How can the UK be a credible trading nation without a trade policy?
This post is by Anna Sands, trade policy specialist at WWF-UK.
In the past few weeks, a “ferocious” battle has taken place in the cabinet around whether a ‘zero tariff zero quota’ trade deal should be agreed with Australia. With trade secretary Liz Truss on one side, and environment secretary George Eustice on the other, the internal conflict has played out loudly across national and international media.
The UK appears desperate, divided and uncoordinated
Is this image, of desperate, divided and, frankly, poorly co-ordinated decision making, one the UK really wants to project to negotiating partners around the world? How exactly are UK negotiators supposed to maintain a strong hand in negotiations when they can’t resolve issues internally?
None of this would have happened if the UK had reached agreement on important aspects of its trade policy in advance of entering into major negotiations that will have economic implications for decades to come.
This embarrassing showdown could have been avoided if the government had responded to calls for a published trade policy. A diverse coalition of stakeholders, including businesses, environmental organisations and consumer rights groups, have been united in asking for one, including in last week’s letter to the secretary of state.
These issues won’t go away with the Australia deal. They will come up again and again in negotiations with New Zealand, Canada, the US and other countries.
Examples from the US, New Zealand and the EU show that trade policy can be detailed, ambitious and formulated in a process that involves significant consultation.
Guiding frameworks for trade policy: the UK and its trading partners compared
The US sets red lines
US negotiators are known for using domestic red lines in negotiations. The US Congress signals to the executive branch its priorities for trade negotiations, most regularly through the Trade Promotion Authority (TPA). Through this a number of pieces of legislation that have been passed since the 1970s, each of which spells out negotiating objectives and procedures for trade deals.
In addition, Congress has, on occasion, passed additional clarifying legislation on trade issues. By 2007, enough time had passed since the passage of the most recent TPA for Congress to consider that it was failing to capture important issues, so the Bipartisan Agreement on Trade Policy was passed, ensuring that trade deals would reflect domestic priorities and thereby win Congressional approval. On the environmental front, it required compliance with a series of international environmental agreements and established that the same dispute settlement mechanism should be used for environmental chapters as for commercial provisions.
Having such a clear mandate from the legislature strengthens the hands of negotiators, as it sends a message to their partners that the US cannot fall below its red lines. Otherwise, it risks not obtaining domestic approval for the agreement.
While the US is a different constitutional system from the UK, the principle of using legislation to strengthen the position of negotiators could still apply to the UK.
New Zealand involves the public in setting its policy
New Zealand has shown how public and expert consultation can shape the country’s approach to trade. Since protests against the Trans-Pacific Partnership in 2016, the government has involved the public more closely in trade policy. It launched the Trade For All strategy in 2018, starting with a broad consultation process which lasted several months. This resulted in a new advisory board which provided the government with an independent report, identifying recommendations for trade policy which the government subsequently accepted.
The report recommended an “anticipatory governance framework” for trade, involving processes to determine trade policy and its links to domestic policies on environment, digitisation, services, etc, before trade deals are negotiated. This avoids putting future governments in a position where they would need to choose between manifesto commitments and obligations set in trade agreements.
The Trade for All Board recognised that trade policy is not static and needs regular review. It recommended an outcome assessment every five years to check that trade policy is aligned with the government’s broader economic, social and environmental objectives, above and beyond independent impact assessments of individual trade deals.
This shows that trade policy can be created in a thoroughly consulted process to gain public trust,and that its continued development can respond to new policy challenges as they arise.
The EU takes a principled approach
The European Commission recently published an extensive trade strategy, which includes high level foreign policy objectives, detailed commitments for future trade agreements and measures supporting trade policy. It followed a public consultation, with input from the European Parliament, member states and civil society, and aims to integrate the European Green New Deal with trade policy, for example, with a chapter on sustainable food systems in future trade agreements. The trade strategy also refers to measures which regulate trade but are not directly part of trade agreements. These include legislation addressing deforestation and due diligence obligations for companies on the environment, labour and human rights. It says imports will need to comply with relevant EU regulations and standards, and that the commission will “pioneer work on developing standards for sustainable growth”.
This shows a principled approach to trade. In being clear about its priorities and core values, the EU recognises it can exercise leadership on environment and trade, and encourage other countries to follow its example.
The UK needs a stated trade policy to be credible
So other major trading nations are taking proactive, transparent, principled and consistent approaches to trade. This makes them stronger in negotiations, as it gives them red lines to fall back on.
If no further action is taken to create a UK trade policy, decisions on significant issues will continue to play out as shambolic showdowns at the highest level of government, revealing weakness and a lack of cohesion which will undermine the UK’s credibility on the international stage.
This needs to be sorted out now before we continue difficult negotiations with partners across the world who, by contrast, know exactly what they want. A well consulted, stated trade policy is the only way to do that.