Picture credit: UK Houses of Parliament
The chair of the Business and Trade Committee has urged the government to “draw far, far closer” to the EU and other “allied” trade partners, amid the heightened risk posed by China to the UK’s economic security.
Labour MP Liam Byrne argued that the UK should pursue an “economic security union” with the EU, centered on anti-coercion cooperation and dynamic alignment, as well as greater collaboration with South-East Asian trade partners, to secure critical supply chains.
Byrne, chair of the committee since 2024, warned that global trade has entered an age of “weaponised interdependency”, adding that the UK must take a more “selective” approach towards engagement with the world’s second-largest economy.
He made the remarks during a talk at Europe House last week (8 January) on the UK’s trading relationships with China and South-East Asian nations.
Economic Security Union
Byrne advocated for an economic security union between the UK and EU, which would include a “European-wide anti-coercion strategy” and “dynamic alignment” in sectors where Europe is heavily dependent on China.
There should be greater cooperation between the EU and UK to launch anti-subsidy and anti-coercion investigations, he argued, claiming the UK’s Trade Remedies Authority – set up to examine unfair trade practices in 2021 following Brexit – is “far too slow” and “behind the curve” on such investigations.
He said that “dynamic alignment” in sectors vulnerable to exposure, such as critical minerals, green technology and pharmaceuticals, would also improve European economic security.
Byrne added that progress on the government’s ‘economic reset’ was going “much, much too slowly”, calling the UK’s failure to negotiate entry to the EU’s Safe defence programme a “major setback for European security”.
His remarks follow growing pressure on the government from within the cabinet and parliament to pursue a customs union with the EU, with 100 MPs backing a Liberal Democrat private members’ bill last year that would commit government engaging Brussels in talks on the matter.
China threat
Bryne called for the union amid what he characterised as a fast-increasing threat from China.
He argued that China’s continued pursuit of an export-led growth model threatens the EU and UK economically, especially as the US maintains its tariff regime.
In light of these threats, Byrne stated the UK needs a “much clearer” trade strategy for China that prioritises economic security, arguing that “we must only trade with China on a risk-adjusted basis” and “defend against leverage”.
Improving relations with China is firmly embedded within the government’s Trade Strategy, published last year. The government wrote that firms from the eight sectors with the greatest potential to boost the UK economy citied China as one of the trading partners they “prioritise access and collaboration with”.
Byrne criticised the government’s approach to China as “chasing headlines”, claiming that the publicised benefits of prospective agreements translate into modest economic gains while “increasing the risk of coercion in the future”.
He dismissed the £600m in economic benefits the government celebrated last year, after chancellor Rachel Reeves’ visit to Beijing yielded several economic agreements, as offering only “tenths of a percentage of GDP”.
“Far greater opportunity” in trade rests with other members of the Comprehensive and Progressive Agreement Trans-Pacific Partnership (CPTPP).
CPTPP potential
CPTPP’s impact on UK growth is likely to be similarly minor – last estimated by the government to add £2bn to the economy in the long-run, which is only 0.08% of GDP.
Byrne highlighted the security benefits of deeper ties with members, especially critical minerals. He added that cooperation with CPTPP members like Japan, Australia and Canada are “important platforms that will power trade… and growth in our country”.
The UK is currently “failing to coordinate” with members on critical minerals – a strategic misstep when members are a source of substantial reserves of rare earth deposits.
Such coordination would support efforts to “derisk” from China, which currently monopolises the mineral supply chain.
Strengthen ties with ‘allies’
In the face of this vulnerability, he touted recently signed trade agreements with South Korea, the US and India as creating a “triple-ocean architecture of trade deals”, offering traders “free movement across the Atlantic, Indian Ocean and Pacific”.
While not a trade bloc, he said these agreements help enmesh the UK in a valuable system, “connected by sea lanes, cyberspace and shared ambition, and rules, rather than coercion”.
The future of the UK’s trade policy, he argued, should be in using this system to grow “trusted trade”.
“The price of free trade cannot become weakened security. Free trade has got to expand our freedom, not erode our peace of mind.”
