Election 2017: Vote for trade

The so-called Brexit election has so far been woefully lacking in any serious discussion of Brexit. It has also been notably short of any vision for life after Brexit. In the final days of the campaign, the Conservatives have started to promote their ideas on how to make trade policy outside the EU.

Taking back control

Our report Taking Back Control of Trade Policy sets out the key ingredients for effective trade policy in government. It’s something we’ve not needed to do for decades and a capability we will need to build quickly. A UK government which is well-equipped to make trade deals will be important in attracting to potential partners; other countries will be reluctant to start the arduous process of negotiations with a country which does not look as though it is negotiation ready. They will want confidence that business has been properly engaged on the substance of a deal, but also that any trade deal is not going to hit roadblocks in ratification. That means making sure that other interested parties – from environmental non-governmental organisations to consumers to trade unions to the devolved administrations – have had their views sufficiently considered to avoid derailing the final settlement. 

It is possible that the new ‘Board of Trade’ could perform some of that function – though it is supposed to be made up of businessmen and politicians with no mention of other interests. The Conservatives make specific reference to ensuring that “trade policy is directly influenced by every part of our United Kingdom” and the membership of the Board “will be specifically charged with ensuring we increase exports from Scotland, Wales and Northern Ireland”. Talk of increased exports is unlikely to generate much opposition, but the Board’s job will be much tougher when it needs to make trade-offs between different regions, with winners and losers.  

There is little point to trade deals unless they are used. That is why business needs to be consulted upfront: there is no point wasting negotiating capital on complex provisions that don’t meet business needs – and indeed rates of “utilisation” can be very different between countries that are well geared up to do this and those that are not. One advantage of bringing the old UK Trade and Investment into the Department for International Trade is that they can both feed into the content of deals – and then help British business exploit those deals. The proposed “regional overseas network of Her Majesty’s Trade Commissioners” suggests a more beefed up external role.

Taking back responsibility

Labour also promises a “network of regional trade and investment champions” and adds in export incentives and support for small and medium enterprises.

But it has a much more expansive view of what trade policy is about. Indeed, its manifesto references are over twice as long as in the Conservative one. Labour, too, talks about involving the devolved administrations  but in its case, in the development of the sort of trade and industrial strategy we recommend in our report. The party recognises the need for a “national debate” about trade policy, explicitly recognises the importance of building “human rights and social policy into trade policy", and the need to “safeguard the right to regulate in the public interest and to protect public services”.

This suggests that Labour has a better grasp than the Conservatives that taking back control of trade is not as uncontroversial as it sounds. The freedom to set trade policy also means that politicians have to take responsibility for the choices they make on trade – a point made by the panel at our trade policy launch event. As Allie Renison from the Institute for Directors points out, although the UK sees itself as a great liberaliser on trade, the UK also generated most of the (negative) input to the consultation on the proposed EU-US trade deal.  

The future of trade policy

Successful future trade policy will need to blend both the “what” and the “how”. There is no point having big delivery machinery if you can’t get agreement on the right policy; similarly, there is no point having a strategy without the capability to deliver the benefits. And in the short run the absolute priority is, as the Conservatives say, to replicate existing EU free trade agreements to avoid losing those current benefits after Brexit, rather than embark on new deals with hypothetical benefits.

But the election marks a small recognition that Brexit means trade policy will be a future electoral battleground. There will be no place for hiding behind the European Commission – or the French as one of our audience put it – in post-Brexit trade policy. Governments will be directly accountable for the choices and trade-offs they make. By the next election, trade could be a significant dividing line.