December 27, 2016 By FTI Consulting
The government is very keen to ensure that the events of 2016 do not define Britain’s trading outlook through a lens of isolationism and protectionism. With Brexit and the Trump ascendancy, there are many uncertainties in the road ahead. The May government finds itself in the peculiar position of on the one hand, keen to promote the benefits of free trade, whilst on the other, attempting to appease Brexit voters, who might fit into the “just about managing” section of society, many of whom feel alienated by globalisation and saw the EU Referendum as a denunciation of international trade.
The founding of a new ministerial Department for International Trade was therefore an important symbolic marker therefore from Theresa May’s government – to stave off any perception that the new government was viewing Brexit as a move turning inwards. The elevation of vocal Brexiteer and stalwart Libertarian Liam Fox, has been seen by many as a strategic move by Theresa May to give the Minister an incredibly challenging task to do well- developing and negotiating free trade agreements and market access deals with non-EU countries, but all in the context of uncertainty and confusion around Britain’s Brexit position.
Fox and his department have spent the last 6 months “in listening mode” and 2017 is likely to be the year when partnerships with individual countries are prioritised, the intensity of which will heighten when Article 50 is triggered. But who will those partners be? A keen Atlanticist and believer in the “Anglosphere,” Fox’s first port of call has been the United States and the rich Commonwealth. It remains to be seen how successful any hypothetical agreements might be however, but the Department is keen to vaunt its successful initial talks.
The Cameron government had made strategic partnerships with the emerging markets a key priority for their future trade relationshipsfocusing specifically on developing closer ties with China and India. The Chinese market continues to fascinate, and this year saw the continuation of high-level dialogues between the Chancellor and Chinese Finance Minister, as well as roundtables on how to better cooperate on key industries- in particular FinTech and Financial Services.
India is certainly a key target for Theresa May. The weeks after the establishment of the new government saw no fewer than four high level visits from UK Ministers to India. In November, May’s first bilateral meeting outside of Europe was with Indian PM Narendra Modi. However, despite the warm will on the British side, the visits were marked by their lack of particular substance or purpose, with Ministers wanting more to show their goodwill than offer anything substantive. 2017 will be about translating this goodwill into action, and business leaders will likely follow suite.
Ultimately however it will be a case of prioritising either the more achievable “low hanging fruit” with other developed economies and individual member states of the European Union, or focusing more on the ambitious and long term strategic gains from the booming East, which although appetising, might be harder to reap benefit from, given the palpable barriers to entry which still exist in these markets.
Above all, the Government will need to do serious thinking on how it can connect its policy of an “inclusive economy” with one that also embraces the opportunities for enhanced international trade. Despite the government’s best efforts to project an outward-looking and internationalist policy platform, Brexit demonstrated an undercurrent of discontent from a large swathe of society who felt that globalisation was not working in their best interests. To stave off this isolationist and protectionist sentiment, British businesses and the Department for International Trade need to work together to develop a cohesive and impactful narrative for citizens across the social and political spectrum, which advocates for better trading partnerships, without which, Britain is likely to lose out – in an increasingly globalised and interconnected world.