THE DEPARTMENT FOR INTERNATIONAL TRADE (DIT) is certainly busy. On January 13th Anne-Marie Trevelyan, the international-trade minister, launched new talks with India. Just over a month later, on February 18th, she announced progress towards her goal of joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a trade deal with 11 countries around the Pacific Rim. A digital deal with Singapore is imminent. A cruel observer might dismiss all this as a shallow demonstration of the country’s post-Brexit freedoms. A kinder one might note that, although it is not yet perfectly formed, Britain’s trade policy is at last maturing into a more workable form.
Part of the evolution happened inevitably as Britain moved through the process of Brexit. The first task that DIT faced when Theresa May set it up after the June 2016 referendum was to roll over the free-trade agreements that Britain had signed up to by virtue of being a member of the European Union. Out of 39, it has now managed an impressive 33. But some of these were done only by agreeing to temporary provisions and delaying a full renegotiation. Now, negotiators are working out where they need to tidy up, which in general means reviewing the biggest and oldest FTAs. The agreement with Mexico, for example, is ripe for an update, as its provisions on services do not match up to the most modern standards.
Broader progress has happened simply through practice. The government was forced to start rebuilding its trade capacity pretty much from scratch. As of September 2021 there were 521 full-time equivalent DIT staff directly responsible for negotiating and implementing trade agreements. One person who follows discussions at the World Trade Organisation closely says that, although British representatives in Geneva were active right from the beginning, it was mainly to show that they were no longer just part of the EU delegation. Now, it seems, their interventions are more substantive.
Canny negotiators tend to gather and deploy information to their advantage—as do their business stakeholders as they seek to influence the direction of trade talks. But much to the frustration of the second group, a terror of leaks has stifled DIT’s information sharing. In July 2020 the department set up Trade Advisory Groups, as a more formal way of liaising with the outside world. Lobbyists still complain that officials often use meetings only to give updates on what they have already agreed, rather than to find out what they should be asking for. Still, it seems that engagement has improved.
Politicians have also learned that achieving the vision of post-Brexit Britain as a buccaneering free-trader is not quite as easy to realise as it sounds. The Trade Remedies Authority (TRA) was designed to make independent recommendations on defensive tariffs for the minister to accept or reject. But just weeks into the new system, the government passed emergency legislation allowing it to apply stronger protection for steel than the TRA had recommended. Now the entire framework is under review.
Pacific dreaming
At least the approach to trade deals displays elements of consistency. Although it took a while to become visible, political leaders have long coveted membership of the CPTPP. Deals done with the likes of Australia and New Zealand mean that some of the heavy lifting has already been done. Yet it will not make much of a splash. Excluding partners with which Britain already has trade deals, joining the CPTPP would cover trade worth only 0.4% of Britain’s exports between 2017 and 2020. Even so negotiators hope to conclude the deal by the end of the year, and after that to help build on its rules from within the club.
Attitudes to other partners have seen more change. Sam Lowe of Flint Global, a consultancy, remembers a sense of denial from some close to the talks that incompatibility between EU and American food-safety standards would get in the way of a transatlantic deal. That has since faded into recognition that it would, and that Britain is unlikely to relax its regime. The Biden administration’s lack of interest in a trade deal has also diverted energy into a less glamorous effort of working with individual states (potentially useful in services, though not possible in goods). If successful, this could make it easier for professionals to get qualifications mutually recognised or create more opportunities to win public-procurement contracts.
With hopes of a deal with America in the deep freeze, one with India is the next big shiny prize. India is a notoriously awkward negotiating partner, so officials are not naive about how difficult that will be. But if they were to manage it, it could be a shrewd economic move. Sophie Hale of the Resolution Foundation, a think-tank, points out that India’s demand for imported business services, an area that exploits British comparative advantage, is expected to triple by 2030. Business is more excited about a possible deal with India than about one with America, partly because there is much more regulatory uncertainty to tidy up. The CBI business lobby wants provisions to encourage free flows of data, as well as easier visas for business visitors.
As for China, the policy seems to be not to mention it at all, or else merely to point to the CPTPP as an arena in which Britain could help to set standards that one day China might move towards. But some change is happening behind the scenes. Having been scared by supply-chain vulnerabilities during the pandemic, DIT has built a team dedicated to examining supply-chain resilience in certain high-priority sectors. There are also plans to launch a forum with the United States Trade Representative to discuss topics including unfair trading practices. (That means China.)
A report by the National Audit Office, a public watchdog, notes the concerns of business associations, civil society and consumer groups over a lack of clarity in the alignment of trade policy with the government’s other objectives. Michael Gasiorek of the UK Trade Policy Observatory, a think-tank at Sussex University, hopes that in future there will be more emphasis on meaningful services-trade liberalisation. Trade policy has moved beyond a simple rejection of the EU, which remains by far Britain’s biggest trade partner. Yet there is still some way to go. ■