Britain must look beyond trade deals to turbocharge exports

Ben Digby
The Conservatives Hold Their Annual Party Conference - Day 4
Politicians like to talk about trade deals, but it's often the nitty gritty work on the ground that makes the real difference (Source: Getty)

In 1860, the Cobden-Chevalier Treaty, widely regarded as the first international trade agreement, was signed at the Foreign Office.

French duties on British manufactured goods were slashed and, in return, British duties on French wine and brandy were cut, ushering in three decades of expanding trade – and, presumably, considerable joie de vivre in Britain’s public houses.

What is less well known is that, shortly after the treaty was signed, officials began to notice a couple of mistakes. Coke and coal had been referred to as “English” instead of “British”, for example, and “harbour” was mistakenly used in place of “shipping”. The treaty was re-written, re-signed and finally sealed a few days later.

Trade deals, it seems, have never been easy. But the benefits can be substantial and enduring.

Read more: Britain has a moral duty to lead the world on free trade

International business of course looks rather different in 2016 compared to 1860. The benefits of trade agreements are now arguably more about removing so-called non-tariff barriers than cutting tariffs. Much trade is also now in services, not goods. And, as supply chains become ever more global, it’s much harder to say where something is made.

More often than not it’s most accurate to say that something was “Made in the World”. Take Airbus, headquartered in Holland, with its main group office in France, but manufacturing over 1,000 wings a year in Broughton, Flintshire. When complete, the wings are taken down the River Dee by barge, before being shipped to France for testing and assembly. Or look at the cars we all drive, which on average contain 6,000 different parts, many of which are imported.

So, if trade deals have always been complicated, they are even more so now. But fortunately there’s much more to trade than just trade deals. Reforms by national governments to improve market access for foreign investors – particularly in services trade – and the day-to-day enforcement of these regulations are often more important to British companies.

Read more: As Trump prepares to dump TPP, is globalisation going into reverse?

And every day Britain’s representatives around the world do brilliant work to encourage international governments to make it easier for our companies to do business. I’ve been fortunate to see the fruits of this work at first hand across the globe.

Last month, during the Prime Minister’s visit to India, for example, I heard about the positive steps that have been taken by Prime Minister Narendra Modi’s government to open up the defence, insurance and civil aviation sectors to more foreign direct investment, following work by our High Commission.

I also heard concerns many British investors have about the Indian government’s new model Bilateral Investment Treaty, which has the potential to reduce investor protection in a number of areas. So, as the new Department for International Trade continues its recruitment drive, ensuring our embassies are equipped with talented civil servants to do this nuts and bolts work right now will be just as important as hiring deal-makers to work on the scope of trade agreements further down the line.

Read more: Liam Fox is hiring almost 100 civil servants for his trade department

Meanwhile, in Nairobi, efforts to promote greater regulatory co-operation on insurance in East Africa could pay dividends for some of our major insurers like Prudential, which already owns businesses in Kenya and Uganda. And in Chengdu, China, where I’ve been this week, UK companies are benefiting from the government’s work to showcase British expertise in urban design, financial services, property development and manufacturing, leveraging ties with its twin city, Sheffield.

Unsurprisingly, politicians like talking about trade deals. And for the media, the publication of today’s monthly trade data will provide another opportunity to use the shorthand “trade deals” to gloss over the complicated, nitty gritty stuff.

But as I’ve seen, it’s the nitty gritty stuff which makes a real difference. There’s more to trade than trade deals.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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