The Changing World: when trade and business meet geopolitics
Open trade governed under commonly agreed rules is under threat. World Trade Organisation members are unable to agree to new rules in crucial areas such as climate change and subsidies, while its appeals body is non-operational due to a US boycott.
Meanwhile, Russia’s invasion of Ukraine has intensified concerns in western countries about their own economic security, particularly with regard to China. These concerns cover a range of areas including security threats, over-dependence on materials necessary for the transition to a net-zero economy, and economic competition for manufacturing jobs.
No longer a member of one of the world’s trade superpowers, the UK finds itself as a middle power, dependent on global trade rules, but with only a limited amount of influence over them. Joining the Comprehensive and Progressive agreements for a Trans-Pacific Partnership (CPTPP) however brings us together with similar countries such as Canada and Japan, in its own rules structures.
Questions for discussion
How is the World Trade Organisation likely to develop in the coming years?
What impact will this have on UK businesses?
In what groupings can the UK best influence the development of trade rules in coming years?
What is the most we can hope to achieve? Is further ‘decoupling’ between ‘the west’ and China inevitable, and what will this mean for UK business?
Policy Options
Trade Unlocked 2023’s policy partner, the UK Trade and Business Commission, has recently published a comprehensive report containing policy recommendations to the UK Government.
As part of the report, the UK Trade and Business Commission recommends, given the UK’s strengths and historic role as a convenor of multilateral discussions, that ‘the UK Government should convene a trade policy dialogue of similar “middle powers” of global trade seeking to protect global trade rules’.
However, to play a credible role in global trade discussions that are currently taking place, the UK’s dialogue with other countries needs to be significantly improved. For this reason, the report recommends that the UK ‘seek to establish a trade forum as part of the European Political Community’, and ‘initiate[s] and maintain[s] regular dialogues with individual EU Member States’, and finally ‘work[s] to strengthen its Transatlantic dialogue with the US’.
Also important for UK credibility on global trade issues will be coherence on our trade policies, as well as a coherent overall approach to regulation by alignment with the EU . This would include, for example, the low-carbon transition, and a push to ‘design and implement a UK Carbon Border Adjustment Mechanism (CBAM) that aligns with the EU CBAM scheme’.
Finally, the report recommends ‘maintain[ing] [the UK’s] generous trading scheme for developing countries’, which would in turn create a strong basis for the UK to ‘join global efforts to guarantee free trade in critical raw materials’.