Lord Waverley: A New Chapter for the UK and a Meeting Place for the World

With the EU agreement now in place, the United Kingdom has the chance to develop a strategy that addresses the ambitions and goals of the country at large.

The halcyon days of yesteryear have not diminished but do need to be recalibrated. The UK has an historic opportunity to reset trade relations and do trade differently, creating a purposeful strategy for the future. Our new identity in the world should involve power broking, advocating values and working to bring solutions to long standing unresolved issues.

Global Briatin

Trade today impacts all walks of life so not only does that strategy need to be well defined, delivering benefit to all, but it must also help to deliver a more inclusive, sustainable and greener economy. As a G5 trading nation, a comprehensive trade strategy that incorporates trade policy, trade promotion, investment and trade finance with clear connectivity to climate, development, digital and foreign policy objectives is required.

As a sizeable economy on the global stage, the UK has an opportunity to help shape the future of the global trading system to ensure it rises to the challenges and opportunities that confront us. We must harness the opportunities of the digital economy and trade in services, tackling climate change and global finance gaps.

“Making trade work for everyone will require all voices to be represented at the table with robust consultation and transparency mechanisms to enable everyone into the process.”

The agreements that are negotiated in the coming years will play a key role and have a decisive impact on our economy for decades. They present an opportunity for the UK to be a global standard setter and to design a trade strategy that creates an economy that is prosperous, more sustainable, more inclusive and greener, and which is guided by the long-term interests of our citizens and future generations, rather than short-term imperatives.

Trade generates losers and winners and demands difficult policy choices. It is important that policy options and trade-offs are discussed inclusively and transparently and that we take proactive steps to mitigate any negative effects. To be successful, Global Britain will need a strategy that is coherent and adds up to the sum of its parts combining our wealth of networks, relationships, and assets: all of which need to hinge together to allow us to capitalise on the opportunities and have real global influence.

To be successful means having the right capabilities in all areas. Balanced trade relations will be critical. To be effective on the world stage, the UK needs to be pragmatic and constructively engaged with all nation states. There is an important role to play as a bridge between developed economies and between emerging and frontier markets and developed economies. We must have positive trade relations with all. Good, balanced relations will open doors to new opportunities and so enable us to thrive as an independent trading nation.

A Vision

Trade policy should deliver a prosperous, more equitable, inclusive and sustainable economy in the UK and globally. It should promote trade for an outward-looking economy in a manner that actively promotes high labour, consumer, and environmental standards. It should be rooted in the day-to-day realities of small and large businesses, farmers, and workers, and reflect the priorities of consumers and be developed based on inclusive, meaningful consultation, transparency, and democratic oversight, openly confronting trade-offs and building consensus. This will help ensure that decision-making is informed and robust, and that our trade policy has the trust and confidence of stakeholders and the wider public.

Policy must be joined-up, working to support policy agendas in areas from agriculture and the environment, to innovation, industrial and digital strategy, to foreign affairs and international development.

Six objectives could guide the future of Global Britain:

1: Trade strategy that is green, supporting the climate and biodiversity, and reducing waste

2: Trade strategy that promotes economic opportunities and sustainable, high quality jobs in all parts of the UK, and enables communities to adapt to new opportunities and adjust to trade shocks

3: Trade strategy that supports fair and sustainable trade globally, reinvigorating the multilateral rules-based system and promoting responsible supply chains

4: Trade strategy that capitalises on the opportunities of the digital economy and promotes digital rights of citizens

5: Trade strategy that secures the confidence of stakeholders and the public, through meaningful consultation, and high levels of transparency and accountability

6: Trade strategy that promotes sustainable investment and finance and helps address the global trade finance gap

Much has happened at breakneck pace over the past four years. The agenda has been dominated by the singular goal of leaving the EU, but the opportunity now lies in developing a vision for what comes next. Few would argue with the premise of a ‘Global Britain’ but more work is needed to build a consensus around what this means for the country and to work around any inconsistency in policy.

Whilst an open vision as a preferred destination to do business is being promoted, legislation is being passed that will screen investors with UK interests anywhere in the world, with considerable penalties for noncompliance. This may have the effect of investors thinking twice about coming to the UK. This is not the intention.

A vision to make the UK the biggest investor in Africa but then reducing the development budget, will play a crucial role in helping build trade capability and relations across the continent. The approach towards China also needs careful balancing. To be a successful trading nation, access to markets with proportional trade relations is needed. Special consideration for the major trade power blocs of EU, US and China is fundamental. Policies and laws are being designed that target restricting access to China, the second largest economy, our 3rd largest export market and a country that is responsible for 20 percent of global trade. This could complicate ties into Asia or to help with agreements at the WTO.

The UK cannot afford to be single issue driven. These ambiguities require a vision that everyone can buy into and to ensure that trade benefits everyone. For the most part it is about being pragmatic and targeted in approach to ensure relations remain constructive, whilst single issues are addressed through appropriate channels. This approach will require nuance and diplomacy, areas in which with political will we excel. Standing back and asking some basic questions would be helpful; what do we want to be as a country, what do we want to achieve in the world with the freedoms we now have, and importantly, how do we deliver success consistently over the long term?

Firstly, we need to revisit our trade governance structures to deliver better outcomes from trade. Making trade work for everyone will require all voices to be represented at the table with robust consultation and transparency mechanisms to enable everyone into the process. This will help build consensus on approach and ensure that policies are right from the outset. Ultimately, this will lessen the risk at the latter stages of a trade negotiation when dealing with difficult issues.

We have seen situations in the past when not all constituencies are on board. It can be enough to sink the deal, as the EU discovered with the Transatlantic Trade and Investment Partnership in 2018. A governance structure was put in place in 2018 and re-structured in 2020 but there are still scenarios where key voices are not being adequately consulted. Important gaps in strategy remain that need development, principally around trade in services and the environment.

Secondly, our minds ought to focus, and quickly, on the development of a comprehensive strategy covering policy, export promotion, investment and trade finance. A strategy that underpins and helps deliver our commitments on sustainability, climate and development as well as dovetailing with broader foreign policy objectives such as human rights and diplomatic relations. It also needs to set out clearly what we are working towards at the multilateral level and how we implement the strategy at bilateral level, spelling out the benefits at national level. Services trade is now 50 percent of global trade but is surprisingly undeveloped in terms of global rules. It starts with getting our own thinking straight. The UK could show real leadership in this area, but this will not be possible before a strategy has been developed.

Importantly, a trade strategy needs to contribute to the national ‘levelling up’ agenda to ensure every region and every community benefit with trade with the rest of the world. This may be as a direct benefit, such as specific industries and sectors gaining access to new growth markets, or through increased investment to compensate and mitigate for a loss of market access, investment or jobs. Every trade deal has winners and losers. It is important that those that lose out gain elsewhere to support an economic transition to another part of the economy with additional investment in skills and digital infrastructure. UK coastal towns that have lost out on fishing rights, for example, could benefit from access to new global opportunities.

We do not need to create a new vision or framework for much of this. Rather we need to implement our commitment to delivering the UN Sustainable Development Goals by 2030. This is the framework to building back stronger and driving the economic recovery in a way that delivers better outcomes, whether by driving economic prosperity or eradicating poverty and inequality. The SDG framework would helpfully provide a roadmap to addressing the structural inequalities for all to see, whether that is the north-south divide, impoverished coastal towns and communities, health and education inequality, the digital divide or our ambition to be a net zero economy by 2050. The SDGs bring all these agendas together under a single internationally recognised framework. Trade therefore should support the implementation of the SDG framework.

It would be amiss not to conclude on climate and global governance with G7 and COP26 taking place in the UK this year. Both are important opportunities. COP26 is not only an opportunity to reinforce our commitment to net zero emissions, to help chart a path forward on global challenges and show leadership on the global stage, but also to secure alignment to modernise trade and environment rules to achieve this goal. Such a move would be a huge step forward in removing ambiguities and trade barriers to green goods and services that help protect the environment and deliver a greener economy.

G7 and G20 are ideal platforms to rally the major economies of the world to commit to accelerating the digitisation of the global economy and with it bring a new, more inclusive era for trade where more SMEs, communities and economies can benefit from access to global opportunities.

About the Author

Lord (JD) Waverley
Independent Member
House of Lords

Twitter: @LordWaverley

LinkedIn: linkedin.com/in/jdwaverley