1 Introduction
1. On 4 February 2009 the Committee announced its
inquiry into "Exporting out of recession". It posed
the questions: "What should be done to sustain and increase
Britain's export strengths? Is there more the Government or UKTI
could do to support exporters, to identify key sectors or to reprioritise
markets?"
2. The backdrop to this inquiry is the sharp and
synchronised downturn in the world economy. The then Department
for Business, Enterprise and Regulatory Reform, at the start of
our inquiry, set out the challenges facing the UK and UK businesses:
The UK's traditional export markets, in Europe and
North America, have been disproportionately affected. In 2007,
the United States and the EU together accounted for 68 per cent
(£251 billion) of total UK exports of goods and services.
A recent World Bank forecast is that volumes of world trade in
goods and services are expected to drop 6.1 per cent in 2009,
and that global GDP is expected to contract by 1.7 per cent in
2009—the first decline in world output on record. High income
countries are in deep recession, with OECD economies likely to
contract by three per cent and other high income countries by
two per cent. GDP among developing economies will grow at 2.1
per cent, compared to 5.8 per cent in 2008.[1]
3. The Government stated in its submission that it
considered UK exports to be "critical to individual companies
and to the wider economy."[2]
It is right to highlight this point. As the Department notes:
For companies, investing and selling overseas tends
to improve productivity, innovation and financial performance.
Selling overseas helps businesses achieve economies of scale and
levels of growth and revenue not otherwise possible; reduce their
dependence on a single or small number of markets; and increase
the commercial life span of their products or services, with raised
returns on investment. These companies are more likely to have
capital to invest in new innovation and product development in
the UK, and to maintain or create jobs.[3]
4. As well as bringing a multitude of benefits for
businesses increased, UK exports—of both manufactured goods
and services—have a potentially crucial role to play in
hastening the end of the recession for the nation as a whole.
This was a point that Lord Jones made repeatedly during his appearance
before us:
[…] I will tell you that the only way this country
is going to get out of [the recession] quickly is to trade its
way out of it. If Britain was a company I would be saying, 'The
fundamentals are okay, you're not going to go bust, but this is
going to be bloody.' Now, how do you address it? You trade your
way out of it. If this was a business, you would be trading your
way out of it: head down, batten down the hatches, work hard and
deliver the goods, and get the profit and start regenerating the
business. That would be the same for this country.[4]
5. We understand and agree with the argument that
a strategy to boost UK exports should not be based primarily on
short-term currency movements and, indeed, that many countries
have successfully developed their export performance with a strong
currency. It is however, true that when sterling is relatively
weak, companies can reduce export prices or build margins and
so boost profitability. This Report examines what Government can
do to ensure that our exporters derive the maximum benefit from
their opportunities in overseas markets—opportunities undoubtedly
enhanced by the low value of the pound, and opportunities, which
if seized, will help the whole economy to recover.
6. Government assistance is provided through a number
of initiatives, but at the heart of its trade policy is UK Trade
and Investment (UKTI). Our inquiry focuses on UKTI, and assesses
the extent to which it is helping the UK to export its way out
of the current recession. We also consider the individual programmes
offered to businesses by UKTI, and how well they are aligned to
business needs.
Trade Policy
7. Government efforts to promote international trade
can only be successful when international trade policy has created
an environment in which trade can flourish. Britain can be proud
of having one of the most open and free trading environments in
the world. There were fears that the onset of the recession could
trigger a new wave of protectionism in which countries engaged
in short-sighted measures in an attempt to protect their own industries.
Thankfully this did not happen, but there are still important
trade policy issues which need to be resolved. We welcome the
recent progress made in the EU free trade agreement with South
Korea. We also want to see a wide ranging, free and just conclusion
of the Doha round of trade negotiations, which have dragged on
for far too long. However, as important as these issues are, they
are not subjects for this inquiry, which focuses on trade promotion.
Our inquiry
8. In the course of this inquiry, we received written
submissions from 23 organisations. We held three oral evidence
sessions: the first was with Lord Jones of Birmingham, formerly
Minister of State for Trade and one of the UK Business Ambassadors.
The second session was with Lord Davies of Abersoch, the current
Minister of State for Trade and Investment and, Mr Gareth Thomas
MP, Minister of State, Department for International Development.
At the final session we took evidence from representatives of
the CBI, British Chambers of Commerce and Sponsors' Alliance.
9. We also undertook two visits in connection with
the inquiry. The first was to the UAE and Saudi Arabia to look
at the challenges and opportunities presented by emerging markets.
The second was to France and Italy to examine UK trade relations
with established markets. Both visits gave us the opportunity
to be appraised of activity on the ground. By speaking with people
who deal with trade issues on a daily basis we were better able
to assess the extent to which UKTI has right priorities for the
very different markets around the world. A full account of our
visits can be found in the Annex at the end of the Report. We
would like to thank all those who contributed to our inquiry.
1 Ev 58-59 Back
2
Ev 58 Back
3
EXP 1 para 2.2 Back
4
Q2 Back
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