One of the major purported benefits of Brexit was that the UK would be able to regain control of its international trade policy. Almost four years on from completing its departure from the bloc, the UK has certainly been busy forging its new identity as an independent trading nation, and free trade agreements (FTA) have been a key part of this.
This was especially the case in 2023 when the UK’s deals with Australia and New Zealand – its first completely new FTAs – entered into force. The UK also reached an agreement to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) - a bloc of 11 Pacific nations including both Australia and New Zealand, as well as Japan, Canada and Mexico, among others.
However, while 2023’s milestones shouldn’t be overlooked, it’s too early for a judgement as to what impact these FTAs will have on businesses’ ability to trade overseas.
“It’s difficult to analyse and understand the real impact and utilisation of the new FTAs, including those with Australia and New Zealand, because we don’t have enough data yet,” says Henriette Gjaerde, trade policy and engagement lead at the Institute of Export & International Trade. She says it can take “quite a few years” until the impact of FTAs becomes clear, but says they should be beneficial for UK businesses.
“By reducing tariffs, increased market access, and introducing facilitated trade and customs procedures, such as cutting down processing time required on goods entering a country, they can be beneficial,” she says. “They can reduce the time and resources needed, thereby make it more cost-effective, for UK businesses to export to countries where there is an FTA in force.”
‘Strategic’ importance
Gjaerde’s colleague, Anna Sofia German, a trade agreement specialist at IOE&IT, agrees it will probably take up to a decade to get a “clearer picture” of the economic impact of the UK’s FTAs, but they should lead to “more and better trade”.
German says that the UK’s FTAs are “setting high standards for future agreements” when it comes to opportunities around trade digitalisation, innovation, gender inclusivity and climate change, while the UK’s accession to CPTPP shows the UK is also playing a “proactive role in shifting global trade relations”.
Gjaerde agrees that deals like the CPTPP have broader “strategic” importance, while also giving businesses access to “wider customer bases and an opportunity to diversify their supply chains”.
Moving beyond FTAs
However, in 2023 there were also signs that the UK was starting to look beyond FTAs towards other policy initiatives, particularly after business and trade secretary Kemi Badenoch noted towards the end of 2022 that trade deals “are not the only thing”.
Hemita Bhatti, the IOE&IT’s new head of trade policy, notes that the UK has already started to look at other kinds of deals, including the state-level agreements its secured with US states such as Florida and Washington. She also points to more specific digital trade and mutual recognition agreements, including those the UK has signed with Singapore, Switzerland and Ukraine in recent years.
There’s also the need to provide domestic support for UK businesses to trade, which Bhatti says has been in evidence over the last 12 months, including sector-specific support delivered through the Export Support Service. Such support is needed to ensure businesses can make the most of the trade opportunities the government is creating, whether through FTAs or otherwise.
“There’s been a lot of focus on the implementation and utilisation of FTAs,” she says. “Government has been developing business guides, for example, and that’s a great example of making trade policy achievements useful for businesses, particularly as a lot of businesses are not familiar with the legal language that is used in these agreements.”
Such guidance isn’t just useful for FTA utilisation, but is also of importance for businesses grappling with new export control rules and sanctions, particularly as the government has started to put “greater focus on national security and resilience” when it comes to trade policy, Bhatti says,
German and Gjaerde agree that giving businesses access to the information and skills training needed to navigate the UK’s changing trade landscape is important.
German cites the Department for Business and Trade’s (DBT) International Trade Week programme of events and webinars as an example of businesses, policymakers and trade experts “engaging in conversations addressing key trade issues.” Gjaerde also notes that the Electronic Trade Documents Act, which entered into force in the UK in September, is an example of how domestic legislation can “massively ease trade for businesses”.
Digitalisation and services
IOE&IT has continued to represent its members and the wider trader community on trade policy issues such as FTA utilisation, trade digitalisation and trade in services in 2023.
It published two policy papers, one in March on ‘TradeTech: A pathway for businesses to seize trade opportunities’ and the second in September on ‘Global horizons: Realising the services export potential of UK nations and regions’.
Gjaerde notes that March’s paper was about looking at how new technologies could reduce paperwork for businesses, to “reduce cost, improve efficiency and open up new markets, especially for SMEs”. German notes that September’s report highlights the “inequality in services exports across the country”.
“It was important for us to highlight in our policy paper that these exports are largely concentrated in certain regions of the country, which translates into concentrated benefits of free trade,” says German. “Starting the conversation on solutions to this issue, such as our paper’s proposal to create a regional trade in services taskforce, can lead us to ameliorate these inequalities.”
Although Bhatti joined IOE&IT after the publication of the reports, she sees that there is an important link between the two policy areas.
“The two go hand in glove, in that you’re trying to look at policy initiatives that boost the potential for businesses to export,” she says. “Digitalisation can certainly create accessibility across the nations and regions, for both goods and services trade, that would not have been possible otherwise.”
Trade as a force for good
IOE&IT has also continued its partnerships with multilateral bodies such as the World Trade Organization (WTO) and International Trade Centre (ITC) in 2023, including facilitating a panel of indigenous female entrepreneurs from Ecuador and New Zealand at the WTO Public Forum in Geneva in September. The panel discussed ‘Sustainable Trade: Indigenous Women’s Green Influence’.
Gjaerde said that IOE&IT’s work internationally to promote inclusive trade is important in ensuring “the benefits of trade are widely shared, better balanced and contribute to fairer global trading systems”.
“Trade can be a force for good in the world,” agrees German. “We must make the effort to make sure it is as inclusive as can be. It is important that we continue to give women and indigenous communities, and other marginalised groups, the platform to share their stories to ensure that trade policy also benefits their unique experiences.”
