So what then can the government do about it? The last government used to have a trade policy, which was completing the Doha trade round. In fact, it was so wedded to this policy that it stuck to it even after Doha had collapsed. The question is, what policy should be put in its place? There is no big multilateral trade round that we could sign up to, even if we wanted to. In any case, the new government is far more wedded to bilateral trade deals, such as the free trade agreement between the EU and South Korea that came into force earlier this year. It has a point: multilateral deals involving every country in the world are so unwieldy that they tend to yield very little.
But this begs the question of what the UK government can do. Trade, you see, is an EU competence. That means that Brussels officials are meant to do all the trade negotiations on our behalf. But we have a particular national interest in trade that is not exactly the same as other EU countries. In particular, our strength isn’t exports of capital goods or consumer goods or agricultural produce, but services. And of that, financial and professional services are by far the biggest component.
Financial and professional services produced a £40bn trade surplus last year, larger than the combined surpluses of all other net exporting industries in the UK (the much-trumpeted pharmaceuticals came in second at a mere £7bn). It is clear what our national trade strategy should be: opening up the global trade in financial and professional services. Indeed, the government does persistently lobby the EU to make trade in financial and professional services its priority.
But there is a lot more the government is able to do. Many barriers to trade in financial and professional services are not the competence of the EU, and the UK government could get more heavily engaged.
For example, one of the critical issues for UK companies is recognition of professional qualifications – getting India to give greater recognition to UK-trained lawyers would be a major boost to our legal services exports, and isn’t something we have to rely on Brussels to do for us.
China recently made London the sole offshore renminbi trading hub, after Hong Kong – a great boost to London and its long-term prospects. HSBC has been successful in winning licences from the Chinese government that have made US banks green with envy.
The government has rightly fallen out of love with big, all-encompassing multilateral trade deals. Instead, it is the little victories that the UK must focus on, chipping away at the many barriers to trade in services with whatever tools it has at its disposal.
Anthony Browne is the former director of the leading think tank Policy Exchange. email@example.com