There have been few dull moments for UK businesses in the years following the Brexit referendum in 2016, with four different British prime ministers, the Covid-19 pandemic, wars in Ukraine and Israel, and the impact of rising US-China tensions on global trade flows.
Looking back on the most recent 12 months, IOE&IT director general Marco Forgione reflects that there’s been a “bit more stability in the UK”, following Rishi Sunak entering 10 Downing Street. However, Forgione also acknowledges that 2023 has continued to be difficult for many businesses.
“Despite there being a bit more stability in the UK government, there continue to be significant challenges for businesses that trade internationally,” he says. “We have to address the challenges that the UK economy faces, where there is a continuing cost-of-living crisis, with GDP flatlining and inflation still an issue.”
Trade must be part of the solution
Forgione argues that encouraging more businesses to trade overseas is a key solution to these challenges, particularly for micro-, small- and medium-sized enterprises (MSMEs).
“All the research shows that businesses that trade internationally are more sustainable, resilient, innovative, employ more people and are more profitable.
“The only way we're going to tackle the challenges in the UK economy is by getting more UK businesses trading across borders, taking advantage of the huge opportunities that exist in global trade.”
IOE&IT’s role
The IOE&IT, which Forgione has led since 2020, has continued to support businesses to get the knowledge and skills they need to succeed in international markets. Central to this role has been keeping businesses updated on the changing regulatory landscape that has emerged post-Brexit, particularly for trade with the UK’s closest neighbours in the EU.
Despite the UK completing its departure from the bloc in 2020, with the EU-UK Trade and Cooperation Agreement entering into force at the start of 2021, businesses have been faced with continual change, particularly due to the UK’s decision to postpone introducing import controls on EU goods. The timetable for these new rules has moved several times since 2021, but this year the government published what most in the industry expect to be the final plan for the new rules.
“The final Border Target Operating Model was published in 2023 and we've now got a clear timetable through 2024 of what the rollout of that innovative new approach will mean,” says Forgione.
He further argues that the government’s approach of taking a digital-first, risk-based approach to introducing these checks will enable the UK to achieve its strategy of “establishing the best border in the world by 2025”.
Another big year for digitalisation
To borrow a phrase from the recently appointed foreign secretary, the 2025 Border Strategy “was the future once”, but in just over 365 days it will be due.
The digitalisation of trade processes, which underlies this strategy, is something IOE&IT has been pushing for since Forgione joined the organisation. This year has been another key year for this programme, with the Electronic Trade Documents Act being entering into law, the UK continuing to develop a new single trade window platform and successful pilots being carried out on the new ‘ecosystem of trust’ approach to conducting controls.
Forgione says IOE&IT has been at the heart of these new initiatives.
“IOE&IT was at the forefront of some of the most important initiatives in preparing UK businesses for the future of international trade.
“A report we published last year showed that if we can digitise all UK trade documents it would add 1% to GDP. That's an additional £20bn to the UK economy from greater efficiencies in how trade is done.
“This year, IOE&IT ran a pilot for the Cabinet Office on introducing ‘digital trade corridors’ through the pilots of the ‘ecosystem of trust’ model. IOE&IT’s activities on that project were recognised by the government as being key to its success. The pilot of the digital corridor we created, with partners, increased the speed of cross-border movements by 30% and boosted the profitability of the goods traded by over 40%.”
“This platform is now being looked at more widely, not just in the UK, but internationally,” he adds, saying the technology has been used for exports of tea, coffee and cut flowers by small businesses in Kenya.
FTAs and beyond
The last year has also been a significant one for post-Brexit trade agreements. Deals with Australia and New Zealand entered into force in the summer, while the UK also secured accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Forgione notes that 2024 will be another significant year, including a possible landmark deal with India, further state-level deals in the US and the continuation of negotiations with countries such as Switzerland, Canada and Mexico.
“With regards to the UK’s trade partnerships, IOE&IT continues to play an important role, both to support and inform government with regards to what businesses need, and also to support businesses to understand how they can take advantages of the new trade arrangements.”
IOE&IT representatives sit on a growing number of committees feeding into the UK government, but also internationally and at a multilateral level, including advisory groups into the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD).
IOE&IT has also been working with bodies like WTO on developing content for its Trade4MSMEs platform and has worked with the International Trade Centre (ITC) on the SheTrades initiative, which supports female entrepreneurs in developing nations.
Following the opening of its Brussels office this year, IOE&IT representatives have also been involved in dialogues in the EU about the restructuring of the bloc’s customs processes and reforms. Forgione explains:
“IOE&IT has an important role to play, not just in informing the European Commission on how best to introduce its customs reforms, but also then supporting the nations of the EU and the businesses within those nations to understand how they can take advantage of the new regime and systems.
“It is a great example of how our international profile and influence has grown dramatically in 2023.”
He adds that IOE&IT also opened its first office in Africa this year and the organisation also now has staff working in far east Asia, the Caribbean and Geneva.
Another year of growth
The organisation’s growth at home has also continued at speed under Forgione’s watch. He cites the recent inaugural Import Export Show and International Trade Awards as examples of IOE&IT’s growing domestic impact.
“It was a brilliant day, full to the brim with ideas from business leaders, officials and politicians, with everyone united in the desire to help UK businesses grow and build their international trade.
“We were delighted to have the support of both representatives from government and the Labour Party, as well as some of the UK’s leading export champions.”
Other events highlighted by Forgione include MemberCon23, hosted in Liverpool in July, and the launch of the new E-Commerce Trade Commission, which the IOE&IT convened in June.
The commission includes some of the world’s largest ecommerce platforms – including Amazon, Alibaba, eBay, Google and Shopify – as well as other leading UK business bodies such as the Federation of Small Businesses (FSB), Institute of Chartered Accountants in England and Wales (ICAEW) and Association of International Courier & Express Services (AICES).
It serves to advise the Department for Business and Trade (DBT) on how government can encourage more UK MSMEs to trade internationally using online platforms.
“The commission has a two-year remit and will be publishing an interim report in the middle of 2024, with a final report in 2025. It’s very much an action-based initiative, bringing together the world’s largest marketplaces to collaborate to support UK businesses and to grow their essential cross border international trade.”
Trade as a force for good
Underlying all the energy and activity of 2023 is Forgione’s firm belief that “trade is a force for good” in the world.
“We are a charity created expressly to support, professionalise and grow cross-border trade. It's a mission I take very seriously and one to which the IOE&IT team is committed.
“The only way to tackle the significant challenges that humanity faces is through cross-border trade, collaborating and working across borders, whether that’s the deployment of services, knowledge and expertise, or by growing goods trade.
“There is no other way of addressing the issues of economic exclusion or deprivation, health inequality, educational exclusion and environmental change. Trade is the mechanism through which excluded communities, developing and less developed nations, small island states and female entrepreneurs can get access to prosperity and growth.
“This is as true for the UK as it is for any other country. We need to build trade capacity, knowledge and expertise. This is what the Institute is all about.”