Business

Use Brexit to promote free trade and prosperity across the world

The aid deal between the UK and Saudi Arabia announced last Friday, to coincide with Crown Prince Mohammed bin Salman’s visit, ruffled many feathers within the government, as Downing Street sought to defend the visit, saying that trade deals worth £65bn had also been agreed.

Last week, we also saw the Trump administration push forward with its plan for 25 per cent tariffs on imports of steel and a 10 per cent tariff on aluminium, albeit with some exemptions. The EU responded with retaliatory threats, with Jean-Claude Juncker declaring “we can do stupid too”.

A trend is now emerging in which hard-nosed assessments of economic interests are being combined with diplomacy and defence strategy; a message that “aid” and “trade” are going to be used more strategically in the pursuit of national economic interests.

Read more: Despite what Trump says, trade deficits don’t actually have to be a problem

This strategy can be seen in the scale and ambition of China’s Belt and Road initiative, announced by President Xi Jinping in 2013.

This huge infrastructure, investment and development programme aims to create a new land-based “Silk Road” across the Eurasian landmass and maritime equivalent, from south-east Asia right across to the Mediterranean. This speaks to the country’s global ambitions.

Britain needs to give itself a chance to thrive in this changing world by finding a place in the new economic ecosystem developing in Asia, Africa, and other emerging markets.

When it comes to foreign aid, the UK is the second most generous country in the world, and by 2021 we are expected to give £14.5bn to the poorest countries through the government alone (not including the huge volume of private donations to charities). This speaks to the compassion and decency of the British people.

But remember the twist on the old mantra, “give a man a fish and he’ll feed himself for a day, give a man a fishing rod and he’ll feed himself for a lifetime”. In this context, aid is the fish, and trade is the fishing rod.

Developing countries are already finding their place in the world. These countries now constitute just under half (48 per cent) of all world trade, representing an increase from 33 per cent in 2000.

It is no coincidence that, during that same period, the number of people living in extreme poverty has fallen dramatically. Trade has grown the number and the quality of the jobs in developing countries, stimulated economic growth, and improved productivity.

That means that, with further support from major economies such as ours, genuine prosperity could be just around the corner.

Post-Brexit, we will have the opportunity to develop an independent trade policy – and with the strong suggestion this week that the UK will be able to sign its own trade deals before the transition period expires after all, now is the time to pour resources into the Department for International Trade.

While an independent trade policy should of course benefit the UK, we should reject the nationalistic rhetoric of Donald Trump and other protectionists, and instead use this new freedom to provide moral leadership, working more closely with developing countries to help them trade their way to prosperity.

This is exactly why, in 2010, the UK reorientated its diplomatic and commercial focus in the direction of India and China. This reorientation should now spread to Africa and elsewhere across Asia.

By lowering costs relating to trade, we also allow for deeper and stronger integration of markets, making products and services cheaper for both parties, and helping the poor. And by establishing trade deals and routes with developing economies, we can help to develop the infrastructure in those areas to make it necessary for that trade to run seamlessly.

This would in itself prove that an economic argument can also be a moral one. It could demonstrate that Britain is not going to turn in on itself after Brexit; instead it is going to be a senior voice in rejecting protectionist global trends and be a true leader in making the case for free trade.

In the future, 90 per cent of global growth will come from outside the EU, and it makes sense for the UK to find new customers by developing new trade ties. We should be confident in our ability to take advantage of those opportunities.

“Global Britain” is the government’s rallying call. But it must be more than a slogan, and should be about something more than just our own national success. It should be based on a deep-seated desire to prove that free trade alleviates poverty, secures peace and instigates prosperity – for everyone.

Read more: Brexit latest: UK will be able to strike deals during transition

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Business

Use Brexit to promote free trade and prosperity across the world

The aid deal between the UK and Saudi Arabia announced last Friday, to coincide with Crown Prince Mohammed bin Salman’s visit, ruffled many feathers within the government, as Downing Street sought to defend the visit, saying that trade deals worth £65bn had also been agreed.

Last week, we also saw the Trump administration push forward with its plan for 25 per cent tariffs on imports of steel and a 10 per cent tariff on aluminium, albeit with some exemptions. The EU responded with retaliatory threats, with Jean-Claude Juncker declaring “we can do stupid too”.

A trend is now emerging in which hard-nosed assessments of economic interests are being combined with diplomacy and defence strategy; a message that “aid” and “trade” are going to be used more strategically in the pursuit of national economic interests.

Read more: Despite what Trump says, trade deficits don’t actually have to be a problem

This strategy can be seen in the scale and ambition of China’s Belt and Road initiative, announced by President Xi Jinping in 2013.

This huge infrastructure, investment and development programme aims to create a new land-based “Silk Road” across the Eurasian landmass and maritime equivalent, from south-east Asia right across to the Mediterranean. This speaks to the country’s global ambitions.

Britain needs to give itself a chance to thrive in this changing world by finding a place in the new economic ecosystem developing in Asia, Africa, and other emerging markets.

When it comes to foreign aid, the UK is the second most generous country in the world, and by 2021 we are expected to give £14.5bn to the poorest countries through the government alone (not including the huge volume of private donations to charities). This speaks to the compassion and decency of the British people. (more…)

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