The UK is setting out on the path of an independent trade policy at a difficult time. Public interest in trade policy has never been greater, with US political rejection of a trade agreement negotiated by their government the prime example of the challenge of successfully pursuing a long-term strategy. The UK has a tradition of outward-oriented economic policy, but trade agreements are seen by many as a problem.
Trade policy always has the potential for controversy. Domestic and international interests ask for the protection or promotion of their interests, and this is not fully possible, not least given some are contradictory. Successfully managing these trade-offs is at the heart of effective trade policy.
Disappointingly the management of these trade-offs has scarcely been discussed by UK politicians of either government or opposition parties. Should this situation continue we can expect a UK trade policy agenda to run into difficulty. A new Free Trade Agreement (FTA) with the US would present the greatest risk. Likely US asks in terms of different agricultural standards have already been widely discussed and at least as significant could be any perceived risk to the NHS from asks such as transparency in medicine pricing. Even an agreement with New Zealand could be controversial if it was thought to threaten UK farmers. It won’t be possible to avoid all controversy, but such controversy need not stop trade agreements, as shown by the other signatories to the Trans Pacific Partnership (TPP) who kept going after the US withdrew.
Why did these countries succeed given in many cases they also faced significant domestic opposition? We have identified six pillars of trade policy which are crucial to the success of a country’s trade policy, and against which we have evaluated UK performance to date. Achieving a degree of consensus in trade policy sufficient to overcome inevitable controversies is the first of these. Given the lack of discussion to date this is the area we judge to require most urgent attention.
The UK starts with some strengths in developing trade policy. Most importantly there is a relatively strong support for trade in general, reflected in consistent UK support for trade liberalisation within the EU through governments led by different political parties, and more recently the relative agreement on maintaining existing EU trade agreements after Brexit. A trade policy combining this with the maintenance of high UK standards would, for example, be likely to attract widespread support, particularly if built upon open, clear management of the required trade-offs. But this cannot be taken for granted; rather the UK government must engage widely following best practice.
We will return to this scorecard at regular intervals to monitor ongoing progress.
In leaving the European Union the UK will conduct a fully independent trade policy for the first time since January 1973. This independent trade policy may come into force gradually, with an Implementation Period from March 2019 to December 2020 seeing the UK in a continuing Customs Union with the EU, prior to having full control and the freedom to implement new Free Trade Agreements (FTAs) from January 2021.
This paper will assess the UK’s readiness to successfully run a fully independent trade policy. In the next section we define a measurement framework based around six pillars we have observed as being crucial to success globally. These are not the specifics of which agreements or policies should be pursued, but rather a set of criteria that reflect whether a country has a sufficient and realistic understanding of their priorities and constraints in implementing a trade policy. We then consider how the UK is currently performing against these criteria, accepting that one would expect this to be to a degree a work in progress. However, this analysis should inform the priorities for future work.
We intend to return to the UK performance against these criteria on a periodic basis. Our next survey is proposed for March 2019, on the eve of the UK leaving the EU. A third survey is currently planned for Autumn 2020, as the UK prepares to exit the Implementation Period. By this date it is envisaged that the UK will be on the verge of agreeing independent trade agreements. Given the length of time such negotiations take, they will need to commence soon. First, though, we consider the legacy of UK trade policy within the EU to provide some insight once we consider the pillars.
Existing UK Trade Policy
UK trade policy after Brexit won’t start from scratch. While a member of the EU not all elements of the UK’s Trade Policy were run by the EU. A brief summary of UK against EU elements is outlined below:
a. The EU carried out all trade negotiations, and had exclusive competence over trade defence initiatives;
b. The UK were active players in trade debates within the EU, pushing liberalisation in general, and their own priorities such as Scotch Whisky and increased services market access – these priorities were informed by domestic consultation
c. Parliament was informed of trade policy through updates to EU scrutiny committees, but its only formal power was to be able to block ratification;
d. UK embassies raised various non-tariff barriers both independently and through the EU, they were also typically strong advocates for particular EU trade agreements;
e. The UK is a member of the WTO, but the EU represents all member states;
f. Trade promotion remains an exclusive member state competence, although the UK sometimes uses EU material to encourage take-up of trade agreements;
g. Mutual Recognition Agreements (MRAs) are largely negotiated by the EU, but agreements in some areas such as professional qualifications can be carried out by member states;
h. Since the Treaty of Lisbon, the EU have the competence to negotiate investment protection agreements, however prior to this the UK carried out these negotiations;
i. Investment promotion has always been a UK competence.
Within this framework, the key points of UK trade policy were as follows:
a. Successive UK governments across political parties strongly supported trade liberalisation, within the EU and globally. For example, the UK was one of the strongest supporters of TTIP talks, and supportive articles were published by politicians from each of the three main political parties. The UK was similarly enthusiastic for many years about pushing the Doha Round at the WTO, and strongly opposed moves towards conditioning access to EU public procurement on reciprocity;
b. Bilateral Investment Treaties (BITs) tended to be agreed with non-OECD member countries;
c. In trade defence the UK were strong supporters of the Lesser Duty Rule, and resisted EU attempts to make changes to those;
d. A major offensive interest beyond pushing for trade agreements was removing barriers to Scotch Whisky sales, including protection of the brand and removal of non-tariff barriers. Other offensive interests included business and financial services, and automotive;
e. The UK was particularly defensive on temporary movement of persons (Mode 4) from 2010, indeed this was blamed by some for the failure of trade talks with India (the UK’s key offensive and defensive interests are virtually a mirror image of those for India);
f. Promoting development has been another key focus of UK trade policy.
These positions could be a starting point for future trade policy, noting in particular the consistent support for trade liberalisation. We already see this for example in the support for the aim of maintaining/replicating existing EU trade agreements. However, caution should be noted. There may have been some degree of tacit collaboration with other member states in the way priorities were expressed. For example, it is possible that the UK did not need to be defensive on agriculture or cultural services as other EU Member States could be relied upon to do this. Therefore, when UK trade policy is independent of the EU, defensive positions of the UK may be expressed with greater force.
More importantly, the UK did not have to directly evaluate the interests of different sectors against each other within trade agreements, as this was done at the EU level. The UK put forward priorities, the EU negotiators then considered these against those of other member states and what was achievable. But implementing an independent trade policy, particularly one focusing on trade liberalisation, requires countries to make trade-offs between sectors, which can often be controversial. This is at the heart of the trade policy pillars to which we now turn.
 In large part the presence of Scotch as a particular if unstated priority of UK Government is due to the strong work of the Scotch Whisky Association, who monitor potential non-tariff barriers and impersonations in all markets. No other grouping was as active in pre-referendum UK trade policy
 The UK-Colombia BIT was agreed in 2010, and entered into force in 2014
 See the 2011 UK Government White Paper “Trade and Investment for Growth” – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/228941/8015.pdf
 See for example https://www.independent.co.uk/voices/comment/ignore-the-critics-ttip-is-something-the-left-should-fight-for-9786820.html from John Healey MP and https://www.telegraph.co.uk/news/politics/11173369/This-trade-deal-with-America-would-have-Churchill-beaming.html from Boris Johnson (then Mayor of London)
 For list of UK BITs see http://investmentpolicyhub.unctad.org/IIA/CountryBits/221
 This story of 2010 previews what happened in terms of UK attitudes to EU-India talks https://www.telegraph.co.uk/news/uknews/immigration/8051349/India-trade-deal-with-EU-will-allow-thousands-of-immigrants-into-Britain.html