United Kingdom

UK business demands more involvement in trade talks

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This week’s agreement-in-principle on a free trade deal between the UK and Australia should have been a moment that the Brexit divide between industry and government started to narrow — Brexiters celebrating the UK’s first “proper” post-Brexit FTA and British industry gaining better access to an international market.

As it happened, the mood music around the Downing Street rose garden announcement contained familiar notes of dissonance: brassy boosterism from the government trumpeting the “fantastic” opportunities of Brexit, with industry tutting from the cheap seats.

It wasn’t just farmers raising concerns. William Bain, the new head of trade policy at the British Chambers of Commerce, welcomed the Australia deal in principle, but quickly added that the deal “would not offset the ongoing issues with trade to the European Union”.

The cool reaction is not just about churlishness or sour Brexit grapes (all business groups keep saying they’re keen to move on from old Brexit spats and embrace the future), it’s about more fundamental worries that this government is still conducting international trade policy without sufficient regard to those that do the trading.

As Bain added in his statement, “ultimately it is businesses not governments that trade”, and the desire for much deeper consultation on trade negotiations and strategy is a recurring theme. Business wants the government to listen much more closely to its needs.

Chris Southworth, secretary-general of the International Chamber of Commerce also argues that, while perhaps understandably the first raft of UK deals — including the EU-UK TCA — prioritised speed over quality, there now needs to be a shifting of the gears.

Having rushed to complete so-called rollover deals that copied existing EU arrangements, what the UK needs as it breaks new ground is a more measured, collaborative approach that prioritises future UK interests over the rush to make quick political announcements.

The fact that cutting tariffs on four English cheeses was among the highlights of the recent deal with Norway perhaps speaks to the relative paucity of ambition — and the need to mine collective intellectual resources of forums such as the All-Party Parliamentary Group for Trade and Export Promotion.

The APPG comprises 130 organisations from business, consumers, unions, civil society and academia to make the most of the UK’s trade independence. It should be a “no brainer”, said Southworth, that the government tapped deeper into that network. “Everyone wants to help the UK prosper. Why wouldn’t the government want the best and most innovative minds at the table?” 

Lord Waverley, a crossbench peer who co-chairs the APPG, argues that “engaging with all voices on trade will not only deliver the best results, it will also heal the divisions” created by Brexit so that everyone can work together “in a common endeavour for the whole of the UK”. 

A second, related, complaint from UK business is that — unlike their international counterparts — they are not really part of the team helping to work together with the government to secure wins for British industry.

Southworth noted that on the Norway deal, for example, the UK government didn’t share a text, but his network was able to get a copy of the draft from Norwegian colleagues who were much more closely involved.

Minette Batters, boss of the National Farmers’ Union, made a similar point in a Radio 4 interview this week, saying that her opposite number in Australia, Fiona Simpson, knew about the deal two days before it was announced because she was part of the Australian trade delegation team — which duly won big on farming access.

Trade deals always create winners and losers, but the lack of hard information on the UK deal raises the general suspicion that the UK is coming off second best. It was notable that the Australian government’s press release on the deal contained details of quotas on agricultural products, while the UK’s “Ten key benefits” document was an altogether more broad-brush affair.

All this, perhaps, is a legacy of the adversarial atmosphere in which the TCA was conceived but the Department for International Trade has shown — for example in its widely applauded work on trade for the G7 summit — that it can collaborate to positive effect.

Another concern raised by Batters — and this has been a longstanding gripe of UK exporters — is the relative feebleness of UK export promotion machinery compared with countries such as Germany, France or Israel.

Asia might provide new markets for UK farmers, as international trade secretary Liz Truss contends, but to develop those markets takes five or 10 years of hard graft. Batters said Australian agricultural trade counsellors outnumbered their UK counterparts by 22 to 2. “At the moment it just seems to be about writing the press release and developing the policy later,” she added.

There are also calls for more joined-up thinking domestically. Southworth of the ICC would like to see domestic policymaking that also recognises that trade is not just a cross-border activity and that the platform needs to be built at home.

So progress needs to be made in plugging the estimated £2bn “trade finance gap” (the volume of working capital that small businesses can’t get hold of to trade) and it would help to modernise trade finance processes that are still far too trussed up in physical paperwork, partly as a legacy of 9/11.

The broader concern among industry, but also raised by MPs this week, is that, unless the UK government gets less confrontational and more collaborative with industry and the networks of APPGs, it will lead to worse deals in the long term. 

The fear already is that the rush to conclude an Australia deal has set precedents on zero-tariff access that the UK may well come to regret down the line.

Truss says the UK has world-beating levels of parliamentary scrutiny over trade deals, but experts such as Brigid Fowler at the Hansard Society and Alexander Horne, a former legal adviser to the House of Lords international agreements committee, are clear that they are in fact relatively weak. (Horne explains why in a lecture here). 

Bain of the British Chambers of Commerce summed it up thus: “Businesses remained concerned about the lack of opportunities to properly scrutinise trade deals including this one. There needs to be more in-depth industry consultation, particularly in sectors considered sensitive, to better analyse the UK’s offensive and defensive strategic interests and the impact on other agreements.”

In short, while the government can, under the current system, just ram deals through parliament and carry on regardless, without seeking deeper consent from industry and wider society — as happens in other countries — then “global Britain” will continue to be a bone of political contention, rather than a grand vision that everyone can get behind.

Brexit in numbers

Despite all the upheaval in Northern Ireland caused by Brexit and the protocol over the past 12 months the latest Northern Ireland Life and Times (NILT) survey — a rolling annual survey of NI social attitudes that’s been published every year since the 1998 peace deal was signed — still shows clear support for that Belfast/Good Friday Agreement in the region.

The 2020 survey, released last week, found a clear majority believed that the B/GFA remained the best basis for governing Northern Ireland, even if a growing number said it needed reform — up 10 points from the 2019 survey.

When it comes to the question of Irish unification, 53-55 per cent say that their preferred option for Northern Ireland’s future is to remain in the UK and that they would vote this way if there were a referendum on the topic tomorrow. This is a finding that is broadly in line with other recent polls on the subject in the region.

That’s the macro picture and one that could be said to offer some comfort to unionists. But the survey also starkly reveals the tensions and fears raised by the events of the past year among those who identify as unionists.

The number of supporters of the two main Unionist parties (DUP, UUP) who say they think that Brexit has made the unification of Ireland “more likely” has very nearly doubled since 2019. A clear sign of the anxieties provoked by the protocol and the region’s new hybrid place in the single markets of the United Kingdom and EU.

But tellingly, the reactions to this growing sense (across all groups) that unification is becoming more likely has been very different. The “non-aligned” voters (neither Unionist or nationalist) view unification more favourably now, but among unionists, the trend has been in the opposite direction: 1 in 4 say it makes them less in favour of a united Ireland, up from just 1 in 10 a year ago.

Professor Katy Hayward of Queen’s University Belfast who leads on the political attitudes sections of the NILT surveys, said this helped us understand the sociopolitical reaction to the consequences of Brexit in Northern Ireland in 2021 after the end of the transition period.

“The sense that Brexit has made Irish unification an increasingly real prospect and, for a substantial proportion, less desirable is adding a sense of urgency and momentousness to unionists’ responses to the protocol in this, Northern Ireland’s centenary year,” she added.

And finally, three unmissable Brexit stories

  • Labour shortages are causing the UK meat industry to cut production, the British Poultry Council has warned, adding businesses will soon be unable to meet orders unless the government relaxes post-Brexit immigration rules. The BPC said throughput in the industry — which usually processes 20m birds each week — had fallen 10 per cent since Easter, because of the shortages of workers across farming and processing. 

  • The most consequential fissure in the Conservative party is the gulf between Boris Johnson’s lofty visions and his short-term gambits. This faultline has been obvious in the current row with the EU over the Northern Ireland protocol, which the prime minister signed but does not wish to enforce, says Robert Shrimsley

  • In Washington, there is no bitterness or even much discussion any more of Britain’s decision to leave the EU. But nor is there the slightest qualm about engaging with the continent through Berlin or Paris, if London renders itself peripheral or eccentric, writes Janan Ganesh.

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