In this paper Shanker Singham, Chairman of the Legatum Institute's Special Trade Commission, sets out a blueprint for pursuing trade policy after Brexit.
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- A Blueprint for UK Trade Policy PDF
- By Shanker Singham
- April 2017
- Published by the Legatum Institute
When the British people voted to leave the European Union on June 23rd, 2016, the economic backdrop was not positive. Measures of actual wealth creation had been down since before the financial crisis. Growth in industrial output has been down for over ten years. The elevated growth of the 1990s in developed countries collapsed with the 2001 recession, and then started to increase once more until 2004 when it started to slow. The Global Financial Crisis significantly worsened what was already a deteriorating situation. This was partly because the global trade agenda had been stalled. The only multilateral agreement since the 1995 launch of the World Trade Organization (“WTO”) itself was the WTO Agreement on Trade Facilitation.
This agreement which relates simply to ensuring better customs processes to facilitate trade movements took fifteen years to agree in the WTO. The more difficult discussions on services, investment, competition and the like have been stalled since 1997. Twenty years later, it is fitting that the UK, a new chess piece on the trade policy chessboard will emerge. How effective that piece will be, and precisely what moves it can make will determine the economic future not only of the UK but also the rest of the world. There is an opportunity for this unfrozen moment, or inflection point to be used to create a global economic engine as a result of unblocking the trade agenda and dealing better with barriers inside the border which are the modern impediments to trade. Before we can understand what kind of trade policy the UK should have, it is important to understand the nature and structure of the UK economy. Since 80% of the UK’s GDP is accounted for by services, and because much of its exports are services, it is critical that the UK is able to negotiate on those issues that impede services trade. These are the behind the border barriers, regulatory protection and anti-competitive market distortions that particularly thwart services exports.
WHAT DOES THAT INDEPENDENT TRADE POLICY LOOK LIKE?
The UK’s trade policy should consist of four fundamental pillars. These pillars include:
- What we can do unilaterally to create a more pro-competitive environment at home and a reduction of tariffs;
- What we can do bilaterally to sign agreements with other countries;
- What we can do plurilaterally to gather a group of like-minded countries into a broader Prosperity Zone;
- What we can do multilaterally including our WTO rectification process, and our liberalizing agenda going forwards.
Read the full report here.
About the Special Trade Commission
The Legatum Institute Special Trade Commission (STC) was created in the wake of the British vote to leave the European Union. At this critical historical juncture, the STC aims to present a roadmap for the many trade negotiations which the UK will need to undertake now. It seeks to re-focus the public discussion on Brexit to a positive conversation on opportunities, rather than challenges, while presenting empirical evidence of the dangers of not following an expansive trade negotiating path.
The STC will draw upon the talent of experienced former trade negotiators from the US, Canada, Mexico, Australia, New Zealand, and Singapore, among other nations.
In 2017, the STC will host a number of public briefings that offer advice to key stakeholders on EU negotiations.