In a speech last month, Liz Truss, the then International Trade Secretary, set out Britain’s new trade policy. She said the strategy is grounded in the fundamental changes happening across the world.
Britain’s new trade policy
Firstly, the centre of gravity in the global economy is moving East. Almost 60% of the world’s high-income earners are set to be in Asia by 2030 which means consumers who want to buy high-quality goods and services that Britain sells, whether it’s technology, financial services, or high-quality manufactured goods. Secondly, demand for digital services is set to double in this decade and demand is booming for all types of key industries that Britain specialises in, from life sciences to media, in a global market which could be worth £9 trillion by 2030. So the strategy is to grow trade with the fastest growing parts of the world and to turbocharge trade, particularly in digital and services. The way forward, she said, is free trade and free enterprise.
Free Trade Agreements
The Government’s ambition is to sign free trade agreements with countries covering 80% of UK trade by the end of 2022. Trade deals have already been agreed with 68 countries plus the EU worth £744 billion. The Office for Investment has been established to attract the world’s top investors and green investment will be pursued through the COP26 summit.
The CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Parnership)
The UK had its first virtual negotiation meeting with all 11 members of CPTPP at the end of September. The CPTPP has a population of 500 million people and had a combined GDP of £9 trillion in 2019 with some of the world’s biggest and fastest-growing economies across Asia-Pacific and the Americas. The benefits of joining could mean tariff-free trade for 99.9% of UK exports, including food and drink, and cars, while also creating new opportunities for modern industries. The initial talks focused on how the UK meets the standards set out in the CPTPP agreement.
The scope and ambition for a UK-India trade agreement are being discussed following the close of the DIT consultation at the end of August. Steps have been agreed to get ready to launch negotiations later this year including a series of trade working groups to help both sides better understand each other’s position on potential chapter areas in a trade deal such as tariffs, standards, IP and data regulation. Trade between the UK and India was around £23 billion in 2019 which both countries want to double by 2030.
Canada and Mexico
The UK has already agreed Trade Continuity Agreements with Canada and Mexico which provide the basis for negotiating new and more ambitious trade deals. DIT has now received input from businesses which it will publish before beginning negotiations with both countries to upgrade trade arrangements later this year.
Gulf Cooperation Council (GCC)
The new International Trade Secretary Anne-Marie Trevelyan has launched a consultation for the public and businesses to give their views ahead of negotiations starting in 2022 with the GCC. The GCC is a political and economic alliance between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Bilateral trade with the GCC was worth over £30 billion in 2020 and there were almost £22 billion of UK exports. An advanced trade deal would take the relationship to the next level in industries such as digital trade, services and green growth. British businesses should find new opportunities in areas like renewable energy, financial and digital services, education and healthcare, food and drink. The consultation which will conclude on 14 January 2022 can be accessed here.