WALES IN THE WORLD: THE ROLE OF THE UK
GOVERNMENT IN PROMOTING WALES ABROAD
TRADE AND INVESTMENT
13. Promoting trade and investment is the single
largest activity of the Foreign and Commonwealth Office (FCO),
accounting for 39 per cent of its frontline overseas staff activity.
Much of this work is now carried out under the auspices of British
Trade International (BTI), a new body created in 2000 to bring
together the various components of trade and investment promotion
for the UK.
BTI consists of two branches: Trade Partners UK, which deals with
trade development, trade promotion, outward investment and investment
promotion, and Invest-UK (formerly the Invest in Britain Bureau),
which promotes inward investment to the UK.
A representative of the National Assembly sits on the Board of
14. In June 2000, the National Assembly established
WalesTrade International, which brought together the overseas
trade work which was previously carried out by the National Assembly
and the Welsh Development Agency (WDA) and operates under the
direct control of the Assembly. The WDA retained its overseas
inward investment work, so the split between WalesTrade International
and the WDA more or less reflects the split between Trade Partners
UK and Invest-UK (I-UK).
WalesTrade International has two staff based overseas,
and the WDA has 25.
BTI has a network of 1,400 overseas staff, based in more than
200 posts and covering roughly 140 overseas markets.
15. Although they are still relatively new organisations,
the evidence suggests that Trade Partners UK and WalesTrade International
are working well together. Officials from the NAW went so far
as to describe their working relationship with Trade Partners
UK as "excellent".
The Chief Executive of BTI told us that they has had a good deal
of success with a number of products from Wales, including contracts
in Brazil and South Africa for a Merthyr Tydfil firm which makes
heavy lifting equipment, the export of camera equipment for use
in large stadiums and the export of self-adhesive film used in
the aircraft industry to the Middle East and Latin America.
One reason for the good relations between Trade Partners UK and
WalesTrade International might be that Trade Partners UK was first
established at about the same time that devolution was taking
place, and efforts were made to involve the devolved administrations
right from the start.
We are pleased that WalesTrade International and Trade Partners
UK are working well together.
16. We have already reported during this Parliament
on investment in industry in Wales.
We found that Wales had been markedly more successful than other
parts of the UK over the last twenty years in attracting investment
in manufacturing from overseas.
Although its share of inward investment into the UK had fallen
since 1991 (from 19 per cent to 11 per cent), it was still far
higher than its share of the population (five per cent).
Inward investment has been an effective way of creating large
numbers of jobs to replace those lost in the coal and steel industries
in the 1970s and 1980s, and the importance of this consideration
is once again highlighted by the current problems with the steel
industry in Wales.
17. The granting of Objective 1 status to two-thirds
of the country provides an opportunity further to enhance Wales's
attractiveness as a strong business environment and an ideal location
for foreign investors. We heard evidence from Hicks Randles ,
a firm of chartered accountants in Mold who are developing a website
called Click-Cymru which is designed to reach out to the Welsh
expatriate community to promote Wales and Welsh business abroad.
They are hoping to receive Objective 1 funding for the project,
which is being undertaken in partnership with CELTEC.
We also heard of other initiatives to promote Wales abroad which
were seeking Objective 1 funding, some led by public-sector organisations
and others led by small and medium-sized business such as Hicks
Randles. For small businesses, there is a limit to the amount
of time and money they can invest in a project before receiving
funding and we are concerned that delays in the distribution of
Objective 1 funds may lead to some projects led by small and medium-sized
enterprises being lost entirely. Objective 1 funds in Wales are
distributed by the Wales European Funding Office (WEFO), an executive
agency of the National Assembly for Wales. We invite the Assembly
to examine the resources available to WEFO for administering the
Objective 1 budget.
18. Unfortunately, witnesses' confidence in Trade
Partners UK was not entirely matched when it came to Invest-UK,
British Trade International's inward investment wing. The Welsh
Development Agency (WDA) works closely with Invest-UK and believes
that it has a successful track record, but they are concerned
that Wales has on occasion been poorly supported by Invest-UK.
They allege that a number of high profile investment missions
from Japan and Korea have not included Wales on their itinerary
despite the fact that both countries have strong business links
with Wales and despite lobbying from the WDA.
To some extent, this is reflected in Invest-UK's outcomes: of
757 inward investment decisions recorded by them in 1999-2000,
only 45 went to Wales.
At just under six per cent of the total, this is considerably
smaller than Wales's overall share of UK inward investment, suggesting
that investors who approach the UK through Invest-UK are less
likely to invest in Wales than those who approach it via some
19. The First Minister told us that relations between
the WDA and the Invest in Britain Bureau has been "pretty
unhealthy" for a long time, but that since the creation of
BTI relations with I-UK had begun to improve. The Assembly's Director
of Economic Affairs thought the tensions stemmed from natural
rivalry between organisations representing different areas.
The Chief Executive of BTI told us that I-UK worked very closely
with the WDAthey were in "daily, if not hourly contact".
He thought that working relations were good and pointed to the
example of the First Minister's visit to Japan in September 2000
and to a number of trade missions that yearfor mobile telecoms,
autocomponents, flat panel display and other manufacturingwhich
had visited Wales.
Invest-UK's main argument about the level of support it provides
to the WDA is that it is not for them to direct potential investors
to any particular part of the UK. Investors make their own decisions,
based on their business needs and what each region has to offer.
I-UK's job is to maximise the total size of the "investment
20. British Trade International is still a young
organisation but there is encouraging evidence that since its
creation relations between the WDA and I-UK have been better than
those with I-UK's predecessor, the Invest in Britain Bureau. We
accept that Invest-UK's role is to maximise the total amount of
investment in the UK and this emphasises the importance of promoting
Wales abroad, alongside the UK as a whole. This is largely a matter
for the National Assembly for Wales and its sponsored public bodies.
28 Ev. p. 85, paragraph 32. Back
p. 87, paragraph 49. Back
59. The representative is the NAW's Director of Economic Affairs
(Ev. p. 2, paragraph 16). Back
are based in the USA and Singapore, see Ev. p.3, paragraph 17. Back
p. 131. Back
pp. 87-88. Back
Report from the Welsh Affairs Committee, Session 1997-98, HC 821,
Investment in Industry in Wales. Back
"inward investment" we mean foreign direct investment,
not investment in Wales from other parts of the UK. The Welsh
Development Agency uses the term to describe investment from anywhere
outside Wales. Back
Report from the Welsh Affairs Committee, Session 1997-98, HC 821,
Investment in Industry in Wales, paragraph 5. Back
of Evidence taken before the Welsh Affairs Committee on 1 March
2001, HC 259, Session 2000-01, Job Losses in the Steel Industry
in Wales. Back
p. 132. Back
p. 88, paragraph 56. Back
43 & 44. Back