LET’S MAKE THE MOST OF THE UK’S NEW STATUS AT THE WTO
On Saturday, WTO members were notified of the UK’s new status as an independent nation at the WTO with its own seat and voice at the table. What does this mean for business and what does it mean for the rest of the world?
For anyone familiar with the WTO and trade, the roles of China, the EU and USA are well documented as the big players in influencing and shaping global trade. Less well known is the critical role countries like Japan, Australia, Canada, Nigeria and Singapore play in brokering agreement between the big players and the less developed country (LDC) bloc. In short, deals don’t get agreed if there isn’t a consensus between these four trade blocs. Much of the media focuses on China, the EU and US but the LDC bloc is equally powerful and key countries within it are critical to any agreement, namely India and South Africa. The UK, with its Commonwealth connection and global network of diplomatic trade and development relations will add significant weight and resource to the brokers group.
Why is this important? Because by getting back to its traditional role as a pragmatic, honest broker in global trade, the UK will play an important role in helping to oil the wheels of trade and propose solutions to key issues that would otherwise be difficult through a big bloc. To give an example of the power of brokerage, Pakistan and Costa Rica with the support of 13 developing nations played a pivotal role in securing the start of ecommerce negotiations which had been blocked for 20 years. If it hadn’t been for this group, it would have been far harder, if possible at all, for the developed nations to put forward proposals and secure agreement at the WTO Ministerial Conference in Buenos Aires in 2018 for the simple reason that it would have looked like the developed world bullying the developing world.
We should expect the UK to step up to the plate in areas where the UK has clear strengths and interests; digital trade and trade in services to name two. 80% of UK trade and 50% of global trade is now services yet the rules surrounding trade in services are nothing like as well developed as those for more tangible goods. There are currently no global standards for digital trade which is why ICC is launching a new digital standards initiative this year. The WTO rule book dates back to 1998 before smart phones and many of the daily technologies we all use existed. This is why there is so much the excitement around ecommerce negotiations and the prospect of propelling the global trade economy into the 21st century.
Similarly, international law covering the ownership of goods dates back to the 1882 Bills of Exchange Act when goods were transported in steam ships and the main exports of the US were cotton, tobacco, furs, skins, salt meat, flaxseed, rice, tar, turpentine and pitch. Promissory Notes, a key document in many trade transactions haven’t really changed for 1,000 years – the only difference, is that they are written on paper rather than stone tablets. 4 billion paper-based documents float around the trading system every day completely unnecessarily in a world where our carbon footprint needs to be urgently reduced and where the technology exists to trade digitally. As the centre of English law, the UK could change it all for the better by modernising the law and tipping the first domino across the Commonwealth and international trade community worldwide. It would transform global trade.
The UK is better placed than most countries to be at the vanguard of making it all happen alongside others like Australia, Singapore and Japan. What is abundantly clear is that the solutions, at least in the short term, won’t be coming from the big players who are all distracted by trade wars and political battles and have the major disadvantage of size. In the WTO, being small, nimble and a good diplomat can be an enormous advantage – it’s the new currency the UK has to exploit.
If the UK plays a smart game, it will be able to help bridge the dialogue between all four blocs at the WTO providing it doesn’t get too close to any one of them. The latter will be a challenge with UK-US trade negotiations underway – too close to the US and it will disadvantage the UK’s ability to work with China and the less developed country bloc. Too far away and the UK will have no influence with the largest economy. It’ll be a tightrope act with little forgiveness for getting it wrong. The role of Huawei in the UK’s 5G network is fascinating test of where the UK will position itself and whether it is strong enough to stand its ground.
For business, this means getting involved – if we don’t highlight the opportunities and make the case for change, it is less likely to happen. We need to ramp up engagement with the Trade Policy Unit at the Department for International Trade in London, strengthen engagement with the UK Mission in Geneva [up over 600% since 2017 and climbing] and use our considerable network of relations with foreign governments and trading partners to make it happen.
The UK business community no longer has the EU to act as its voice in the WTO. We need to do it ourselves and get smart; sharpen our business diplomacy skills, cooperate more with foreign governments, consumer groups, unions and NGOs and build alliances with business communities elsewhere in the world to strengthen our voice and get agreements over the line working alongside government. We need to expand our horizons beyond the day to day challenges of trade and Brexit and invest in ensuring the business environment in five years’ time is better than it is now, particularly across the emerging markets where the majority of trade opportunities will be. Let’s be honest – if we don’t, it either won’t happen or other countries will dictate the trade terms on which we all depend which may well not be in our interests. Most of all, world trade will always be fairer and better with an active UK standing up for core values of good governance, rule of law and a level playing field.
This is the opportunity that starts this week with our own seat at the WTO swiftly followed by climate negotiations in Glasgow in December and hosting G7 in 2021. It all starts now. Contrary to what the media says, the WTO is busy reforming itself and has some great initiatives underway but it can’t do it alone – we need to get stuck in and help, now we have our own seat at the table.
If you’d like to find out more about how to get involved and support efforts, get in touch!