Regional approach to international trade vaunted in IOE and IT panel at Labour conference

Tue 10 Oct 2023
Posted by: Benjamin Roche
IOE News
Newstatesman panel

Small businesses need better export support if they’re to be an engine of growth for the UK’s regions — that was among the takeaways from a panel discussion on regions and trade, co-hosted at the Labour Party Conference in Liverpool yesterday (9 October) by the New Statesman and the Institute of Export and International Trade (IOE&IT).

IOE&IT director general Marco Forgione spoke alongside shadow minister without portfolio Nick Thomas-Symonds and shadow minister for trade, Gareth Thomas, as well as associate director for migration and trade at Institute for Public Policy Research (IPPR) North, Marley Morris, and Katherine Fairclough, CEO of Liverpool City Region Combined Authority.

The session was hosted by Alona Ferber, editor of the New Statesman’s Spotlight supplement.

G7 slump

Thomas opened the session by highlighting that the UK has experienced lower export growth than every other G7 member state except Japan over the last decade. If the UK had kept pace with other nations in the group, he suggested, it would have been £87bn better off.

He suggested a new deal with the EU to cut trade friction as one solution, as well as better guidance from government on how to export to particular countries:

“Businesses have said to me that they use other countries’ websites to find out how to access markets. There is an obvious crucial imperative to sort out those digital challenges, but the government has been progressively cutting back on support to small businesses to help them export.”

Without this support, businesses in the UK’s regions will struggle more than they should to “expand and succeed”.

The Harrow East MP said that Labour will publish a white paper on trade, exports and securing supply chains, if it wins the next general election.

Boon for Bootle

Fairclough spoke next to highlight some of the Liverpool region’s recent successes in securing international investment, particularly for video game development.

“Demystifying the complexity of doing business and exporting is a significant part of our work, through existing business support organisations and those we fund directly ourselves, and we’ve seen real rewards from that work for local business.”

Liverpool was benefitting from its new status as a freeport, she said, particularly in its work to build its life sciences industry.

Fairclough made the point that regions have different things to offer, and said that not every policy will be appropriate for Liverpool City Region. She advised those who developed national export strategy to consider each region on its own merits.

‘Race to the top’

Thomas-Symonds, a former shadow international trade minister, explored the issue of export and regional growth by talking about his new role as shadow minister without portfolio, which he said should be interpreted as “shadow minister of all portfolios”.

The role gives him an opportunity to explore a variety of opportunities, he argued, among them ensuring that every part of the UK can take advantage of existing trade deals.

The UK’s trade would benefit from a “race to the top” on product standards and workers’ rights — it is particular regions that will suffer if these are cut, he suggested. He also promised a that a Labour government would pursue a veterinary agreement with the EU to “tear down unnecessary trade barriers” in agriculture and agrifood.

Need for ‘clear UK strategy for trade’

Brexit marked a “transformative moment in UK trade policy”, said Morris, speaking next, but this “hasn’t been matched with a clear UK strategy for trade”.

An early strategy of picking as many “low-hanging fruit” deals as possible has reached its limits, he suggested, and a “broader and more thought-out approach” was needed that focused on sustainability.

As well as presenting opportunities for regions, trade also poses the risk of exacerbating their imbalances, he added.

He picked up the recurring theme of support for small businesses to export and how it could also contribute to regional growth.

“Local government has a really important role in supporting exporters navigating online systems, while a lot of exporters say they want face-to-face support.”

‘Too centralised’

Forgione rounded out the panel with a word on the need to reform a regulatory regime that is “too centralised”.

Making the case first that the UK must adapt as the global economy changes, he said:

“US economist Jim Rickard says it’s important the government understands that supply chain is not part of your economy — it is your economy. We have got to address the challenges that the world is facing as it changes its supply chains.”

There is a growing need for resilience in supply chains after years of focusing on efficiency and low costs, he suggested, but international trade is still crucial in building more profitable and innovative firms providing better-quality, more secure jobs.

He endorsed Thomas-Symonds’s defence of high product and employment standards in a race to the top, but advised that any Labour government’s trade policy should “devolve properly” to regions and nations in the UK, as local authorities know their business environments and what they need to export best.

A “comprehensive industrial strategy” is also crucial, he argued, so that businesses know how to invest their money, as is engagement with businesses so they are able to actually use the benefits of trade agreements.

Trading questions

Asked if the UK should follow the US’s lead in decoupling from China, Forgione said the UK could not realistically expect to take China out of its supply chains completely, and instead should try to “take the heat” out of the escalating tensions.

Thomas-Symonds suggested “de-risking” was crucial, but that problems like climate change could not be resolved without dealing with China.

In the final round of questions, one audience member asked Forgione if the advantages of exporting exist simply because firms that sell internationally tend to be larger.

Forgione explained that the effect was not a function of size, citing a London School of Economics (LSE) study published last week that contended there was a 40% differential between businesses that do and do not trade internationally — regardless of size.

Trade and human rights

A closing question on trade and human rights drew a suggestion from Morris that the UK should ban imports made using forced labour, which he said would be a “simple step” already made by the US to improve the human rights implications of the country’s trade policy.

Thomas, who said he was “instinctively sympathetic” to the point, said that things called “simple” in trade terms were often “not to simple” in reality.

“There’s a general instruction for people at my level not to say anything exciting,” he said, drawing the biggest laugh of the discussion. “That sounds like it’s in danger of being an exciting thing to say, so I’ll stay cautious and not back it just at this stage.”