3 Global Factors
57. While there are many influences which the Government
can bring to bear, a significant proportion of trade agreements
are conducted at a multinational level. As Dr Sally from the LSE
highlighted:
Most of our trade policy is conducted in Brussels
and it is a pretty centralised operation. In that sense the UK
does not have a trade policy. Rather we have an input into EU
trade policy made in Brussels.[56]
This reality was recognised in the Trade White Paper:
Trade and FDI policy (though not trade and investment
promotion) is an EU competence and the Commission negotiates on
behalf of Member States in accordance with instructions given
by them.[57]
58. The CBI took the view that the impact of the
UK's input needed to be maximised and argued that the Government
should play to the UK's strengths by pushing for comprehensive
liberalisation across all sectors in trade agreements:
It must fight to ensure that liberalisation of
the services sector, which make up over 40% of the UK's exports,
is at least as ambitious as goods liberalisation. It should also,
in consultation with business, draw up a priority list of fast-growing
emerging economies, based on the opportunities and challenges
each one presents to UK businesses, particularly in high-growth,
high-value sectors, and ensure that FTAs are put in place.[58]
Dr Sally also argued that historically, UK Governments
were guilty of "punching well below [their] weight"
which resulted in other European nations being allowed to direct
trade policy in a way which did not benefit the United Kingdom.[59]
He also had particular concerns about the increasing role of the
European Parliament:
The Parliament now has powers to block. It has
got to be taken into account in terms of trade policymaking. Globalisation-sceptical
constituencies find support amongst certain members of the European
Parliament, and some of them are actually on the International
Trade Committee. Actual knowledge about international trade is
sadly lacking, and that is also true of many members of the Trade
Committee.[60]
He concluded:
I think it is important for the British Government
and for companies and indeed for parliamentarians to have much
closer contact with the European Parliament and, on these issues,
with the International Trade Committee in particular, partly to
educate them as to the facts of the world and to have trade policy
go in the right direction, and not be derailed by this or that
often non-trade issue that might hijack a trade agenda.[61]
59. We were told that in some areas the UK had suffered
due to its lack of engagement in EU bilateral trade agreements.
The Society of Motor Manufacturers and Traders (SMMT), for example,
highlighted that the EU South Korea Free Trade Agreement had disadvantaged
the UK car industry.[62]
Paul Everitt, SMMT's Chief Executive said:
Our disappointment was that there were a number
of European Governments with concerns about the Korean Free Trade
Agreement; the UK was not one of them and, therefore, some of
the other major vehicle manufacturing countries, which could have
come together to have done something slightly more productive
on that Agreement, did not have all the support that they might
have required.[63]
60. We welcome the Government's assertion that
it will be more active in shaping EU trade policy. However, we
note that previous Governments have used similar rhetoric with
mixed results. The Government will be judged on its delivery of
an EU trade policy which benefits the United Kingdom. As a key
negotiator in world trade the EU will play an important role.
WTO and the Doha Round
61. In addition to policy formation at the European
Level, a crucial driver in world trade is the WTO and the Doha
round of negotiations. The importance of Doha was noted by the
CBI. It stressed the importance of an early conclusion to negotiations
and urged the Government to do all it could both within the EU
and as part of other groupings (such as the G20) to secure the
necessary political support.[64]
62. Other organisations we spoke to were all keen
for Doha to be completed. Melanie Leech from the Food and Drink
Federation told us:
In general terms, in the UK food and drink industry,
we want to buy globally traded commodities at a competitive price.
We want to export value added products into global markets, so
a multilateral trade liberalisation has to be the priority for
us, so Doha is absolutely critical.[65]
The SMMT also called on Government and BIS Department
to "prioritise an effective, balanced and fair conclusion
to the Doha Development Round of WTO trade talks".[66]
63. The Trade White Paper acknowledged the importance
of Doha to trade:
Concluding the DDA (Doha Development Agenda)
is the overarching trade priority for the UK Government and 2011
is the make or break year. The deal on the table represents the
most ambitious multilateral trade deal yet, covering agriculture,
industrial goods, services, intellectual property and trade facilitation.
The Government will work hard to enable a conclusion to the Round
in 2011.[67]
However, the UK can only influence the WTO through
the EU. Dr Sally reminded us that the UK does not negotiate on
its own in the WTO but as part of the European Union:
The EU commission sits there, albeit with the
Council sitting on its shoulder like 27 parrots trying to whisper
in its ear. Nonetheless, that is the issue in all of this. We
can go around and talk to people; job owning is always a good
thing to do if you want something to happen in a political sense,
but the bottom line is it is not within our gift to complete this.[68]
64. The importance of completing the Doha Round has
again recently been highlighted by the publication of the Trade
Experts Group Report.[69]
The group was set up by the UK, Germany, Turkey and Indonesia
to consider the actions needed to combat protectionism and boost
global trade. The report concluded that the Doha negotiations
had produced the most substantial package of trade liberalisation
and called on national leaders to seize the opportunity.[70]
65. We recognise the fact that the UK's influence
on the WTO can only be exercised through its membership of the
European Union. However, the lack of a direct influence should
not deter the Government from using established bilateral relations
to press for an early conclusion to the Doha round. This is a
complicated area of international agreement and we support the
Government's desire for an agreement which will deliver the right
environment for free trade. We look forward to an update on progress
when the Government responds to this Report.
56 Q 356 Back
57
Department for Business, Innovation and Skills, Trade and Investment
for Growth, Cm 8015, February 2011 Back
58
Ev 165 Back
59
Q 362 Back
60
Q 363 Back
61
Q 363 Back
62
Ev 204 Back
63
Q 81 Back
64
Ev 165 Back
65
Q 84 Back
66
Ev 204 Back
67
Department for Business, Innovation and Skills, Trade and Investment
for Growth, Cm 8015, February 2011 Back
68
Q 365 Back
69
The leaders of the United Kingdom, Germany, Indonesia and Turkey
set up the high level group in October 2010 to provide analysis
and recommendations in support of trade liberalisation and revitalisation.
It was co-chaired by Professor Jagdish Bhagwati and Peter Sutherland. Back
70
Peter Sutherland and PR Jagdish Bhagwati, World Trade and the
Doha Round. Back
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