One of the only good things that seems to have emerged from the whole Brexit process is an increased focus on UK trade performance. Everybody seems to agree that our approach to Trade hasn’t really worked and that we need to address this issue. The forthcoming retreat from Europe means that we need to seriously re-think our whole Trade strategy, but I’m not sure if we have been asking the right questions.
The main Brexit Trade argument seems to have been around whether or not being part of the EU was good for Trade or a restraining factor. Germany certainly doesn’t seem to have been hampered by being in the EU and neither has Switzerland suffered by not being part of the EU – so maybe the problem doesn’t lie with the EU but elsewhere?
Another argument has been that a weakened pound would be great for UK Trade as it automatically makes our goods and services cheaper (whilst at the same time make FDI into the UK less attractive of course). But this argument doesn’t really hold water either. Working, as I do, in the International Trade area at Think Global Growth, we know that the time-frames for successfully entering new markets and building a real pipeline of orders are long – things just don’t happen overnight. It is highly unlikely that a company in a distant land will hear that the pound has fallen by 8% and think ‘I really must look for a new supplier in the UK’. Things just do not work like that. Research has to be done, relationships need to be built, contracts agreed, sample shipments made – and that simply doesn’t happen overnight (by which time the pound will have hopefully stabilised).
So neither the EU nor the strength or weakness of the pound seems to hold the key to our historic weakness in the Trade space. Maybe we should look at individual companies for a clue to where the problem might be.
The biggest mistake that most companies make when they look at new markets is that they operate opportunistically rather than strategically. They get an enquiry from a potential customer in Uzbekistan and suddenly Uzbekistan becomes their core international target market – even when the most cursory strategy piece would have told them that Uzbekistan should be country 143 on their ‘to do’ list.
And so it is with the UK. The government’s targets have been completely numbers driven. UKTI have been tasked with ensuring a certain total increase in the numbers of UK exporters. How can that be in any way strategic? It shouldn’t be about numbers it should be about sectors and targets.
And this brings me to my main point. What does the UK excel at? What do we do better in the UK than other countries? Basically what do we have to sell that people might want to buy?
Surely this should be at the heart of the UK debate on Trade. Yes we have to renegotiate lots of Trade agreements with lots of countries and that will be arduous and time-consuming. But if at the end of those negotiations we don’t know what we want to sell as a nation, and to whom, then the whole process will have been fairly pointless.
The government needs to lead this process but it needs to call on the help of people who really understand the international
Trade space – and that is unlikely to be politicians or civil servants. We need people from the commercial world to drive this strategy piece, and it needs to be a combination of large corps, SME’s, and advisors who help companies expand internationally on a day-to-day basis. I’d certainly love to be part of the process as would lots of really seasoned international people that I know.
I also strongly feel that quality companies with great products which will sell around the world should be given direct government subsidy to encourage them to aggressively attack overseas markets. Not the jam tomorrow of tax incentives but real cash directly into their bank accounts to help them through the cash-flow pressures of opening up new countries. Less money should be spent on ‘Britain is Great’ banners and more on helping companies research and enter new, potentially lucrative, markets. We’ll soon be out of the EU so nobody would be able to tell us that such subsidies are anti-competitive.
We simply cannot wait to do this national Trade strategy work and implement the direct funding which exporters need. It has to be done now as a matter of urgency. My worry is that all the attention will be on the structure of Trade agreements and not on getting our house in order at home.
We have a once-in-a-lifetime opportunity to acknowledge that our approach to Trade just hasn’t been working and to build a better Trade future. Will we have the wit to seize that opportunity?