade policy to support environmental, health and social goals. The UK’s diplomatic and aid policies should be aligned with trade objectives at home and abroad.
Leveraging new opportunities
The Government is working to open new opportunities across the world through a wide range of trade policy initiatives such as Free Trade Agreements (FTAs), leveraging our new regulatory flexibility, and mutual recognition of standards and qualifications. Their ambitious targets include securing FTAs with countries covering 80% of UK trade within the next three years and increasing the export intensity of UK GDP to 35%. Positive early steps included establishing the Department for International Trade and setting up a world-wide network of Trade Commissioners. In recent months the Government has achieved trade deals that roll over, for now, the terms of a large majority of previously applicable EU trade agreements; and with Japan there are some enhancements on digital trade. It has also started new negotiations with the US, Australia and New Zealand.
Looking ahead, the UK needs to forge greater coherence between its domestic and international aims. Trade and export policy should become an integral consideration in domestic economic strategy, so that businesses see a clear direction of travel, understand the priorities, know where they can get effective and well-resourced support, and have confidence in a stable policy and regulatory environment.
There are many questions. A lively debate has started on which markets to prioritise, the UK’s role in reforming the WTO, how to achieve first rate technological trade facilitation and how to minimise red tape. The political and economic choices involved in trade, which were often distant and abstract during our EU membership, are now more immediate for parliamentarians, businesses and the public. Through close collaboration between government and business there is an opportunity to build broad political, industry and public support for an ambitious new agenda. Our recommendations:
Prioritise urgent EU trade transition support: The Government should do its utmost to advise and support companies and individuals on how to continue smoothly trading with the EU.
Improve the export finance offer: Continue to improve availability, access and flexibility to export credit finance, particularly for SMEs.
Provide simple integrated support tools for business: Enable companies to access customs and regulatory paperwork, information on barriers to trade, rules on importing and exporting in different markets and other support tools via simple and, as far as possible, integrated information platforms.
Link trade policy to wider industrial and regional levelling up strategies: The Government’s recent Plan for Growth is an important first step to incorporate the UK’s Trade policy agenda into the UK’s wider economic strategy. Government should make sure to Work closely with the business community to implement it.
Further strengthen the overseas network: HMG should further develop the Trade Commissioners network to reflect the changing trade priorities with focus on growing markets in Asia, Africa and South America. Trade should be a priority for the wider diplomatic network with more senior personnel deployed to priority markets.
Continue to strike Free Trade Agreements (FTAs) around the world: The focus should be on markets where the UK has volumes of trade with room for further expansion as well as markets where the UK has particular strategic or historical advantages.
Robustly defend UK interests: Ensure the UK has the tools, alliances and frameworks necessary to adequately defend UK interests at home and abroad in the face of unfair trade practices and noncompliance with legal commitments.
Establish a new UK Trade Committee: Strengthen cross-Government engagement and decision-making, including engagement with industry, by the establishment of a Whitehall Trade Committee, chaired by the Prime Minister, to give greater focus and thrust to trade issues.
Give Parliament a stronger voice: Ensure adequate parliamentary scrutiny of trade policy and negotiating mandates, and ratification of agreements. This will bring the UK into line with international best practice and improve transparency and public confidence.
Use multilateral fora to champion national priorities, particularly free trade and environmental sustainability: In 2021 the UK, now an independent member of the WTO, holds the presidency of the G7 and will host COP26 in November. It should use these opportunities to promote sustainable global trade in a rules-based multilateral system and to link international trade with the need for robust commitments to reduce carbon emissions
Graham Stuart MP, Minister for Exports presents his foreword at the beginning of the paper, outlining his views. This is a timely and thought-provoking report. I would like to thank the IOE&IT for coming forward with such clear recommendations and look forward to discussing them with the Institute and wider industry. Protectionism has been on the rise and Covid-19 is at risk of reinforcing that unfortunate trend. In 2019, before the pandemic, nine of the top ten exporting nations saw their exports fall according to UNCTAD. That’s why it is so important that the UK uses the return of its powers over trade policy to champion free trade, reform the trading system and build alliances with like-minded allies. International commerce will be vital in delivering the UK’s economic recovery.
After the standout success of our negotiation of continuity deals we are now concentrating on delivering FTAs with additional countries, including our accession to the Comprehensive and Progressive agreement for Trans-Pacific Partnership, and improved market access for all. DIT leads on WTO reform, G7, trade disputes, whilst Lord Frost as Minister of State in the Cabinet Office will implement the Trade and Cooperation Agreement. But why does trade matter? Our research suggests exports support more than six million jobs in the UK1 . Exporting companies are more productive, profitable, innovative and resilient – yet currently, fewer than 10% of British companies export. This was an enormous, missed opportunity. Maximising on this will be central to levelling up the UK and strengthening the Union; already, in 2016, nearly three-quarters of the jobs supported through UK exports were outside of London, equating to hundreds of thousands of jobs in every region and nation of the UK.
Astrid Geeraerts Head of Investment at Flanders Investment & Trade (London)
The plethora of information about Brexit can be confusing. Below is a very short summary to help you understand the full picture and where you might need help.
- A zero tariff and zero quota trading agreement was agreed. However there are:
- New customs controls around product certification and health certificates.
- Changes to transport, logistics and fulfilment, resulting in delivery delays.
- Sales tax changes. They’re now collected by and in each country. The buyer has to settle the bill upfront.
- Changes to duty and eligibility for preferential rates. These rules are intricate and complex.
Understanding how to classify goods correctly and follow safety and security requirements for products is not straightforward, you will probably need expert help.
We speak to many UK companies, and they are adapting to the changes in different ways. One of the most successful, is to establish a base within the EU, as that way you only have to enter the bloc and deal with the bureaucracy once. Flanders is becoming a popular choice for companies wishing to do that, due factors such as geography, culture and language.
Flanders Investment & Trade (FIT) is an official body of the region offering free help and advice. One service we offer UK companies is a Brexit impact scan, which provides you with a calculation of customs duties and additional costs for customs declarations, as well as an interactive report with possible Brexit strategies.
Director General Marco Forgion, The Institute of Export & International Trade (IOE&IT)
Now that the UK has left the EU, businesses face new challenges in a new trade relationship with our nearest and largest market. But with this comes a once in a generation opportunity to lead by example in rebuilding support for multilateral trade rules, resisting protectionist impulses and using trade policy to achieve environmental, health and social goals.
The way in which the government exploits its new-found freedoms, how it secures wide ranging trade agreements and its ability to forge meaningful trading partnerships will influence how we reshape the UK’s economy as we ‘build back better’ from the impacts of Covid-19.
Our ten-point action plan from IOE&IT will create an environment which supports international trade and inspires more business leaders to export. The Policy Platform, which has the backing of Minister for Exports Graham Stuart, highlights that trade really matters and will be crucial to driving life after Brexit and Covid-19.
The pandemic has made it even more necessary for business and government to realise untapped potential from the economy and, like countries all over the world, the UK faces significant headwinds.
Even before the virus, the pace of global trade liberalisation was slowing amid tensions between the major trading nations and blocs and a trend towards economic nationalism. Rapid technological change is altering the nature of trade, presenting previously unimagined opportunities, but also calling for new regulation and creating potential barriers.
The falling percentage of SMEs who export is one genuine point of concern and is down from 50% of total export output in 2008 to just 32% a decade later. This suggests that there is room for improvement and drives IOE&IT recommendations to improve the Export Finance Offer (especially for small to medium-sized companies) and to encourage further development of the Trade Commissioners network to reflect changing priorities and growing markets in Asia, Africa and South America.
To stay up to date on the latest, trends, innovations, people news and company updates within the global trade and logistics market please register to receive our newsletter here.
Rebecca Morpeth Spayne,
Editor, International Trade Magazine
Tel: +44 (0) 1622 823 922