Liam Fox – 2019 Speech on Global Trade

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 1 February 2019.

Good morning.

The arguments around Britain’s exit from the European Union have been intense and passionate.

Understandably, they have dominated the political agenda and consumed most – sometimes all – of our political bandwidth.

On Tuesday the House of Commons voted to support a deal, with changes to the backstop. And the Government will now talk to the EU about how we address Parliament’s views.

But, however we ultimately separate ourselves from the European Union, we must remember that there is a world beyond Europe and there will be a time beyond Brexit. That is what I would like to begin to focus on today.

The UK’s future role

The first question we must ask is a general one. What should Britain’s place in the world be? Where should we direct our great political, diplomatic and economic energies?

What, if you like, is our mission?

It used to be fashionable to quote Dean Acheson, US Secretary of State under Harry Truman, in saying that Britain had “lost an empire and not yet found a role”.

That may have once been true. For some, the EU seemed to provide an answer. But the UK has been always an awkward member, unsuited politically and temperamentally to the demands and destination of ever-closer union.

Our new relationship will be far better for both the UK and the EU. Now Britain is taking back ownership of our destiny. Where we share a common agenda, the EU will find a stalwart friend, and a close political and economic ally.

We are emerging into a world that is crying out for leadership, and our country is uniquely placed to meet the global challenges of the 21st century.

The 2015 Strategic Defence and Security Review sums up our position perfectly. As it says:

“We sit at the heart of the rules-based international order. The UK is the only nation to be a permanent member of the UN Security Council and in NATO… the Commonwealth, the G7 and G20, the Organization for Security and Cooperation in Europe, the OECD, the World Trade Organization, the International Monetary Fund and the World Bank.

We use our membership of these organisations as an instrument to amplify our nation’s power and prosperity. In all these organisations, we play a central role in strengthening international norms and promoting our values. We promote good governance, anti-corruption, the rule of law and open societies.

We maintain and champion free trade, and we work with growing powers around the world to build a stronger and more resilient global economy.”

It’s hard to put it better than that. As Britain takes up her role as a fully independent actor on the world stage, this is an enviable position from which to be starting.

The Department for International Trade has, since its creation, been looking to that world beyond Europe and that time beyond Brexit.

And in an era where globalisation and rapid technological advancement are fundamentally changing the face of global commerce, Britain will have a clear role in helping to identify and meet the challenges and opportunities ahead.

In Davos last week, trade ministers considered a paper from the Global Future Council on International Trade and Investment. It set out a number of scenarios for the future trading environment.

They started with the optimistic – where countries cooperate to address issues through a revitalised WTO and complementary international frameworks – then they had the less optimistic, where countries cooperate but are drawn into competing blocs, producing a Balkanisation of global trade.

And finally they had the genuinely pessimistic where there would be a rise of protectionism and where countries could not cooperate, leading to prohibitive unilateral barriers with consequent inefficiencies, high economic risks and a decline in productivity and innovation.

It is essential that Britain uses its new role to help push the global trading arguments in the right direction.

Over the coming months I will be talking about the challenges we face in more detail such as the consequences of a protracted US – China trade dispute, the potential slowing of the global economy and the unmet challenges in the global trading system.

Today I want to set out our general approach to the institutions that govern global trade and where we believe momentum is required.

Opportunities of independent WTO membership

Our first port of call has to be the WTO – the home of the rules-based international trading system that underpins our prosperity.

Now we all accept that the WTO as it stands may be imperfect. Some of its rules may be outdated. But, as Spanish-American Philosopher George Santayana said: “Those who cannot remember the past are doomed to repeat it.”

We have tried a world without multilateral institutions, where the economically powerful sought to defend their interests by erecting high tariff walls.

It didn’t work out very well. Which is why, when the world came back together there was a strong desire to develop a framework where national governments could create collective solutions to shared challenges.

Since the end of the Second World War, falling tariffs and an ever more integrated rules-based system – underpinned by the General Agreement on Tariffs and Trade and the World Trade Organisation – have brought great benefits, both to developed and developing economies, in terms of stability, predictability and openness, creating greater opportunities for exporters and lower prices for consumers.

And it is important to remember at this juncture that we are committed to multilateral solutions not for altruistic reasons but because they best serve the interests of the UK and the wider world.

The case for trade

It is also important to remember and to remind our people that free enterprise and open trade have taken more than 1 billion people out of abject poverty in the last generation or, as Francis Fukuyama put it in his latest book “Identity”, the percentage of children dying before their fifth birthday has declined from 22% in 1960 to less than 5% by 2016.

But we have never seen trade simply as an end in itself. Trade is a means by which we are able to spread prosperity. That prosperity underpins social cohesion. That social cohesion, itself in turn, underpins political stability and that political stability is the building block of our collective security.

In the interconnected and interdependent world of globalisation, we cannot disaggregate these elements without risking profoundly unwanted consequences.

Security, environmental concerns, trade, economic development, these are best tackled by countries working together. And not just two or three working together – but many, ideally all.

Economic nationalism may look like an attractive shelter from the winds of change that have come with the era of globalisation and even more from the technological revolution in which we find ourselves, but it is a mirage.

The alternative to an international rules-based system is at best a deals-based system that will suit only the strongest and at worst a free for all that will put at risk much of the progress we have made in recent decades.

The principle of working through consensus is one held dear by WTO members – and the United Kingdom and the United States were key in forming that organisation. Decisions forced on countries by a larger group will not be legitimate, will not be respected and cannot ultimately be enforced.

But consensus building can be, and indeed has been, painstaking and slow. In the WTO, as in many international arenas, finding that sweet spot has proved elusive. So many of our collective ambitions for the multilateral system remain unfulfilled.

Now the WTO has, of course, had its successes such as the Government Procurement Agreement, the Information Technology Agreement, the Trade Facilitation Agreement, among others. But the reality is that we have not yet been successful in moving the system forward from the balance we achieved at the end of the Uruguay Round.

The changing global economy

Fundamental changes in the world economy have created an entirely new trading environment.

The global economic centre of gravity is shifting, from North America in 1990 to China and the Far East in 2050. While we still expect North America and Europe to remain key trading partners for the UK, the growth in the East represents a huge opportunity for the UK to establish new, and grow existing, trading relationships.

It is predicted that the share of global GDP of the seven largest emerging economies – including China, India and Turkey – could increase from around 35% to nearly 50% by 2050, which would mean that they overtake the G7.

This is particularly relevant in the case of China, for example, which by 2050 will reach a projected $51.3 trillion at Purchasing Power Parity, from $21.4 trillion now, with India reaching $30.7 trillion by the same year.

The Chinese bond market is expected to grow from around US $3 trillion to US $32 trillion by 2030, which is not a long time away, and by 2050, Asia’s financial sector is likely to be four times the size of that in the West.

I often point out to those who are sceptical about the scale of change that China is expected to have 220 cities with a population of more than a million by 2030. The whole of Europe has just 35. This will be driven, in part, by a rapid expansion of the global middle class, which is expected to reach 5.4 billion people by 2030, up from 3 billion in 2015. Asia is expected to account for the vast majority of this growth.

But as well as a fundamental shift in who we trade with, how we trade is changing too.

The revolution in e-commerce is now a major component of world trade, from some of the world’s largest corporations, like Amazon, to the thousands of small companies who have never before been able to trade internationally.

And such an upheaval requires a fundamental shake-up of the rules which govern international trade. We live in a world where there is an increasing blurring of what constitutes a good and what constitutes a service and yet the regulatory system is a long way behind the curve.

Imagine what would have happened back in 1995 when the WTO was created if I had asked you the following question – “if I sell you code over the Internet to make something on your 3-D printer, have I sold you a good or a service?”

In 1995 you would not have understood the terms of the question because the terms would not have been invented yet. Yet these are the terms in which we trade today in the real global economy, but the system of global governance has not kept up.

Even if we ignore technological advances, patterns of international trade are still shifting rapidly.

We live in a world where complex global value chains are an ever more important part of how we do business yet our trading system still applies taxes – for let’s be very frank that “tariff” is simply a more acceptable way to describe taxes – a nice euphemism, but they are taxes – multiple times before the creation of a final product. This locks up value and increases costs to consumers.

Then we come to what we actually trade. Services are now a larger part of the world economy than ever before and Britain is the second largest services exporter in the world, behind the United States.

A recent WTO report estimates that, while services comprise two-thirds of global GDP and employment – and nearly half of world trade on a value-added basis, the barriers to trade in services are about as large as those in goods were half a century ago.

This has to change. Despite recent high-profile tensions, global tariff levels on goods have reached a historic low. But we have yet to achieve the same level of liberalisation for services.

Pursuing trade policies that promote openness and better reflect these developments in the global economy would boost productivity, raise living standards and promote competitiveness.

And these reforms will only become more vital as the interdependence of the global economy actually increases.

Benefits of multilateralism

So, recognising this, what is the correct response for governments like ours, which are committed to global solutions to global challenges?

One option is bilateral or regional agreements. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP – much easier to say in the morning – is a good example, and of specific interest to a post-Brexit UK.

Its 11 member states constitute some 13% of global GDP. As you will be aware, the United Kingdom will, potentially, seek accession to CPTPP upon our exit from the EU.

I am delighted, Dean, that you mentioned that Policy Exchange endorsed this course of action in a paper last summer.

And, as many of you will be aware, the EU-Japan Economic Partnership Agreement comes into force today.

The UK was, naturally, deeply involved in the negotiation of this agreement. And, as both our Prime Ministers have made clear, this ambitious EPA will form the basis of our new economic partnership.

Neither side intends to put up barriers where none now exist, and the UK-Japan Trade and Investment Working Group is striving to deliver this commitment.

Agreements such as these can be useful complements to the multilateral core. Which is why, given certain conditions, they are recognised as a possible deviation from the Most-Favoured Nation principle. They are easier and they are quicker to negotiate.

But they cannot tackle problems caused by widespread agricultural or industrial subsidies, they cannot adequately address unfair competitive practices, and ultimately the economic benefits unlocked by such agreements are relatively small compared to those of an agreement between all 164 WTO members.

Now, that does not mean we should not pursue them vigorously as an adjunct to wider liberalisation agreements but, equally, we need to remember that true multilateralism is, and will remain, the gold-standard of international trade agreements.

It minimises the risk of trade diversion. It lowers the costs for businesses, allowing them to take a common approach to non-tariff measures across a wide range of countries and markets.

For nations themselves, multilateral agreements provide stability and predictability, as well as guarding against ad hoc protectionism.

There is strong evidence of the trade creating effects of the GATT and WTO. In 2007 a paper was published that modelled the value of imports from 1950 to 2000. It found that world imports are higher by 120%, or $8 trillion in 2000, relative to a world without the GATT and WTO.

And that is a truly historic achievement.

Of course, it has not been without its issues. The same report highlighted that the benefits have sometimes been uneven amongst developing nations.

Crucially, there is also evidence that sectors that have been mostly excluded from multilateral negotiations have not increased trade as a result of the GATT and the WTO.

If Britain’s destiny is to be a global champion of trading freedoms, then these two challenges represent our global mission – a direction of focus and an opportunity to change the world for the better.

Liberalisation of trade in services

Our first priority must be the liberalisation of the global trade in services.

Now I’m sure that this audience is familiar with the headline figures. The UK economy is one of the most services-intensive on earth, with services comprising 79% of our GDP.

The sector employs some 26 million people in this country. Out of every five people in Britain with a job, four of them work in a service industry.

And these are remarkable figures by any measure. And they mean that the UK has a vast amount to gain by working with partners to make services markets more open, more transparent and more competitive.

And it must not be overlooked that, because so many aspects of the production of physical goods are in fact services – such as design, distribution, logistics and marketing, that liberalising services will also drive wider international trade.

Currently, it is estimated that the trade costs for services are up to three times higher than those for goods.

Between 1995 and 2005 trade costs for goods fell by around 15% – while the trade costs for services have remained, to this day, fairly constant.

Research from the Bank of England suggests that if a large sample of trade partners lowered their services trade barriers to the level of the least restrictive country, the UK’s current account deficit could fall by up to 16%.

Leaving the EU gives us the freedom to pursue an independent trade policy that reflects our unique strengths in services.

A policy that is focused on our areas of competitive advantage – such as finance, insurance and business services.

And together, these comprise 57% of our services exports.

But it also gives us the opportunity to instigate international services liberalisation through fora such as the WTO.

We will actively engage in current discussions to agree new rules in key areas such as e-commerce, and to ensure domestic regulations do not constitute unnecessary barriers.

We are of course committed to TiSA, the ambitious, but currently stalled, agreement on trade in services.

TiSA has the potential to set the international standard and deliver a significant boost to the global economy, and we will continue making the case for it. But it is not our only option.

Digital trade

I have already very briefly touched on the way that the digital economy is revolutionising trade. Digital and associated technologies are an area in which the UK is genuinely world-leading, and commands a significant competitive edge.

The ability to send data across borders is the central requirement for international digital trade. And data flows are the life-blood of today’s digitalised economies.

They are vital not only to high tech industries but also traditional sectors, good and services as well. And I believe that it is patently absurd to talk about moving goods and services but not data in a modern economy.

And that is why obstacles such as data localisation must be tackled if we are genuinely to be able to take advantage of the digital era.

And ensuring that such flows continue unimpeded is a top priority for the United Kingdom. But if we are to ensure that data is free-flowing, we must also see that cross-border data flows are governed responsibly with modern, liberal and ambitious regulations, including the safe handling and storage of people’s personal data.

UK and the Commonwealth

Now, working to liberalise the trade in services will be of vast economic benefit to the UK and our partners.

But there is a greater mission that I alluded to earlier. The United Kingdom is uniquely placed to help redress the imbalance of the multilateral system, and to bring developing nations to the fore of the international trading community.

In 2019 our work at the WTO will move forward apace.

As the world’s fifth largest economy but also as a leading commonwealth nation, we occupy an exceptional place among the world’s biggest economic players.

Not only do we have historic and cultural ties to many of the world’s developing nations, but we are also part of an existing community of nations that are eager and willing to deepen their trading ties.

Britain has enormous scope to facilitate, and enact, change.

We believe that the real story of the Commonwealth is its vast potential for trade and investment opportunities.

The 52 member states boast a combined population of over 2.2 billion people, 1 billion of whom are under the age of 25.

Their economies are wonderfully diverse, each with their own specialisations, industries and opportunities.

Most importantly, Intra-Commonwealth trade has consistently grown faster than the global average.

The Commonwealth Secretariat has calculated that bilateral trade costs for Commonwealth partners are, on average, a stunning 19% lower than between non-Commonwealth members.

To date, Commonwealth nations have registered over 600 trade liberalisation measures with the WTO.

Clearly, the potential is there, and so is the will.

WTO engagement in 2019

So 2019 will be a significant year for both the UK and the WTO.

The UK is leaving the European Union. The WTO is facing many challenges to the ruled-based multilateral trading system.

As an independent member, the UK will have greater freedom to advance our agenda – in line with the terms of the withdrawal agreement – and to take advantage of the opportunities that leaving the EU presents us with in respect of our presence and participation at the WTO.

We will need to establish the UK as a credible, influential and creative WTO member – and there are a number of steps we need to take.

Establishing our own independent GATT and GATS schedules… …accession to the GPA… … complying with our notification and other WTO obligations and participating effectively in WTO fora, such as in the 28 WTO sub-committees that cover all aspects of multilateral trade… And of course to bolster the rules-based multilateral trading system, with the WTO at its centre.

We have the Global Dialogue on Trade, in which the CBI and our branch of the International Chambers of Commerce are strongly involved.

This is assessing what needs preserving and what needs improving in the multilateral trading system, and how to equip the WTO with the tools needed to tackle new challenges and disruptions of the 21st century.

The UK has world-class ‘soft power’ and we will be using this to hold meetings with developing countries, including in the Commonwealth, and maximising opportunities to promote and develop strong relationships to defend the interests of developing countries and the UK.

And we want to partner with Commonwealth countries to engage in WTO reform discussions in the sectors of the future.

We will encourage Commonwealth trade ministers at our next meeting, which Britain will chair, to set out ambitious thinking on how we can bring our trade and development policies closer together so that we can provide mechanisms for ever more countries to trade themselves out of poverty and into sustainable prosperity.

We need to build alliances to update and enhance the WTO rulebook to tackle underlying trade tensions. These issues include industrial subsidies, state-owned enterprises, and tackling blockages in ongoing negotiations, such as over fishing subsidies. We also need to establish new regulations and norms to facilitate emerging regulatory needs – as I have mentioned, such as in digital trade and service liberalisation.

But we also need to encourage trust and transparency in the WTO, in particular, modernisation of the dispute settlement system, improving WTO member compliance with notification requirements, and take another look at special and differential treatment.

For, if we are to have an international rules-based system that inspires confidence, then it needs not only to be fair but transparent. We must know which industries genuinely belong to the private sector and which are simply a cover for state economic activity.

We must redouble our efforts against overproduction, subsidy and dumping. We must protect intellectual property and strengthen our measures against IP theft and the restrictive treatment of foreign investors that are operated through mechanisms such as forced joint-venture requirements.

It is clear that while there are enormous opportunities in the global trading environment, with both the changing global patterns of trade and the nature of what is traded itself, there will be considerable challenges to be faced.

Security, environment, migration, trade and economic development. These things are related – part of the same continuum, as I described earlier.

The WTO and other international institutions have their parts to play in producing stable conditions for progress and prosperity.

But ultimately it is the responsibility of governments, of individual members, to provide the guiding vision. That vision needs to have not only a coherent intellectual and philosophical base but also practical solutions to some of the seemingly intractable problems that we face.

Building consensus requires everyone to have a stake in the solution. It has to work for the smallest and most economically vulnerable as well as the strongest and most advanced economies. It has to provide confidence for those who face an era with an almost unprecedented rate of change, socially and technologically.

And it will involve updating our global institutions so that they reflect the realities of the 21st century – not the political, economic and social patterns of the second half of the second half of the 20th century when they were created.

I believe that together with our partners around the world, using all the advantages that I have set out, the United Kingdom can rise to this challenge as a modern, independent, free-trading nation.

We are not passengers in our own destiny. It is time for us to have a clear direction and set a firm course for our future.

A nation is a human thing. Influence is, at least in part, a reflection of our own self confidence.

We have so much to offer – to ourselves and to the world around us.

A confident Britain will help build a confident future for all.

Liam Fox – 2019 Speech on Global Britain

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, in the House of Commons on 14 January 2019.

As we take this debate into the early hours of tomorrow morning, I hope that we will be able to replicate the good humour, good manners and resilience that the Prime Minister showed during her two hours in front of the House this afternoon.

It is a pleasure to open this debate on “global Britain and the economy” as we consider how to honour the decision made by the British people, in a democratic referendum, to leave the European Union. When Parliament made the decision to hold the referendum it made a contract with the British people that said “we are unable, or unwilling, to make a decision on this constitutional relationship. This will be decided by the British people and Parliament will abide by that decision”.

We have a duty to honour our side of that contract, whether we ourselves voted to remain or leave in the referendum. When we, as members of Parliament, voted in that referendum we did so in the knowledge that our vote carried an equal weight to that of all other citizens of our country.

For Parliament to attempt to block Brexit by any means would be an act of vanity and self-indulgence that would create a breach of trust between Parliament and the people with potentially unknowable consequences.

It is clear that there are three possible outcomes to our deliberations. I want to say at the outset that Members will determine which route they choose, and while we may disagree, I do not doubt either their motives or their patriotism as they choose the course available to this country.

The first is to accept the deal that has been negotiated – and there is no other deal available. The second is to leave the EU with no deal and the third is no Brexit at all.

Before considering the implications of these options I think it important to underline the fundamental strengths that underpin the UK economy, the changing patterns of our trade and the future patterns of global trade.

Mr Speaker, the UK has an excellent economic success story to tell. Since a Conservative-led government came to power in 2010, exports have grown by 38.1%, around 6% per year, driven by an increase in services exports of 54.8%.

We sold some £618billion worth of goods and services in 2017, up 10.9% on the previous year.

New figures released last week by the ONS revealed exports (of goods and services) in the year to November 2018 were worth £630bn, growing by £13.9bn since the previous year.

There has now been 32 consecutive months of exports growth.

As the UK considers future FTAs with the likes of the USA, Australia, New Zealand and the CPTPP countries, goods exports to these countries continued to boom:

To the, USA: up 6.9% to £54.9bn

To Australia: up 2.9% £5.1bn

To New Zealand: up 3.8% to £869m

To CPTPP: up 4.2% to £28.4bn

With other notable goods exports growth to non-EU markets including Nigeria (up 29.2%), India (up 27.3%), and Thailand (up 18.5%), this news comes as London retained its position as the top tech investment destination in Europe earlier this week. According to Pitchbook and London & Partners, the capital received £1.8bn tech investment in 2018, more than Berlin and Paris combined.

These achievements are no accident but the result of the innovation and hard work of British businesses, large and small, supported by a Conservative government that understands that wealth has to be created and that governments cannot simply promise to spend money without knowing where the income will come from.

It is a matter of fact that the relative importance of the EU as an export market has been declining over the last decade – falling from 48.9% of the total in 2010 to 45.2% in 2017.

Of course, the importance of the UK to EU trade varies from country to country.

Figures compiled by Japanese investment bank Nomura show that Belgium’s economy is the most reliant on trade with the UK, with around 8% of Belgian GDP dependant on trade with Britain. That’s the highest level within the EU27.

Belgium exports over €30bn of goods to the UK, which is Belgium’s fourth largest export market. It sells things like textiles, vehicles, chemicals, and food and beverages to the UK.

Belgium’s finance minister has previously called for a quick trade deal with the UK post-Brexit to protect thousands of jobs in the country.

When trade is looked at purely in terms of exports, Ireland is the most exposed. Around 13% of all Irish exports end up in Britain. The Netherlands also has a large reliance on the UK for exports and GDP.

At the same time as the proportion of Britain’s exports to the EU has fallen we are trading more with other partners around the world.

We export a huge variety of commodities. For example, we sold £22 billion worth of food, feed and drink abroad in 2017.

In the year to November 2018, we sold £33.7 billion worth of cars, £25.2 billion worth of medicinal and pharmaceutical products, and £24.6 billion worth of mechanical power generator products – from aircraft engines, to gas turbines, steam generators to nuclear reactors. So much for Britain not producing anything anymore.

But we also export a great many services – we are, in fact, the world’s second largest services exporter. In the year to September 2018, we sold some £82.4 billion of business services, £60.9 billion of financial services and £37.7 billion of travel services. Here, across the services sectors, the UK has huge comparative advantage. Services account for almost half of all our exports, 42.4% going to the EU, and 57.6% to non-EU countries.

World trade is also at a pivotal moment. We are at the intersection of a series of major global trends – trends so seismic that they have transformed, or will transform, economies and societies across the world.

Services are now a larger part of the world economy than ever before, and more easily traded across borders thanks to the internet and digital telecommunications.

We live in an emerging knowledge transfer-based trading system where an engineering report, a 3D printer design, or new advances in machine learning can be just as valuable as the contents of a cargo container. The transfer of services and expertise in things like product design and software engineering – are becoming ever more important.

A revolution in e-commerce is now underway. It is already a major component of world trade, from some of the world’s largest corporations, like Alibaba and Amazon, to the thousands of small companies who have never before been able to trade internationally.

Major new opportunities are arising in the rapidly developing commercial and consumer markets of South East Asia, Africa and Latin America, and it is essential that Britain leverages its unique strengths to realise them.

Britain’s consumers have embraced e-commerce, with around 20% of all goods in the UK bought online. At the same time, of goods sold online, the UK is third globally behind only China and the United States. Last year one in seven global online shoppers bought UK goods.

It is therefore essential that we are able to operate an independent trade policy, allowing us to access the EU market which remains hugely important to us without tying our hands in our ability to access markets in some of the world’s fastest-growing economies.

This deal enables us to develop a trade policy that will mean we can make the most of the opportunities of new technologies, and the changing shape of the global economy, striking a balance between protecting the markets we already have and tapping into new and rapidly expanding markets elsewhere.

Mr Speaker, we must have a policy which is flexible and nimble, where we can make the most of the opportunities of new technologies, and the changing shape of the global economy.

We can boost productivity, raise living standards and promote competitiveness. Working with Parliament, business, civil society and the devolved administrations, this deal allows us to have an independent trade policy for the first time in over 40 years.

We have not got everything we wanted in this deal – but neither has the EU. There is give and take in any negotiation, and compromises have had to be made. But today I would just like to emphasise what this agreement and the political declaration do.

They give the United Kingdom the freedom to decide for ourselves who comes here.

How to support our farmers.

Who fishes in our waters.

And it gives us the freedom to open up new markets to world-class British goods and services around the globe.

The Political Declaration sets out a clearly agreed vision for the UK’s future relationship with the EU and provides precise instructions to negotiators.

What the Political Declaration does is set out an unprecedented arrangement for UK-EU economic cooperation, ambitious arrangements for services and investment, and ensures that our relationship is far more comprehensive than any other free trade agreement the EU has signed to date.

The Political Declaration will enable both parties to deliver the legal agreements that will give the future relationship effect by the end of 2020, covering an economic partnership; a security partnership; and specific agreements on cross-cutting cooperation.

There has been much speculation as to what the alternative to this agreement is.

Let me be clear: there is no alternative agreement to that which has already been negotiated.

The EU and the UK Government have painstakingly thrashed out this deal. It has been endorsed by the Prime Minister and the 27 leaders of the other EU Member States.

Failure to accept a negotiated deal will lead us to either no deal or no Brexit.

This government has been clear that it neither wants nor expects a ‘no deal’ scenario.

Of course the government will continue to do the responsible thing and prepare for all eventualities in case a final agreement cannot be reached.

But the evidence is clear that the best way forward for our businesses, for jobs and for our collective prosperity, is to have a Brexit deal.

Some have suggested that it would be possible under article 24 of the GATT to maintain tariff free trade as an alternative to this negotiated agreement in a no deal scenario. Let me say that there are two immediate problems facing this suggestion. The first is that it would require the agreement of the EU itself and be based on the expectation of a future trade agreement or customs union to be operable.

While it might be argued that this would be in the economic interests of the EU 27, we know from experience that the politics of the EU can take precedence over economic pragmatism. In the political atmosphere of no deal it would be difficult to cultivate the good will necessary for this to proceed.

Secondly, this suggestion would not deal with all of the regulatory issues which are so important to many businesses.

There are of course, Members of this House who want there to be no Brexit at all.

I have to say this would be a democratic disaster. It would be a betrayal of the commitments given by this House to respect the result of the EU referendum and the manifesto commitments on which over 80% of MPs were elected.

Mr Speaker, there are many who say that democracy exists on the understanding that a voter can change their mind.

This is undoubtedly true. But democratic consent by the people is also founded on the understanding that the result of the vote will be carried out.

Failing to do so would undermine the trust of the people. Not only that, but it would be politically unacceptable, a betrayal of our principles and potentially, a seismic and existential threat to our political system. We should not underestimate it. It would be to create a chasm of distrust between the electors and the elected of an unprecedented nature, a wilful destruction of the reputation of Parliament in the eyes of the people.

We should also be under no illusion that the United Kingdom could somehow retain the status quo of its EU membership.

This is not possible. It wasn’t possible even before the referendum was called because the EU itself is changing.

The EU is committed to ever closer union.

Even since the referendum there have been calls to move to qualified majority voting in areas from VAT to common foreign policy. These may, indeed, be right for those who wish to move towards greater integration, but they are not the right course for our country.

Remaining in the European Union would be either to tie the United Kingdom into a more integrationist future or to create ever more tension and friction between ourselves and our European partners.

Let me just say something briefly about two other suggestions. Some members of this House have raised the prospect of a so-called ‘Norway’ or EEA option.

Re-joining the EEA Agreement would mean that we would have to accept all of the four freedoms of the Single Market, including free movement of people.

It would not on its own be sufficient to enable our commitments to Northern Ireland to be met, including on avoiding a hard border between Northern Ireland and the Republic of Ireland.

We’d be stuck in the Single Market, and if this were also coupled with staying in a Customs Union, as some have suggested, we would also be prevented from pursuing a fully independent trade policy.

It would also leave our financial services industry exposed to a rapidly evolving body of EU regulation over which we would have no influence.

In many ways it would be worse than remaining in the European Union, leaving us with many of the restrictions but, in perpetuity, unable to utilise any of the levers of decision-making.

Mr Speaker, there are also Members of this House who have advocated a second referendum. But there are three substantive problems with this suggestion: on practical grounds, democratic grounds and constitutional grounds.

Firstly, in practical terms, it would take time for this House and the other place, to pass the necessary primary legislation.

The Electoral Commission would also have to fulfil its statutory duty to assess the ‘intelligibility’ of the question to be posed – a process taking around 10 weeks.

A further 12 weeks would be required between the question being determined and the referendum actually being held.

It is therefore completely impractical to hold such a referendum before the United Kingdom leaves the European Union on 29 March. It is entirely possible to see such a process taking up to a year before it could be completed.

Secondly, there are clear democratic grounds to oppose a second referendum.

This House voted overwhelmingly to hold the referendum – to give the decision on Britain’s membership of the European Union to the British people.

A ‘People’s Vote’ has been held already – and it produced a clear, unambiguous instruction from the British electorate for us to leave the European Union. We are honour-bound to respect it.

This House confirmed that it would do so when it voted -again overwhelmingly – to trigger Article 50 and begin the process of negotiations. This was further confirmed by the last General Election, in which the two main parties – comprising over 80% of the total votes cast – promised to respect the referendum result.

Let us imagine, Mr Speaker, that a second referendum were held in which the Remain side won – perhaps with a narrow majority, on a lower turnout.

Leave supporters such as myself could well begin demanding a third referendum – a best-of-three scenario. Where would it end?

This would not settle the issue or heal our divisions – quite the opposite. It would further divide our already fractious country at a time when we need to come together.

There is also the constitutional issue. If we overturn this referendum result, we will be setting a precedent that could be applied to other referenda too.

Furthermore, a second referendum would create prolonged – not diminished – political and economic uncertainty.

Mr Speaker, it is time to consign the divisions of the referendum to the past. This is a time to raise our sights and acknowledge that there is a world beyond Europe and there will be a time beyond Brexit – to build the economic opportunities this country needs to thrive as a truly Global Britain.

This Withdrawal Agreement and Political Declaration is the way forward to achieve this Global Britain. To bring us together, seize the new opportunities out there in the world economy, and lead our country to a more prosperous, stable and secure future.

Whilst the UK is leaving the EU, we are certainly not leaving Europe, and this agreement provides the foundation on which to build our continued cooperation with our European partners on trading, political and security matters.

It will enable us to play a full and active role on the global stage, working closely with friends new and old and building an independent trade policy which caters to the strengths and requirements of the UK economy.

This deal allows the United Kingdom to continue to participate in the EU’s existing free trade deals during the implementation period.

But crucially, we will also have the benefit of being able to negotiate, sign and ratify new trade agreements and lay the foundations for future relationships with our trading partners across the world.

We need to take a balanced approach, acknowledging the continued importance of our EU partners, whilst taking advantage of opportunities beyond the borders of our continent in the high-growth economies of Africa, Asia, and South America. I believe these will be key to our economic success as a Global Britain.

This deal will give us the freedom to implement our own trade remedies regime, protecting jobs and livelihoods from unfair trade, set our own tariffs, and take up our independent seat at the World Trade Organisation for the first time in over 40 years.

This will be a key opportunity to further our support for the international rules-based trading system, ensures it delivers free and fair trade, and particularly, to pioneer the liberalisation of trade in services.

As I have outlined, there are fundamental changes in the global economy which simply didn’t exist when the Uruguay round concluded, and it is right that we position the British economy to take advantage of them.

Even as the information revolution continues to transform our world at a staggering pace, with the system of free and fair international trade which underpins it lifting millions out of poverty, there is still much to do to reduce existing – and emerging – tariff and non-tariff barriers to trade that post a serious threat to global growth.

And Britain can play a key role in this.

Mr Speaker, we have an abiding duty to do what is right for our country.

This agreement carries out the democratic will of the British people, to leave the European Union, as expressed by the referendum.

It allows the United Kingdom to take back control of our borders, laws and money – and it delivers a close and cooperative partnership with the EU.

Crucially, it delivers for the British economy. No negotiated agreement is likely to deliver everything that anyone wants. Perhaps no agreement could ever do so.

But for our communities, our prosperity and for future generations, I believe this Agreement is the right thing for the United Kingdom.

I commend this deal and this motion to the House.

Liam Fox – 2018 Speech on Brexit

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, at Royal Portbury Dock on 30 November 2018.

It’s a pleasure to be here this morning at the Royal Portbury Dock.

As MP for North Somerset, as well as Secretary of State for International Trade, it’s fair to say I have a significant interest in the success of a venture that supports more than 500 jobs in my constituency.

And I can’t help but notice that business is booming.

At the time of the referendum, we were told that just voting to leave the EU would cause such an economic shock that we’d lose half a million jobs, our investors would desert us, and we would require an emergency budget to deal with the ensuing fiscal imbalance.

What’s happened since? We’ve added over 700,000 jobs to the economy, with more people finding work than at any time in the past 40 years.

This upward trajectory shows no signs of slowing. Indeed, the OBR has calculated that we can add another 800,000 jobs without creating inflationary pressure, because there’s still slack in the economy.

In 2017 we saw total UK exports rise by 10.9% compared with 2016.

And what did we sell? We sold almost £50 billion worth of mechanical machinery, £41 billion worth of motor vehicles, £16 billion worth of aircraft and £14 billion worth of medical equipment.

And, as I have to mention on St Andrew’s Day, some £4.3 billion of Scotch Whisky.

So much for Britain not making anything anymore. And that’s before we even consider our world-leading services sector.

Clearly, the vote to leave the European Union has not had the catastrophic effect on our economy that was predicted. Quite the reverse.

Now is the time to raise our sights, and acknowledge that there is a world beyond Europe, and a time Beyond Brexit.

My Department for International Trade exists to look to this world, and plan for that time. Perhaps more than any other part of government, we are mandated to look beyond the process of leaving the EU and to prepare for the open, global future that lies ahead.

The referendum settled the question of our departure from the European Union and our manifesto made clear that we will leave the Customs Union and the Single Market as we do so.

The IMF has predicted that 90% of global growth in the next 5 years will originate outside the EU. So the question is, where do we, as a nation, position ourselves to take advantage of the opportunities that this growth will produce.

Future relationship with the EU

The government has made clear that we want to take a balanced approach to the question of our future trading prospects. We need to maximise our access to the EU market but without damaging our potential to benefit from emerging trade opportunities in other parts of the world.

The 27 nations of the European Union constitute some of our largest trading partners. As a whole, some 44% of this country’s exports of goods and services still go to the EU, although that proportion has been declining over the past decade or so.

The withdrawal agreement, and the political declaration on the future relationship, have put us on the verge of securing a deal with the European Union.

It is a deal that delivers on the result of the referendum, ending vast payments to Brussels, and giving the UK control over our own borders for the first time in a generation.

Of course, the end of free movement does not mean the end of immigration. The UK is always open to those who want to work hard and build a life here. But now, we can offer a level playing field, ensuring that we can admit the people we need to meet business demand, wherever they come from – so it won’t matter if you were born in Marseilles, Memphis or Mumbai. The key difference is that we will set the rules according to what we believe is best for our own country.

Above all else, the withdrawal agreement and the political declaration provide the stability and certainty that businesses crave, as well as a firm foundation on which to continue to operate across the EU.

The political declaration proposes the creation of a free trade area for goods, combining deep regulatory and customs co-operation with no tariffs, no fees, charges or quantitative restrictions across all goods sectors.

This would be the first such agreement between an advanced economy and the EU, a recognition of the unique position of the UK and our economy to those of our European partners.

Ambitious arrangements have been made in the political declaration for services and investment, arrangements that go well beyond WTO commitments and build on recent EU FTAs.

And an arrangement on financial services, grounded in the economic partnership, provides greater cooperation and consultation than is possible under existing third country frameworks.

But we have also been clear that our future relationship with the EU would recognise the development of an independent UK trade policy and not tie our hands when it comes to global opportunities.

We have set out an approach which means the UK would be able to set its own trade policy with the rest of the world, including setting our own tariffs, implementing our own trade remedies, and taking up our independent seat at the World Trade Organization.

FTA Consultations

Perhaps most importantly, during the implementation period, my department will have the freedom to negotiate, sign and ratify new trade agreements. . The Withdrawal Agreement means that, from the 29th of March next year, we can begun to build closer commercial relationships with our closest allies, such as the US, New Zealand and Australia, as well as laying the groundwork for improved market access for UK companies to key global growth economies.

As some of you may know, we recently carried out extensive public consultations on our future FTAs with those three nations, as well as on the UK’s potential accession to the Trans-Pacific Partnership – known as CPTPP.

Leaders across these nations have been clear in their endorsement of future trade agreements with the UK.

As Prime Minister Shinzo Abe of Japan put it, we would “be welcomed with open arms”. Far from being isolated, Britain will be an ‘in-demand’ trading partner.

Over 14 weeks, we asked businesses, organisations and individuals to tell us what they needed from these FTAs, and how the Department for International Trade can help them to thrive internationally.

The response rate was phenomenal, far exceeding all expectations.

Above all, the exercise demonstrated the interest that exists in the shape of the UK’s future trade policy, right across the country.

How do we take advantage of this groundswell of interest and engagement from businesses and individuals?

The answer is to harness that enthusiasm to boost exports and attract investment to this country. Clearly, businesses the length and breadth of Britain are eager to move into new markets overseas.

If we want Britain to become a global exporting superpower, all we have to do is unlock that potential.

Even before we get to new trade opportunities afforded by new trade agreements there are still considerable export opportunities for British businesses to exploit in existing markets. We still have ground to make up on our international competitors in many of these countries.

Export Strategy

Our new Export Strategy, published in August, is an important first step to doing just that.

I won’t exhaust you with the detail. But suffice to say that the Export Strategy represents one of the most comprehensive export packages offered to businesses anywhere in the world, designed to inform, connect, encourage and finance exporting opportunities for businesses of all sizes.

There are currently over 24,000 live export and investment opportunities on our website. Put simply, the world wants what Britain is selling. Businesses large and small can find these real-time opportunities at great.gov.uk.

Royal Portbury Dock

And the Royal Portbury Dock where we now stand is a perfect example of the dynamic, global outlook that hundreds of thousands of British businesses have already embraced.

In 1991 the dock was owned and managed by Bristol Council, and it was regarded as a ‘white elephant’.

Since the port was privatised almost 30 years ago and reborn as the Bristol Port Company, over £500 million has been invested to turn this into one of the most capable and advanced ports in the United Kingdom.

Each year, the Bristol Port Company handles some 750,000 motor vehicles, 27% of UK aviation fuel imports, 10% of coal imports, and more than 6 million tons of bulk dry goods.

In all, the work done here at Portbury, and at Avonmouth, contributes over £1 billion to the British economy. Now that is something to be proud of.

Integrated imports and exports

This port, and dozens like it across the UK, shows that the UK’s global commercial footprint is not just about what we sell overseas, but also what we import into this country.

It is crucial in ensuring that competition provides consumers with greater choice and at affordable prices.

But in a highly integrated economy it would also be wrong to ignore the huge and necessary role that imports play in the production of goods and services for export – some 23% of all UK exports have some added value or component that originated as an import.

Less than half of this value added originates in EU countries. And it shows how the United Kingdom is already closely linked to global value chains, that extend far beyond the boundaries of Europe.

In the long-term, a global future for an economy as large, diverse and interconnected as ours was inevitable. Our departure from the EU, combining an open, comprehensive trade relationship there, with the possibility of creating new trading relationships elsewhere is the next phase of that journey.

WTO/The changing world of trade

Internationally, of course, a wholesale revolution in the patterns of trade has already arrived. The tectonic plates of global commerce are shifting under our feet. Our future FTAs are hugely important – not least because they are strategic as well as economic tools – but in the long run, it is not what we do unilaterally, or even bilaterally, that will make the biggest difference.

Instead, it is working to update and improve the rules-based international system that governs global trade.

How the multilateral trading environment develops will almost certainly be the most crucial determinant of the degree of trade liberalisation that will occur and consequently the scale of future opportunities.

This is an area in which the UK will play a pivotal role. The world’s fifth-largest economy taking its seat at the WTO, as a powerful and unabashed defender of free trade, will be a key moment for the United Kingdom. It is one of the most important, if seldom mentioned, aspects of Brexit.

With 164 full members, the WTO is the home of the rules-based international system, and the crucible of free and fair global trade.

Yet even they will admit that their current rules are in need of updating.

The fundamental framework of the WTO’s rules has not changed substantially since 1995. A time before the widespread use of business email. A time before internet banking. A time before data became a valuable traded commodity, like cars and steel.

Consider this: back in 1995, if I asked you whether the digital code that I have sold you on the internet to make something on your 3D printer counts as a good or a service, you wouldn’t even begin to understand the question, let alone be able to answer it!

This is an example of how the real economy has moved and outgrown the rules and regulations that still attempt to govern it.

It’s not just the architecture of the WTO itself that needs reform, but also the regulatory framework, which must be flexible enough to move with the new realities of the global economy, updating itself in real time.

The Prime Minister acknowledged this recently in a speech at the Guildhall when she observed that goods as a proportion of UK and global commerce are declining.

This will be a priority as she attends the G20 in Argentina, where she will hold trade talks with world leaders including Argentinian President Macri. The leaders are expected to agree the first ever UK Trade Envoy for the country.

And as the proportion of trade in goods declines, the digital and knowledge economy are racing ahead, as new products and services emerge from the disruption that technology has left in its wake.

The future of world trade has already arrived, and the United Kingdom is ideally prepared to realise all the opportunities of the digital age and embrace the possibilities of communications technology as a commercial tool.

To take just one example, a higher proportion of retail spending takes place online in the UK than anywhere else on earth. More than China or the USA. More than South Korea. More than Japan.

Recent research by PayPal found that in the 12 months to July, 1 in 7 online shoppers globally had bought goods from the UK – more than any other European country.

In fact, overall, they found that the UK was the third most popular country in the world from which to buy goods online, behind only the US and China.

There are few countries that are as prepared for the coming digital economic revolution as the United Kingdom.

The world’s investors already know this – last year, the UK tech sector attracted more venture capital investment than Sweden, France and Germany combined.

The simple fact is that this country is already a genuine world-leader in fields from artificial intelligence, to digital and data trade, to e-commerce and FinTech.

In the knowledge economy, Britain’s shelves are already stacked with what the world wants to buy.

This is not to say that we are falling behind in goods. On the contrary, those same factors that have made us a global powerhouse of the digital economy have enabled us to retain the cutting-edge of advanced manufacturing.

For example, 17% of all the aerospace products sold in the entire world come from the United Kingdom.

Nearly half of the world’s planes are flying on wings that have been designed, engineered or assembled within just a few miles of where we are today, either in Filton or across the water in Wales.

And how do these wings reach their customers in every corner of the world? They are shipped on specialised ferries from right here in the Royal Portbury Dock.

The world beyond Europe, and the future beyond Brexit, starts right here.

And if you want to know if the world has confidence in this new Global Britain, then look at our investment record and see where global investors are choosing to put their money.

According to UNCTAD, in the first 6 months of 2018 the UK was second only to China in terms of FDI, ahead of the United States and data published by Ernst and Young showed that all parts of the UK and all England regions are benefiting with around 50,000 jobs created as a result.

In the 19th Century, Britain became the world’s first free-trading nation. In the 20th century, we helped to design and create the architecture of global trade.

And in the 21st, we will help reshape the rules-based international system through our independent trade policy.

Today I can announce that in April, when we become an independent trading nation once more, I will push for three key things:

Firstly, the UK will aim to revolutionise the rulebook on digital trade. The existing framework of international trade is vitally important to the functioning of the global economy. Yet, as we have seen, all too often its rules are outdated and unfit for purpose, acting as a brake on the digital economy.

There are too many innovative, rapidly growing companies who find it too difficult to operate overseas because of ridiculous barriers like unjustified server localisation requirements.

Our ambition is to negotiate agreements that go further on digital trade than ever before.

To join those agreements, such as the CPTPP, which take digital seriously.

And to work in coalition with other like-minded countries to drive reform on digital services at the WTO.

Secondly, we will put services at the heart of our trade policy.

The mass liberalisation that has reduced barriers on global goods trade, has never been mirrored for services. Yet the UK is an 80% services economy and has huge comparative advantage across the service sectors, from accountancy and legal, to science, research and development.

Services are a huge part of our present, and will be a larger part of our future, and we must play to our strengths, creating partnerships with countries around the world who want what we have to offer.

This is our commitment to the British SMEs of today, so that they can become the digital giants of the future.

And thirdly, we will continue to fight trade protectionism and improve international economic co-operation.

This is not something that Britain will be doing alone. As the political declaration with the EU says, our unique relationship with the EU 27 will ensure that we can work together to improve global trade, while continuing to develop and operate our own independent trade policy.

But our steadfast commitment to the philosophy and practice of free trade is an irreducible element of what we believe and who we are.

The withdrawal agreement and the political declaration will not please everyone, and we have had some tough choices to make. Choices which many in Parliament, on both sides of the House, are yet to face up to.

But the deal we’ve reached will give us a firm and stable base on which to leave the EU and build this country’s global future, a future that still encompasses Europe, of course, but also the wide fast-growing markets beyond, with all the opportunity that entails.

We will maximise our post-Brexit opportunities by helping British businesses take advantage of the considerable untapped potential of existing markets.

We will use our independent trade policy to negotiate new trade agreements and we will use our ability to act independently at the WTO to shape the global trade environment of the future, defending the open, free and fair trade that is crucial to the elimination of poverty, the nurturing of stability and the building block of our collective security.

We are well prepared for the future of world trade. We are embracing all the possibilities of the digital economy.

No other country has the same combination of fundamental strengths that will allow us to thrive in an age where knowledge and expertise are the instigators of success. Our recent export and investment performance show that sceptics have been wrong. Britain is flourishing.

The divisions of the referendum need to be consigned to the past. Now is the time to set aside our differences, and lead our country to a future of freedom, success, and prosperity.

In politics we cannot always have the luxury of doing what we want for ourselves, but we have an abiding duty to do what is right for our country.

Liam Fox – 2018 Speech on Exports Dividend of Brexit

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 17 October 2018.

Your excellencies, my lords ladies and gentlemen. It’s an absolute pleasure to be here tonight. I would like to thank, in particular, the Lord Mayor and the Lady Mayoress, and all the staff of Mansion House for hosting us this evening.

Charles has been an advocate of DIT from the very beginning, so thank you for your support and your unwavering commitment to spreading the message of free trade around the world on behalf of the City of London.

I would also like to thank my three excellent ministers who are with us this evening – George Hollingbery, Rona Fairhead and Graham Stuart, all our trade envoys and all my fantastic staff from the Department for International Trade, all of whom contribute so much to Britain’s trade and investment performance.

And I wish to extend a particular welcome to the Director-General of the World Trade Organization, my friend and colleague, Roberto Azevêdo, who you’ll all be fortunate enough to hear from once you’ve sat through my speech.

Winston Churchill said that:

“Free Trade is a condition of progress; it is an aid to progress; it is a herald of progress.”

Those words were written more than a century ago, yet he was speaking from a tradition which stretched a lot further – almost a quarter of a millennium – to Adam Smith and David Ricardo.

In all our recent history the Governments of this country, whether Labour or Conservative, have recognised the strategic advantages of international free trade.

In this, of course, they have been right. All trade is strategic. It is also economic. It is also social.

It represents one of the oldest forms of human interaction, and one of the most enduring.

It has linked civilisations, crossed the deserts and the oceans, and bridged the chasm of time.

It spurs innovation, rewards enterprise, and fosters interdependence.

Trade is the food we eat, the clothes we wear, the TVs we watch, the mobiles we use, and the cars we drive.

And all these elements contribute to the “trade dividend”, and that is what I wish to discuss tonight – the human dividend, the security dividend, and the economic dividend of trade – before briefly turning to tonight’s Brexit discussions.

The Human Dividend

The first part of the trade dividend – the human dividend – is not always given the credit it deserves. But it is, perhaps, the most important of all.

As economies across the world have liberalised, opportunities for employment, or commerce, have allowed billions of people to lift themselves from poverty.

According to the World Bank, the three decades between 1981 and 2011, within all of our lifetimes, witnessed the single greatest decrease in material deprivation in history.

It is hard to imagine an international aid programme – even one as generous as our own – that would or could have been so effective.

Such a reduction in human suffering should rank among the greatest of humankind’s achievements, and we should recognise it.

At a fundamental level, free and open trade allows people to improve their own lives, by giving them access to global opportunities, sharing knowledge, skills and experience and fundamentally, by the exchange of goods and services.

As a consequence, living standards across the globe are at their highest level in history.

The desire for comfort, for financial security, to provide for your family and to leave something for your children is innate in humankind. We should all strive to ensure that the next generation can have an easier start in life than the one before.

The dream of achieving what once only existed in the developed world, increasingly blossoms in all parts of the globe – and more importantly is increasingly possible.

Our aim, as a Department and as a country should be to continue this remarkable progress. To give the world’s poorest the ability to trade their way out of poverty.

Yet those in the anti-trade lobby would deny them this possibility. As part of their wider ideological anti-capitalist agenda, they would stop the clock on the social progress and poverty reduction of recent decades.

We must take head-on the destructive arguments of those whose narrative is that free trade is nothing more than a global corporate conspiracy. In fact, our ability to trade is a condition of our freedom.

Indeed, as the American economist Milton Friedman said:

Underlying most arguments against the free market is a lack of belief in freedom itself.

Free trade is intrinsically linked to personal and political freedom. And that brings me onto the second of our trade dividends – the security dividend.

It is important to understand that trade is not an end in itself but a means to an end – to grow and spread our collective prosperity.

The Security Dividend

I have always believed that prosperity underpins social cohesion. That social cohesion itself underpins political stability, and that political stability is the building block of our collective security.

These are all part of the same continuum; you cannot disrupt one of these without disrupting the whole.

To deny people their access to prosperity, or the economic freedom to achieve it, is to risk political extremism, uncontrolled migration, and diminished security.

For the United Kingdom, trade contributes directly to our safety, helping to fund our armed forces and our security services.

It ensures that vital supplies, such as energy and raw materials, continue to enter the UK from abroad.

And the denial of trade – the ability to impose effective economic sanctions on external aggressors – provides a vital tool in dealing with global dangers and rogue states.

Looked at another way, the clamour for economic freedoms against an authoritarian state can help to liberate the innovation, enterprise and individual aspiration that are hallmarks of a free society.

By this reckoning, the promotion of free and open international trade, will in turn foster political stability, promote social security, and build a safer world.

The Economic Dividend

Of course, the benefits of prosperity are not only felt internationally, but in this country as well.

It is as true today as it always was that there is no such thing as government money – only taxpayers’ money.

And, £186 billion of that taxpayer’s money comes, in one form or another, from business. So, it follows that if we improve the profitability and productivity of business through exporting and investment, then the public coffers benefit too.

When I arrived in the newly created Department for International Trade, I was amazed to find that we had no mechanism to enable us to translate the value of our exports into returns for the Treasury – although, as I am finding, this is not unique to the UK.

Since that day, the United Kingdom’s exports have risen dramatically. In 2017 alone, we saw a 10.9% increase. This means that since the time of the referendum we have added £111 billion to our annual exporting total with all the financial implications of tax receipts that this brings.

The result of this is what we might call the economic, or more precisely, the “export dividend’. As a government, we have been elected to be fiscally responsible whilst, of course, continuing to fund public services.

This can only be achieved through a strong economy that brings rising tax revenues without increasing the individual tax burden.

But fiscal balance is not solely about whether to raise taxes or cut spending – it is also about how to generate more revenue by growing the economy domestically and selling more of our goods and services abroad. Put simply as a country, if we want to spend more, we must earn more.

Increasing GDP, however, is not the sole preserve of government. I need hardly tell a room full of business leaders, the head of the City of London Corporation, and the Director-General of the WTO, that economic activity is led by private enterprise and through the demand and supply of a free market, rather than by government directive.

But where government does have a role to play is in facilitating enterprise – creating the optimum conditions for our businesses to succeed and thrive.

And thrive is what our businesses have done.

This remarkable achievement belongs to the thousands of exporters across the United Kingdom who have worked tirelessly to develop and manufacture great products and expand into global markets.

Many of you have joined us here this evening. Your success is Britain’s success.

Exporting, generates wider benefits for the economy, including productivity gains, greater profitability and increased longevity for those that participate in it.

That is not to downplay the importance of imports. It would be naïve indeed to ignore the huge and necessary role that imports play in the production of goods and services for export, as well as consumer benefits: with more choice of higher quality products at lower prices.

Our global era is one where interdependence is increasing – one of the reasons why protectionism and economic nationalism are likely to be inefficient, ineffective, and damaging.

Of course, to benefit fully from the opportunities of the global economy we have to be fully ‘match fit’.

Which is why it is important that supply side reforms, such as those set out in the Government’s Industrial Strategy, complement our push to transform the UK’s exporting potential. The two are mutually reinforcing. We must, create the right conditions for firms to move up the value chain, improving their productivity, competitiveness and profitability.

It is here that we can see the ‘coal face’ of the potential intersection between exports and GDP and its impact on government finances.

We know that higher incomes and economic activity translate into higher tax revenues, both at a business and personal level.

This obviously raises the question of just how great an export dividend could be.

Last month the Institute of Economic Affairs attempted to work this out – and I stress that this is not government analysis. But, where they got to suggested that a 10% increase in the gross value of our exports – currently at £620 billion – could lead to a £50 billion increase in GDP.

Put simply, increased exports could mean increased economic activity. Increased economic activity increases labour demand, raising employment and pushing up wages. And the resulting increased output leads to higher profits and higher corporate tax revenues.

And what of our budget balance. Based still on the 10% uplift in exports, the budget deficit could, according to the IEA, reduce by some £20bn. The potential for us to balance our budget, is real.

Of course, raising the value of a country’s exports by 10% is no easy task, even for a nation as dynamic, resourceful and competitive as the United Kingdom. But not impossible. 20 years ago, Germany’s exports were were exactly ours are today as a proportion of GDP, and now they stand at 47% of GDP, sitting on a fiscal surplus.

So we have accepted this challenge.

Our Export Strategy, launched in August, set out the ambitious target of raising exports as a proportion of the UK’s GDP from 30 to 35 percent, putting us towards the top of the G7.

That is the scale of our ambition.

For Britain to fulfil its whole potential we must access all the available global markets. It is not a choice between the EU and the rest of the world – we need to sell to both. The EU remains the market for 44% of our exports, but the EU itself accepts that 90% of global growth in the next five to ten years will come from markets outside Europe.

Tonight, the Prime Minister is in Brussels for the October EU Council. We have made our position clear: that we will honour the democratic decision of the British people made at the referendum.

We will leave the customs union and the single market. We cannot accept the jurisdiction of the European Court of Justice. We will leave the Common Fisheries policy and the Common Agricultural Policy. We will end free movement. We will have our own independent trade policy and we will not accept any solution that divides the United Kingdom by treating Northern Ireland differently to any other part of our country.

We hope that we will achieve agreement that leaves all European countries able to take advantage of both our own and growing global markets.

Trade, and the rules-based international system that upholds its freedoms, underpins everything, from political stability and security, to economic prosperity and the livelihoods that have lifted a generation out of poverty.

We are opening a new chapter in this nation’s history. It is a once in a generation chance to shape a better future for our own people, realise the highest ambitions of our businesses, and offer real leadership on free trade in an often uncertain and divided world.

It is also a chance to address the legitimate concerns of those who have been left behind by the pace of global change, and to build a global economy that works for everyone.

We in government have a responsibility to ensure that the dividends of trade are evenly spread. The rising tide of prosperity must lift all boats.

In fact, the dividends of trade are perhaps greater than for almost any other human activity. Yet in every place in the world, and at every time in history, trading freedoms have been under threat.

We all have a duty to defend it.

Liam Fox – 2018 Speech on Free Trade

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 25 July 2018.

Good afternoon. It is a pleasure to be back in Washington.

I would like to thank our hosts, the Heritage Foundation, for inviting me to address such a distinguished gathering, on a topic that is not only close to my heart professionally, but more politically relevant than at any time in the past thirty years.

In my first speech as Secretary of State for International Trade I set out the case for an open and liberal trading environment.

That speech was in Manchester in the North of England – home of the Industrial Revolution, and a city with iconic associations to free trade.

That was nearly was two years ago when trade barely registered on the radar for most of our media. How different things are today when trade is front and centre of the international political debate . The disputes between the US and China, around NAFTA, steel and aluminium tariffs, and the UK’s future trade agreement with the European Union are the most talked about issues of the day.

It is therefore a good time for us to examine both our attitudes to trade from first principles and to measure them against our domestic priorities and international obligations.

It was just over 240 years ago, on 9 March 1776 that Adam Smith published the Wealth of Nations.

It set out the principles for the emerging world of global commerce at the end of the eighteenth century with a vision of what trade could produce in terms of prosperity and opportunity.

He countered the dominant mercantilist viewpoint – revolutionary in its time – and the case he set out is just as relevant today.

Indeed, he reminds us still, that the essential element of a successful trading system is mutual benefit.

David Ricardo took these principles of free trade forward when, in 1817, he published the theory of comparative advantage.

Building on Smith a generation before, Ricardo described the economic reality of the gains from trade and demonstrated how free and open trade is profitable to all.

It is one of the most powerful concepts in economics, described by the economist Paul Samuelson as the only proposition in all the social sciences that is both true and non-trivial. It remains, to this day, the most fundamental justification of the power of free trade.

Now of course, since those days, since 1817, the world has changed beyond all recognition, yet the experiences of globalisation, and of technological advances unimaginable in Ricardo’s time, have only served to validate his theory.

The principles of free and open trade have underpinned the multilateral institutions, rules and alliances that helped rebuild post-war Europe and the world beyond.

They helped usher the fall of communism and the tearing down of the Iron Curtain; they facilitated 70 years of global prosperity, and they have raised the living standards of hundreds of millions of our fellow human beings across the world.

Indeed free trade has allowed us to take 1 billion of our fellow human beings out of abject poverty in just one generation – one of the great achievements in history.

Just as predicted in the early theorising by Smith, Ricardo and others, time and time again we find a strong positive correlation between economic openness and growth.

During the 1990’s, per capita income grew three times faster in the developing countries that lowered trade barriers than in those that did not.

That effect is not confined to the developing countries, either. The OECD Growth Project found that a 10 percentage-point increase in trade exposure was associated with a 4 per cent rise in income per capita. Free trade works.

Globally, as free trade has blossomed, poverty levels have fallen to their lowest in history: bringing industry, jobs and wealth where once there was only deprivation.

Trade liberalisation gives consumers greater choice, and the competition it unleashes brings higher quality and standards at lower prices for everything from food and drink to toys and cars. Free trade provides developing countries with the opportunity to embrace the international trading system, to integrate into global value chains, and ultimately to grow their economies.

But the effects of free and open trade go further than simple economics. This is particularly true in the era of globalisation and will become even more so in the future. I have already mentioned the fact that free trade has already allowed us to take 1 billion of our fellow human beings out of abject poverty.

But trade is not an end in itself. It is a means to spread prosperity. That prosperity underpins social cohesion. That social cohesion in turn underpins political stability, and that political stability is the building block of our collective security. It is a continuum that cannot be interrupted without consequence. If prosperity is denied to those who aspire to it – and free trade is a key enabler of this – we should not be surprised if the result is further mass migration across the globe or indeed political radicalisation.

Those of us, the world’s richest countries, who have done well from a global free trade system cannot simply say ‘we’ve done okay’ and pull the drawbridge up behind us without having to pay a price.

There are many arguments in the worlds of politics and economics that will never be settled – just as well for the politicians and journalists here today – and are as much a matter of interpretation as they are objective data.

But the effect of protectionism is as close to settled science as anything in economics will ever be: it means reduced productivity gains and lost economic growth. Long run historical trends suggest that a 20 per cent reduction in trade holds back productivity by around 5 per cent.

And worse, in a world of globalisation where interdependency is increasing and where disruptions in one part of the world can quickly ricochet around the rest, our ability to act unilaterally with impunity is diminishing by the day. The 2008 financial crisis was just the latest example of how economic earthquake in one part of the globe can soon be the financial tsunami for the rest.

We, today, are at an important juncture in the history of free and open trade, and of the established international order.

In many ways, the picture is actually a positive one. After several years of relative stagnation, the growth in global trade is once again outpacing the rise in global GDP with trade predicted to grow by 4.5 per cent this year with GDP growing by 3.8 per cent.

The global economy continues to rebound from the dark days of the financial crash and ensuing recession experienced by many large economies.

Yet it is also a reflection of how globalisation and new technology continue to facilitate trade, and the irrepressible growth of the digital and knowledge economies – sectors which hardly existed even two decades ago.

And this is perhaps the root of our current paradox which is this: we have seen the benefits of free trade at home and abroad. We are seeing a rise in living standards and a reduction in global poverty. We are witnessing our innovative industries achieve global dominance.

Who, 20 years ago, could ever have imagined the global impact of Google, of Facebook or of Amazon? Who would have believed how cheaply we could access the newest electronic gadgets from mobile phones with more computer capacity than the Apollo programme, or the latest high definition TVs at seemingly evermore affordable prices?

Yet, even with all this evidence of the success of our own economic beliefs, the public, especially in the world’s richest countries, are seemingly questioning the benefits of a free trading system with politicians seemingly caught in a crisis of self confidence in what was once an article of faith for many.

Perhaps at least part of the explanation lies in the rate of change and reorientation of our economies and the fear of actual and potential displacement felt by many workforces.

In Britain we have seen industries like coal mining all but disappear, but new service industries and modern manufacturing take their place, including the growth of renewable energy. In areas such as steel production we have seen new technologies enable us to produce the same output with far fewer employees.

It is, and will be, new technology that will be the major disruptive force in our economies. We will best serve both our economies and our workforce not by turning our back on free trade, but by ensuring that we can provide mitigation for those who bear the brunt of change by providing the necessary economic support, especially in re-skilling, retraining and education.

Change is coming and we must embrace it – for our global competitors certainly will – but we must also be willing to reach out that helping hand to the men and women in our countries who will most feel the winds of change and use our skills, our experience and our knowledge to maximise the benefits for the generations to come.

We can bring prosperity and revival to some of our challenged industrial communities as they transition to new patterns of work as they have always done. From the agricultural age to the industrial revolution, to the rise of the knowledge economy, change is forever with us. Rather than seeking to avoid the realities of the globalised economy, we should ensure that its rising tide lifts all boats.

To do so, we require a set of global rules that are transparent, robust and enforceable and institutions that are credible and accountable. Despite its flaws, trade specialisation and innovation, largely as a result of globalisation, has spawned a productivity revolution through increased competition, economies of scale and global value chains.

When this is combined with the effect of liberal values of meritocracy, democracy and the rule of law, it can create a tidal wave of innovation and creativity.

It is no coincidence that the United Kingdom and the United States are among the world’s most innovative economies, while those with more authoritarian regimes are only now beginning to catch up as centralised planning at least in some cases gives way to individual creativity.

In the twentieth century, one of the products of the influence of the US and the UK in particular was the creation of the WTO.

From the founding in the aftermath of the Secord World War of the General Agreements on Tariffs and Trade, the WTO emerged as the home of the rules-based international trading system, and the repository of those free trading values that have underpinned global growth and facilitated more formal trading agreements.

It is worth remembering that these rules, and the WTO itself, are not an external imposition on our economies, but were largely shaped and codified by the work of successive US and British governments.

In 1948, our nations were founding members of the General Agreement on Tariffs and Trade.

In 1986 it was the US, under President Reagan, that launched the Uruguay Round of multilateral negotiations that led to the establishment of the World Trade Organisation.

The United States has been at the heart of the WTO since the very beginning.

Of course, the system that we established in 1995 is also in need of some refurbishment.

After all, the global economy is now driven by advances in technology that were embryonic in 1995.

Who could have foreseen, for example, the rise of the digital economy? Or how knowledge and data have become so valuable? Or the blurring between goods and services? Just imagine the concept of selling a digital code on the internet to build something on a 3D printer. It would have sounded like science fiction when the WTO began.

The structures of the international system may not have caught up with the modern world. But that is cause for reform and renewal, not rejection. The UK and US are ideally placed to work together to modernise, and make the international rules-based trading system work better, so the benefits of free trade can truly be felt by all.

Above all, the WTO remains the way to ensure that a level playing field is created and maintained between the major actors in international trade but its rules must be enforceable and the actions of its members fully transparent if confidence is to be maintained.

All of this is occurring in a period of rapid change in the patterns of global trade.

The thriving economies of South and East Asia and, increasingly, Africa, are, and will become, ever more important as their newfound prosperity drives demand for the goods and services from more advanced economies, like the UK and the US.

The sheer scale of the change that is underway is often difficult to grasp from here in the West, in countries which have long enjoyed economic and political dominance.

Twice this year I have been in the Chinese city of Shenzhen. When Britain handed Hong Kong back to China in 1997 Shenzhen had a population of 5.2 million. Today it has a population of nearly 12.5 million.

By 2030 China is expected to have more than 220 cities with a population of more than a million. The whole of Europe has 35.

And on top of the vast Asia-Pacific growth it is predicted that there will be 1.1 billion middle class Africans by 2060. We are living through a period of profound and stunning change. Such a shift, not just in global demographics, but in the rise of the collective wealth of developing countries, will determine where the golden economic opportunities of the future will be – and where we must be too, if we are to provide jobs and prosperity for our peoples in the future.

If we are to navigate the changes that the next decade will bring, we have to fully accommodate these changes and recognise the emerging pattern of our own trade too. We cannot wish away change any more than we can ignore its effects. As I used to say to my patients when I still practised as a doctor ‘there’s no point in complaining about the air when there’s nothing else to breathe.’

Within a rapidly changing world, the trading relationship between the UK and the United States remains a consistent source of stability and prosperity. And it is our two nations that have the opportunity to negotiate a trailblazing, modern free trade agreement.

Because we both fundamentally believe in trading and commercial freedom, our interests are not in opposition to other countries – trade between us is not a zero-sum game.

The UK is the largest source of Foreign Direct Investment into the USA, with around $560bn of holdings here – more than France and Germany combined and 30 per cent more than Japan.

Our investment is also twenty times the investment from China, and thirty times that of Mexico.

British companies employ over a million workers across every state in the Union, from Ohio and Pennsylvania to Florida to California.

I don’t know if we have any Texans here today, but more than 107,000 people in the Lone Star State are employed by UK firms and I wonder how many of them understand that.

Likewise, American firms employee huge numbers of British people. We have more than a trillion dollars invested in one another’s economies – probably the most interdependent investment relationship on our planet today.

Yet we are also on the threshold of a renewed trading relationship that will further enrich both our nations.

For the first time in more than four decades, the United Kingdom will have an independent trade policy required to forge closer ties to our closest economic partner, through an ambitious free trade agreement.

It is an unprecedented opportunity for an ambitious and future-proof framework for our bilateral trade. We must not let it pass us by.

Likewise we must not fail to take the opportunity for global leadership in the areas where we already excel, particularly in trade in services and especially financial services. The UK and the US host the two leading global financial centres and are at the forefront of innovation. Our deep and broad relationship on financial services is a cornerstone of the modern global economy. We should make it even easier in the future for businesses to operate across the Atlantic through frictionless trade.

Fundamentally, our close economic ties are underpinned by the strong personal links that tie our two peoples. We share a common language, mostly, but also the ties of history, and even more importantly of values. We must also be linked by our shared ambition to shape the global economy in ways that match our shared interests.

It is not just in our economic interests but in our strategic interests for the long term.

For the past century our two nations have stood shoulder to shoulder against mankind’s gravest security threats. We have saved Europe in the 20th century from the twin scourges of Communism and Fascism.

We must have the optimism and self confidence now to shape it for the future: free markets, through free trade, for the benefit of free people.

I will leave you today with the words of President Reagan:

“The freer the flow of world trade, the stronger the tides of human progress and peace among nations”

There is no greater prize than that.

Thank you.

Liam Fox – 2018 Speech on Global Trade

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 18 July 2018.

Good morning everyone and thanks to the Federation of Small Businesses for the opportunity to hold this gathering this morning.

In my first speech as Secretary of State for International Trade I set out the case for an open and liberal trading environment.

In that speech, in Manchester, with its iconic associations to free trade, I referenced Adam Smith, one of my political heroes – and not just because he was also Scottish and went to Glasgow university.

It was just over 240 years ago, on 9 March 1776 that he published the Wealth of Nations.

It set out the principles for the emerging world of global commerce at the end of the eighteenth century with a vision of what trade could produce in terms of prosperity and opportunity.

He countered the dominant mercantilist viewpoint – revolutionary in its time – and the case he set out is just as relevant today.

Indeed, he reminds us still, that the essential element of a successful trading system is mutual benefit.

David Ricardo took these principles of free trade forward when, in 1817, he published the theory of comparative advantage.

Building on Smith a generation before, Ricardo described the economic reality of the gains from trade and demonstrated how free and open trade is profitable to all.

When countries trade with each other, both sides benefit – even if one side is better at everything. It’s counter-intuitive but it is true nonetheless.

Ricardo talked of wine from Portugal and wool from England. Now Americans can buy iPhones built in China but designed in America – or the British can invest our pensions in a fund that trades stocks in London but has a back office in India. Everyone benefits.

Yet, although the principles of free trade are the same today as set out by Smith and Ricardo, the way we trade has changed beyond recognition.

Today, we stand on the verge of an unprecedented ability to liberate global trade to the benefit of all our citizens, with technological advances and burgeoning innovation dissolving away the barriers.

And Smith, nearly a quarter of a millennium later, is repeatedly vindicated. Time and again we find a strong positive correlation between economic openness and growth.

During the 1990s, per capita income grew 3 times faster in the developing countries that lowered trade barriers than in those that did not.

That effect is not confined to the developing world, either. The OECD Growth Project found that a 10 percentage-point increase in trade exposure was associated with a 4% rise in income per capita. So free trade works.

Trade, specialisation and innovation, largely as a result of globalisation, has been of huge and sustainable benefit to the world economy. This in turn has spawned a productivity revolution through increased competition, economies of scale and global value chains.

When this is combined with the effect of liberal values of meritocracy, democracy and the rule of law, it can create a tidal wave of innovation and creativity.

It is no coincidence that the United Kingdom and the United States are among the most innovative economies, while those with more authoritarian regimes are only now beginning to catch up as centralised planning gives way to individual creativity.

In the twentieth century, one of the products of the influence of the UK, US and others was the creation of the WTO.

From the founding in the aftermath of the Secord World War of the General Agreements on Tariffs and Trade, the WTO emerged as the home of the rules-based international trading system, and the repository of those free trading values that have underpinned global growth and facilitated more formal trade agreements.

And as we have heard when such agreements are reached, the positive effect on businesses, industries and economies can be remarkable.

Let me give you just one example.

The EU-Korea free trade agreement came into effect in July 2011. In the year before the deal was agreed, the UK beer and cider industry – commodities close to my heart in the West Country – sold almost nothing to Korea. Exports were under £2 million.

By 2016, however, sales to South Korea have exploded to over £65 million, and companies from large multinationals to SMEs we are able to embrace the opportunities that it bestowed. That is the scale of what can happen and that can happen multiplied many times over.

Making the moral and political case for free trade

Globally, as free trade has blossomed, poverty levels have fallen to their lowest in history: bringing industry, jobs and wealth where once there was only deprivation.

Trade liberalisation gives consumers greater choice, and the competition it unleashes brings higher quality and standards at lower prices for everything from food and drink to toys and cars. Free trade provides developing countries at the same time the opportunity to embrace the international trading system, to integrate into global value chains, and ultimately to grow their economies.

But, as Smith found, it would be a major mistake to assume that the case for free trade is so self-evident that it does not require steadfast champions.

We have seen the way in which trade agreements such as TTIP produced significant anti-trade protest across Europe, including in pro- free trade countries such as Germany.

Protestors successfully exploited public anxiety, based largely on lack of information and perceived, not actual, risks.

So, we must be willing to confront the myths and distortions that are often perpetuated by those opposed to the principles of free trade.

At the same time, we must ensure the right mitigations are in place – in reskilling and training – for those displaced by unavoidable technological change.

To make the case for free trade relevant, we need a narrative that transcends the whole political spectrum.

We can begin by pointing out that global free trade has enabled us to take 1 billion of our fellow human beings out of poverty in just one generation. It is one of the greatest achievements in the whole of human history.

And it is hard to imagine an international aid programme that would or could ever have been so effective.

History of protectionism

Yet, the benefits of free trade have not always been well understood.

And – perhaps more damaging – the perils of adopting a protectionist course have not always been apparent.

We saw this in the trade wars of the late nineteenth century. The ‘Long Depression’ of the 1870s onwards saw country after country trying, and failing, to protect themselves from global competition through tariff barriers and closing off their markets.

And we saw the same story again during the Great Depression.

Whether in Germany through draconian exchange controls, in America with Smoot-Hawley tariffs or in Britain and the Commonwealth with the Ottawa Agreements, we saw history repeat itself.

Again, countries reacted to domestic economic problems by attempting to cut their markets off from international competition.

So let’s be clear. Protectionism saps trade, disrupts supply chains and raises import costs. It creates uncertainty for businesses and consumers, and sows the seeds of hostility and mistrust between nations. It is not a history we need to repeat.

Bank of England statistics

On the other hand, it is a testament to our ability to learn from our history – and the robustness of our international cooperation – that we did not repeat these mistakes during the most recent economic crisis.

Even at the height of the global problems in November 2008, the G20 reaffirmed its commitment to ‘a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation and entrepreneurship that are essential for economic growth, employment and poverty reduction.’

Unlike the Great Depression – where trade in global goods remained 20% less than its peak for most of the following decade – global output recovered in just two years.

Now we all know there are a number of long-standing jokes about the indecisiveness of economists.

There’s no such thing as a one-handed economist: it’s always on the one hand this, on the other hand that. Or if you laid all the economists in the world end to end, they still wouldn’t reach a conclusion.

But the effect of protectionism is as close to settled science as anything in economics will ever be: it means reduced productivity gains and lost economic growth. Long run historical trends suggest that a 20% reduction in trade holds back productivity by around 5%.

Yet now, despite all our collective experience, it seems we may be moving in the wrong direction. As the Governor of the Bank of England Mark Carney said in a speech earlier this month, trade tariffs recently announced between the US, its NAFTA partners, China and the EU have the potential to double bilateral tariff rates – and may already be having a dampening effect on global export orders and manufacturing output. A prolonged trade war would cause lost growth and higher inflation.

As I have said repeatedly in a trade war there are no winners there are only causalities for now. The social, political and security implications are impossible to predict.

How the world of trade is changing. Global trade – a snapshot

We are at an important juncture in the history of free and open trade, and of the established international order.

In many ways, the picture is a positive one. After several years of relative stagnation, the growth in global trade is once again outpacing the rise in global GDP.

This growth has been driven by those economies that will shape the future of trade, and continues to mirror the rebalancing of global commercial activity: Asia made the biggest contribution to trade growth of any region in 2017, accounting for 51% of the increase in merchandise exports, and 60% of the increase in merchandise imports.

Now this growth is partly cyclical, as the global economy continues its rebound from the dark days of the financial crash and ensuing recession experienced by many large economies.

Yet it is also a reflection of how globalisation and new technology continue to facilitate trade, and the irrepressible growth of the digital and knowledge economies – sectors which hardly existed even two decades ago.

But even as we gather under London’s blue skies, there are trade clouds gathering on the horizon.

The 19th Report on G20 Trade Measures, prepared jointly by the WTO, OECD and UNCTAD, warned explicitly of ‘a worrying trend of an increase in trade-restrictive measures’.

Its research showed that the pace at which trade restrictive measures were being implemented across G20 countries in the seven months to May this year had doubled in comparison to the six months before that, with 39 new measures being recorded.

These measures now cover one and half times the value of trade in comparison to restrictions enacted over a similar period in 2016/17.

It would be easy to for us to say that this is just a blip, brought about by the recent US and Chinese measures.

But when we also see that the average number of trade remedy investigations instigated per month is at levels only last recorded in 2013, the trend becomes clear.

One conclusion is that, since 2008, the world’s largest and most advanced economies, constituting the G20, have been falling prey quietly to the siren call of protectionism.

Morally, as well as economically, we cannot allow that to happen.

Those nations that have benefitted the most from free and open international trade – not only in terms of economic growth, but in the living standards of their citizens – should not pull up the drawbridge behind them and deny those same rewards to more recently developing nations.

Why this matters

And why do we think this matters? Why should a UK consumer, small business, or even an exporter, concern themselves with the rise in protectionism and trade restrictive measures in other parts of the world?

Part of the reason is that no company, however small, can rely solely upon the products of one nation.

Global value chains have been the secret behind the consumer revolution of recent decades – they are the reason that we can today buy a flat-screen television for a fraction of the cost of a decade ago, or that we can get fresh fruit and vegetables in our supermarkets of all types year-round.

They have also meant that production costs at every stage, from coordination and logistics to assembly and packaging, have fallen, making it easier and cheaper to divide up the entire process.

On the whole, firms no longer specialise even in a single product. Instead they often specialise in tasks – from assembly, shipping or retail, for example.

At its heart, this is the natural conclusion of Ricardo’s comparative advantage.

Most trade, at some estimates as high as 70%, is now in ‘intermediates’ – services, components and materials that make up final products for consumption.

To complicate the picture still further, the UK is the centre of robust intra-industry trade. This means that we import and export the same products, to account for varying tastes in consumer preferences between different countries.

Think BMWs and Citroens being bought here, while similar cars from the Sunderland plants are exported across Europe.

Put simply, this country’s exports and our ability to satisfy consumer demands are reliant upon free and open access to imported goods.

Evidence of this can be found if we examine the UK’s Trade in Value Added – a relatively new trade statistic jointly developed by the OECD and the WTO that attempts to measure these cross-border trade flows more accurately than traditional measurements have.

The analysis is experimental, yet it has clearly shown that more than a fifth of the content of UK exports are themselves imports, in one form or another.

And this suggests that, as a nation, we are well integrated into global supply chains. Moreover, it shows that the UK’s broader economic health, from our domestic markets to our world-class exports, is largely predicated upon free and open access to the global economy.

In such an environment, where the components of a single consumer item may come from several countries, and cross and re-cross international borders before they are assembled, it is easy to see how small tariffs can quickly add up.

This brings us back to our original problem.

Globalisation affects the lives of every single person in Britain today, and the commercial viability of every business. If a trade war really does break out, the subsequent hike in tariffs, even between just a few large economies, could have catastrophic consequences for global trade.

And the impact of this, let’s be clear, would be felt by every single British citizen, and billions of others across the world.

Changing patterns of global trade

In the future, these consumers will be most prevalent in those hugely growing markets that are radically redefining the patterns of global trade.

I often repeat the fact that the IMF estimates that, in the next 10 to 15 years, 90% of global economic growth will originate from outside the European Union.

The thriving economies of South and East Asia and, increasingly, Africa, are, and will become, ever more important as their newfound prosperity drives demand for the more goods and services.

The sheer scale of the change that is underway is often difficult to grasp from here in Europe, a region which has long enjoyed economic and political dominance.

So twice this year I have been in the Chinese city of Shenzhen. When Britain handed Hong Kong back to China in 1997, not exactly a lifetime ago, Shenzhen had a population of 5.2 million. Today it has a population of over 12.5 million.

By 2030 China is expected to have 220 cities with more than 1 million inhabitants, 220. The whole of Europe will have 35.

And on top of the vast Asia-Pacific growth it is predicted that there will be 1.1 billion middle class African consumers by 2060. The world is seeing a stunning and profound change.

Such a shift, not just in global demographics, but in the rise of the collective wealth of developing countries, will determine where the golden economic opportunities of the future will be – and where we must be too, if we are to provide jobs and prosperity of the future.

If we are to navigate the changes that the next decade will bring, we will have to fully accommodate these changes and recognise the emerging pattern of our own trade too.

56% of Britain’s exports now go outside the EU, compared with only 46% in 2006. What is more, while our EU exports are still dominated by goods, our non-EU exports are evenly split between goods and services. Yet it’s services that present the greatest opportunity to expand Britain’s trade.

We, as a nation, must re-orientate ourselves to where we can prosper in a rapidly changing global environment.

Engagement model

Our decision to leave the European Union is a decision to embrace this new world – not retreat from it. To be more open to free trade – not less. To fight protectionism – not to put up new barriers that would stifle our prosperity.

It was agreed at the European Council meeting in March that the UK could formally begin negotiating new trade agreements from April 2019.

For the first time in over 40 years we will be able to determine who we trade with, and on what terms.

To ensure we make the most of this unique opportunity, it makes sense to start thinking about our negotiating priorities for the future, and thinking about them now.

In the House of Commons on Monday, I set out how Parliament, the Devolved Administrations, the public, businesses and civil society will be able to engage in a trade policy that benefits the whole of the UK and ensure that we meet our commitments to an inclusive and transparent trade policy.

We committed to working closely with the Devolved Administrations on an ongoing basis to deliver an approach that works for the whole of out United Kingdom.

Because everyone, from every part of the UK, must have the opportunity to engage and consult.

Scrutiny of our future trade arrangements is vitally important as we take powers back from the EU into UK law, and begin negotiating our own new free trade agreements.

With other nations

That is why today I am announcing four public consultations on our post-Brexit trade negotiations.

Our intention is to seek free trade agreements with the United States, Australia and New Zealand. These are crucial strategic and economic relationships that must continue on a sound footing after Brexit.

UK exports to Australia and New Zealand are growing at 14.8% and 16.8% respectively, a faster pace than our global average, and far outstripping export growth to the EU.

The United States is the UK’s single largest trading partner and foreign investor, accounting for over £100 billion worth of UK annual exports. As we saw during President Trump’s visit, the UK is very keen to further our already excellent trade and investment relationship, and I look forward to continuing these discussions during my visit to Washington next week.

While there are many other markets the UK will look to for new agreements in the future, our shared values and strength of trade with the US, Australia and New Zealand make them the right places to focus our initial attention.

However, we must go further. The government is determined not only to seek deals with key bilateral partners, but to break new ground: putting the UK at the heart of the world’s fastest growing regions.

That is why I am also announcing a fourth consultation on potentially seeking accession to CPTPP – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

This covers markets across the world – from Canada to Chile, Mexico to Vietnam. It reduces 95% of tariffs, along with other barriers to trade.

The eleven members of CPTPP accounted for £82.5 billion of UK trade in 2016, more than the Netherlands, France or China. It covers a diverse range of economies, many of which have been – and are projected to continue to be – a major source of global economic growth.

These consultations are about how we position ourselves as Global Britain. To build the export markets, investment opportunities and trading relationships of the future.

Trade affects us all – whether it is through the prices and availability of product on our supermarket shelves, to the resources available for our public services, to the jobs and investment on which we all rely.

So, I believe it is vital that everyone has their say to ensure these deals work for the whole of the UK – and I strongly urge anyone and all organisations with an interest to take part in these consultations.

Opportunities for the UK

Because our trading future, as our United Kingdom, is bright.

We require an economic outlook that allows us to take advantage of the substantial opportunities that Europe will continue to bring, but without limiting our ability to adapt to a changing and growing world beyond the European continent – as the Prime Minister has repeatedly made clear.

And when we leave the European Union, we will be able to do just that. We will be able to enter into meaningful trade agreements with partners across the world, leading the charge towards greater liberalisation where we can play to our strengths – in financial services, digital and investment.

We will have the freedom to negotiate in areas such as services, tariffs, quotas, and conformity assessments.

We will take up our independent seat at the WTO and continue to champion the rules-based international trading system.

We have a once in a generation opportunity to set our own course.

It is where the world is growing fastest that demand for British services and goods will offer the most potential growth for our exporters and investors.

Since the Department for International Trade was created, my ministers and I have undertaken 188 visits overseas. No matter where we have travelled, we have found the same phenomenon.

For UK export goods – from top end fashion, to high-quality cars, to our luxury food and drink produce, to high-end manufacturing – the demand is growing.

For professional services too, from accountancy to law or education or life sciences or financial services, the growing demand in places like Asia and Latin America will need more of the skills where we are already world class.

In the knowledge economy, we already have what others want and need.

The demand is out there for what Britain is able to sell. And we must play our comparative advantage.

We must set our sights on this brighter future.

We are at a historic crossroads. Britain has decided to leave a European orbit to embrace a global one, retaining our close links with our European partners while understanding our global potential.

It is an exciting time that we should approach with confidence and optimism, secure in the knowledge that our own belief in free trade and the benefits it has brought are not our history but our road map to the future.

Liam Fox – 2018 Speech at CHOGM

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, at CHOGM on 16 April 2018.

Good afternoon, and welcome to this ‘Investing in the UK’ event.

It is a pleasure to have so many of you attending today.

The Commonwealth Heads of Government Meeting is, first and foremost, a forum of cooperation and a chance to strengthen our partnerships with friends and allies.

This event is, then, a welcome opportunity for me to talk exclusively about the strengths of the United Kingdom!

As Secretary of State for International Trade this is something that I’ve had the opportunity to practice all over the world, from Sydney to Vancouver, from Bangkok to Bogota – and everywhere in between.

Fortunately, it’s a message that I’ll never get tired of delivering.

For some less well-informed investors, the economy of the UK begins and ends in London.

There is no denying that our capital is one of the great global cities.

It is the world’s foremost financial centre – a hive of commercial activity unrivalled anywhere in Europe with an economy roughly the size of Sweden’s.

Moreover, it is a city that continues to be at the cutting edge of new industries. Take, for example, technology.

Last year, new tech companies were founded in London at the rate of one an hour.

In that same period, more tech venture capital was invested in this city than in Germany, France, Spain, and Ireland combined.

I could go on about the merits of London. But the department I lead has a remit covering the whole of Great Britain and Northern Ireland and is tasked with spreading the prosperity and opportunity of international trade across the whole country.

Moreover, today’s event is designed to showcase the vast commercial prospects that exist both inside and outside our capital.

Few people realise that almost 80% of the UK’s GDP is generated outside London.

The UK remains the number one destination for inward investment in Europe, with an open, liberal economy, a flexible and dynamic labour market, business-friendly taxation and regulation and a strong, transparent rule of law.

Fundamentally, the UK is a safe and stable economy in which to invest, with a proven track record of returns for our global partners.

I’m delighted that we are joined today by a panel of six recent investors in the UK, hailing from across the Commonwealth, who will share their experience of doing business here.

You will hear their stories of successful investments across the country, including:

Seqirus from Australia, whose centre of excellence in Liverpool has created 100 new jobs in developing a new flu vaccine.

South Africa’s Fair Tree Capital, whose hotel portfolio spans South West England and the Lake District.

And Royal Enfield Motorcycles, whose new technology centre in Leicestershire involves significant UK-India cross collaboration on engineering and design.

Added to this, I am delighted to announce that India’s Wadhawan Global Capital will invest £300 million into the UK over the next few years, supporting 1,000 jobs.

This is just one of 55 potential deals that we have identified across 17 Commonwealth member states, collectively worth over £1.5 billion, and creating some 5,800 jobs.

I very much look forward to learning what Wadhawan’s plans are during the fireside chat later in this session.

Our panellists’ businesses are part of an extensive pattern of investment that exists between the UK and the Commonwealth.

In the 2016/17 financial year, there were 384 new FDI projects in the UK from Commonwealth investors – 17% of the overall total.

These created almost 10,000 new jobs across the country and safeguarded a similar number.

The importance of our Commonwealth partners to the UK economy cannot be overstated.

India is the fourth-largest source of UK FDI, just behind the United States and China.

In turn, India comes just ahead of Australia and New Zealand, which together have overtaken Japan to land 127 new projects in the UK.

It is no wonder that 2016/17 was the most successful year for FDI in this country’s history, given the strength of our regional diversity.

By this I don’t mean the bewildering array of accents and cultures spread over this small island, but the regional expertise that exists to support certain industries.

Wales, for example, has recently seen a £3 million investment from the Melbourne-based life science firm Medical Ethics.

The company cited the UK’s proven capacity to provide the expertise required to commercialise their technology, including regulatory affairs, manufacturing and clinical studies.

Tax subsidies and patent incentives were also a contributing factor, giving the UK a competitive edge when compared to other locations around the world.

Meanwhile, South West England boasts strong links with the aerospace and nuclear industries, with the presence of Rolls Royce and Airbus, as well as the new reactor development at Hinkley Point, creating a highly skilled local workforce.

The South East is home to globally renowned film studios at Pinewood and Leavesden, while Cambridge and East Anglia plays host to ‘Silicon Fen’, as well as Europe’s most important life science and research clusters.

It also hosts Motorsport Valley – a globally leading cluster of high-performance technology, motorsport and advanced engineering companies that includes the majority of the world’s Formula 1 Teams.

The area also contains Silverstone race circuit – familiar to many as the home of the British Grand Prix.

Most importantly, the UK’s two flagship regional economic development programmes – the Midlands Engine and the Northern Powerhouse – are having a significant impact on Britain’s regional prosperity, creating a wave of new commercial opportunities.

The Midlands is now home to the largest number of medical technology companies in the country, with eight world-class research universities combining their collective excellence to drive cutting edge innovation, research and skills development.

And the Northern Powerhouse has brought together the great cities and towns of the North of England to form a global hub of advanced manufacturing and energy capability.

We have the National Graphene Centre in Manchester.

We have Sheffield’s Advanced Manufacturing Research Centre; the home of Boeing’s new high-tech component manufacturing facility – much praised when I visited Boeing’s Headquarters in Seattle last week.

And we have the National Innovation Centre for Data, which opened in Newcastle last year.

These regions were the cradle of the Industrial Revolution. Now, once again, they are world leaders in science, industry and technology.

And let’s not forget Northern Ireland, with its burgeoning machinery and engineering sector.

Or Scotland, which is leading the world in the uptake and development of renewable energy.

With all of these, I hope I have given you a flavour of the vast opportunities that are available in this county and inspired you to look to London and beyond for your investment.

My Department for International Trade is committed to ensuring that the UK continues to be a global leader in attracting foreign investment.

Earlier this month we launched our new FDI strategy, designed to focus our efforts on maximising wealth creation across the whole UK, and to transform DIT from one of the most respected investment promotion organisations in the world, to the most sophisticated.

Our three-part approach will make innovative use of data in measuring the economic impact of projects.

It will identify those opportunities across the UK with the greatest potential for international investors.

And it will target government support precisely where it will have the greatest positive impact on the economy.

DIT, together with our overseas business partners, intends to fully realise the potential of every part of the United Kingdom, and build a more prosperous future for Britain, the Commonwealth, and the world.

Now, I’m sure you’re all as eager as I am to hear from our panellists, but first, I have the great pleasure of introducing the Lord Mayor of London.

For more than eight centuries, the Lord Mayor and the City of London Corporation have been London’s beating commercial heart.

They have been instrumental in the City’s success and have forged its international reputation.

This afternoon, we have the pleasure of his views and experience on the almost limitless investment opportunities that London has to offer.

Lord Mayor – welcome.

Liam Fox – 2018 Speech in Hong Kong

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, in Hong Kong on 21 March 2018.

Good morning to everyone.

It’s a real pleasure to finally be here, at the start of the GREAT Festival of Innovation in Hong Kong.

For myself and the members of my team who have travelled from the UK, it almost seems surreal that this fantastic showcase is finally upon us. And a huge thank you to all of our people here from the UK and Hong Kong who have made this happen.

For me, this festival offers an opportunity to look far into the future, exploring the technological developments that will unite the UK and Asia, and shape the world economy for up to a century or more.

Innovation is, of course, a key focus of ours. My department was created in order to shape an independent trade policy for the United Kingdom, our first for more than four decades.

A 21st Century trade policy must embrace the realities of the modern trading environment, and that means protecting, promoting and celebrating innovation.

But the location of this festival lends it an extra significance.

Hong Kong has always been one of my personal favourite cities – a global commercial hub that possesses a unique blend of drive, energy and dynamism.

Of course, this city has, for centuries, been Britain’s gateway to Asia.

Of course, we are not here to dwell on the past. But the ties of history and language that are shared by the UK and Hong Kong have put opportunities ahead.

Our shared history is the preface of to our shared future. Now, the IMF predicts that, in the next two decades, 90% of global growth will be generated beyond the borders of the European continent.

Much of this will be driven by the Asian economies, where new markets are growing to meet their own innovation revolution.

The next few years will offer a golden opportunity for the UK to work with our partners across Asia to drive innovation and shape the future of global trade.

The UK has the experience and capability in key industries – from technology and finance to education and healthcare – that make us the natural partner for the region’s burgeoning economies.

This festival is hugely symbolic. Why? Because it comes at a time when the UK is seeking to deepen our trading ties with partners across the world.

This not only applies to those emerging economies that will be the drivers of global economic growth, but also to long-established partners and friends with highly developed and complementary economic structures.

And of course, Hong Kong is foremost among these.

We have chosen to hold the GREAT Festival here in Hong Kong because our trading relationship with this city is, I believe, a model for the UK’s future trading partnerships.

Both the UK and Hong Kong believe that agility and adaptability are the keys to an effective trade policy in an ever-changing and evolving global environment.

And this approach is at the heard of what the Prime Minister has described as a truly ‘Global Britain’. We won’t be less engaged, but more engaged as we leave the EU, deploying the determination that Britain has always had to promote our values and help shape the global environment in our fast-changing world.

Governments must be able to act quickly and effectively to changes on the ground, ensuring that new industries do not mean new barriers to trade but effective and efficient policy tolls to deal with them.

The Strategic Dialogue with Hong Kong was one of the first of our new measures to be launched following the creation of DIT.

We are already holding meetings, at official and ministerial level, to identify and remove those non-tariff barriers which currently impede trade flows between our two economies. Because there is much we can do, and businesses already do, to liberalise our trading practices without undergoing the process of negotiating a full free trade agreement.

What underpins this is the recognition that we share values, goals, and a mutual commitment to global free trade, and built on that commonality.

Earlier this year, I travelled to Davos in Switzerland to attend the World Economic Forum.

The event was, as ever, extremely productive, and an invaluable opportunity for businesses and policymakers to come together and shape the future of global trade.

In that respect, it is a lot like particular showcase – the GREAT Festival of Innovation.

But the WEF also emphasised, to me, how unnecessary some of the perceived complications around global trade liberalisation really are.

A Free Trade Agreement is, of course, a fine achievement for both parties, and should often be pursued as the ultimate goal.

But it is simply too broad to be the first or only approach to bilateral trade liberalisation. Often, barriers can be lifted more quickly with an incremental approach which identifies existing common ground – the ‘low-hanging fruit’, if you like, of trade relations.

There is no greater defender or advocate for the rules-based global trading system than the United Kingdom and multilateral agreements remain the gold-standard of trade liberalisation. Hong Kong is a strong and valued ally in this cause.

Yet it is also true that the system possesses an inherent inflexibility. Too often, formalised policy frameworks have been left standing by progress and innovation, and by the technological developments that have accelerated globalisation.

Let’s just think of the one great change we have witnessed – the development of the digital global economy. It’s hard to imagine now when it didn’t exist.

In the UK alone, the digital economy supports around 1.4 million jobs, and the sector is growing 32% faster than the wider economy.

In 2015, global e-commerce sales surpassed $25 trillion.

Yet there exists no formal international framework governing these vast trade and capital flows.

Of course, you do not need to hear this from me. Many of Asia’s most distinguished and innovative digital companies are here with us at this festival – one of the reasons we chose Hong Kong in the first place.

Many of you might assert that your industry is doing just fine, having reached all its achievements without any multinational governance whatsoever.

But any such measures would be designed not to stifle innovation, but to enhance it.

But these disrupters are the Darwinians drivers of our economy. We all know the benefits that technology can bring to consumers and citizens.

And, I want to see a wider discussion around how technology can help governments to facilitate trade and lead effective policy development.

Later this morning, we will have a panel discussion on ‘The Future of Free Trade’.

Much of the talk around the future of trade is focussed on the ‘trade disruptors’. These new technologies and industries are at the forefront of the shake up the global economy and are reshaping the way we approach international commerce.

Those of us who are fortunate enough to be able to help shape trade legislation must ask ourselves how we can harness the power of innovation to enhance global opportunity and build a more prosperous future for us all.

So technology may be a disruptor, but it is also a facilitator.

One small example is my own department’s trade platform online – great.gov.uk.

Government is using digital innovation to directly put exporters in the UK in contact with potential customers overseas.

Similarly, by the same route, companies in Asia and around the world can access a searchable directory of British exporters, allowing them to quickly source their ideal product.

It is a small but important step towards government embracing technology as a way to facilitate more traditional trade.

But if we really want to harness innovation to open global trade, we must look at the transformative effect technology has had in lifting the burden of bureaucracy from certain industries.

Now take personal finance, just as an example. Twenty years ago or more, if you wanted to take out a loan, you had to walk into a bank for a face-to face discussion with the manager.

For those of you, remember what it was like, armed with your employment and income details, it was up to you to persuade the bank that you were able to repay the money borrowed.

Today, you can take out a loan at the touch of button, or a tap of a smartphone screen you can achieve the effect.

This is not because finance has somehow become less complex. Arguably, people’s personal finances and credit scores are more convoluted than ever.

Rather it is because technology has removed the bureaucratic burden from the customer, and even from the bank manager, and delegated it to an algorithm.

Even in medicine – my own profession in which I began my working career – patients can be assessed, and prescriptions issued through an automated online service.

The fundamental contribution that technology has made to human existence has been to make complicated things simple. It probably says something about our nature that the history of innovation is a long string of labour-saving devices for us.

And if technology can make paying your tax or booking a holiday more efficient and accessible, then why can’t it do the same for exporting?

A bilateral or multilateral free trade agreement is, fundamentally, an attempt to make the system less complicated. It is an admirable an important goal and one which we must pursue with vigour at all time.

But as well as making the world less complicated, we should also recognise that technology can be used to ease to improve the conditions of the people within the economic system.

We cannot forget that innovation also has the potential to unlock vast swathes of the global economy, especially in the developing world.

For years now, millions of Africans have been using mobile phone banking, in lieu of a reliable system of high-street institutions – an early innovation often overlooked outside the continent.

E-commerce has also helped to neutralise at least to some extreme the barriers of geography and infrastructure that have sometimes stifled new ventures in undeveloped nations.

And by allowing economic activity to take place within the home, it continues to emancipate women in particular across the globe into the world of work – entrepreneurism at the click of a mouse.

But, as well as addressing the wider questions of technology and international trade, the GREAT Festival of Innovation also has a narrower and more immediate focus: the vast opportunities that exist between Asia and the United Kingdom.

Our country has a richly-deserved reputation for excellence in innovation and technology.

The UK boasts some 58,000 technology firms. In the last year, more venture capital in tech came to London than in Germany, France, Spain and Ireland combined.

In many areas, the research and development capabilities of the UK have put us at the cutting-edge, creating the technologies of the future.

In Bristol close to where I live and represent in parliment, a company called Graphcore is developing the next generation of computer processors.

In Exeter, the Centre for Graphene Science are developing self-powering wearable tech that will allow electronic devices to be woven directly into clothing – not that far away from the images the young people were telling us about.

And in Cardiff, the Compound Semiconductor Catapult is leading the way to find a high-capacity replacement for silicon chips.

These companies are being aided in their endeavours by a government that is committed to technology and innovation.

Our business-friendly regulatory environment and the lowest corporate tax rate in the G20 have helped to propel us to 1st place in Forbes’ Best Countries for Business survey.

Our Industrial Strategy is ensuring that the investment, resources and infrastructure are in place to help innovators to thrive in every corner of the United Kingdom.

And our ambition to build a truly global Britain is allowing UK companies to trade more freely than ever with our partners across Asia.

Let me give you just one local example – the UK company OC Robotics are working here with Dragages Hong Kong to provide remote access technology for the construction of the undersea road tunnels between the mainland and Hong Kong International Airport.

This is what is at the heart of the GREAT Festival of Innovation.

The UK may have a lot to offer, but so does Asia especially Hong Kong. The festival is not about selling our products to Asian markets though we don’t mind if we do, but about building relationships and collaboration.

The partnerships between UK and Asian firms that will be established at this festival and the networks that we build will shape the future not only of the UK, Hong Kong, and Asia, but of the world.

The festival will showcase the very best of British and Asian innovation in how we will learn, how we live, how we work and how we play in the future, across multiple sectors.

We are here not only to celebrate what we have, but to build a network that will drive innovation, develop new technology, and determine the future of global trade.

We are at a truly exciting moment in history. We want to hear your opinions on global commerce, and learn from your expertise to unlock the opportunities of free and open commerce.

If we innovate together, we can achieve so much.

So, let’s discover the future. Let’s create tomorrow.

Thank you.

Liam Fox – 2018 Speech on Britain and America

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 16 March 2018.

Welcome.

It’s a pleasure to be here at Thomson-Reuters with our close friends at British American Business – an organisation whose very existence is testament to the close and enduring ties between our 2 countries.

And, as always, it’s great to be in the United States, a country with which the United Kingdom has so much in common and shares such a strong and enduring bond.

If you read some sections of the international press, it might seem as though the UK is entering an economic meltdown, with uncertainty around the Brexit process driving commerce and investment away from our shores.

It is an interesting hypothesis, but unfortunately for those commentators, one refuted by simple facts.

In 2017, we saw the highest level of foreign direct investment projects landing in the United Kingdom in our history – hardly the hallmark of an economic slowdown.

This was matched by an increase of some 14% in the value of our exports.

In the year to October 2017 some £617 billion of British goods and services were sold overseas, narrowing the UK’s trade deficit by just under £11 billion.

Partly as a result of this improved export performance, order books for British manufacturers are stronger than at any time since August 1988.

We also saw a continued explosion of interest in British tech and innovation.

The UK boasts some 58,000 technology firms. In the last year, more venture capital was invested in London than in Germany, France, Spain and Ireland combined.

All of this adds up to an extremely positive picture for the British economy – an economy that already boasts record employment levels.

Many of these are down to the record number of new investment projects that I mentioned earlier.

These have contributed almost 108,000 new and safeguarded jobs to the UK employment market in 2016/17.

My Department for International Trade regularly surveys the largest foreign direct investors in the UK economy.

The fundamental reasons they give for investing in the country are always the same.

We have a highly skilled workforce, produced by some of the world’s finest universities.

We have a low tax, well regulated economy which fosters innovation and supports tech start-ups, and we have world-renowned legal system and protections for intellectual property.

Like you, we speak English. We are in the right time zone to trade with the Asia in the morning and the United States in the afternoon.

Those tech companies I mentioned earlier are reassured by our robust intellectual property laws – fundamentally, companies across the world trust the UK to protect their investments.

Our success does not, of course, mean that there won’t be challenges ahead. And I appreciate that firms often crave continuity, and Brexit of course represents a break with the past.

But the referendum result was not a signal of impending insularity.

Rather, it was driven by the democratic principle that laws governing your life should be made in your own country, by people you have elected – a principal that you, our American cousins well understand.

So I want to inject a note of reassurance and optimism. Britain is not turning away from the world. We are not turning away from Europe either – or the economic, political or personal bonds that have evolved over centuries.

All we are doing is leaving the European Union.

Brexit will open far more doors for Britain than it closes. For the first time in more than 4 decades, we will have an independent trade policy, that we can shape to meet the needs of our businesses, and those of our partners operating on UK soil.

It is a once-in-a-generation opportunity for the UK to tap into the changing realities of global trade and ensure our future prosperity.

In 2006, around 60% of the UK’s exports went to other EU countries. By 2020, this is predicted to fall below 40%.

Cooperation and alignment will continue where necessary, but we should also strengthen our ties to our most important global trading partners, including the United States.

The UK intends to be a global champion of trading freedoms, working both unilaterally and within international bodies such as the WTO to erode and remove barriers to trade.

Free trade is fundamentally beneficial to mankind. And there’s a good reason for us to believe this.

Both our countries have benefited enormously from open, capitalist economies. We are standing in one of the greatest cities on earth – built on the back of business, commerce and trade.

The core insight of capitalism is that competition drives improvement and if competition is so good, why would you stop it at your border?

History tells us that, when we trade more and welcome competition, we find that we all benefit –individuals, companies and countries.

It benefits us as consumers to get more choice.

It benefits industry as a whole – competition encourages innovation.

And it has wider benefits. Britain and the United States have the world’s 2 largest foreign aid programmes.

But as generous as they are, free markets have lifted more people out of poverty than every aid programme and charity combined.

According to the World Bank the years 1981 to 2011 witnessed the greatest reduction in poverty in human history – it is no accident that those were the years when China opened-up and the Soviet Union fell.

Of course, free trade does not mean trade without rules. It is entirely legitimate for states to take measures to protect against unfair dumping from abroad – we’re currently taking a Trade Bill through Parliament that will protect our ability to do just that.

But in the long run, it is better for everyone involved if we resolve disputes multilaterally – that’s why we called for the G20 meeting in November at which this issue was discussed.

We look forward to continuing to work closely with the United States and our allies around the world for co-operation on issues of mutual concern.

Make no mistake – trade with America is one of Britain’s top priorities. How could it not be, when America is our single largest export market? Exports to America are twice those to Germany, our next largest market.

That is why we are investing so much effort here: my department, the Department for International Trade, has staff in 11 locations across the United States.

We are making as a government, up to $7 available billion in export finance for companies trading here.

And we are working closely with the American government.

Our joint Trade and Investment Working Group has been discussing issues such as encouraging small business exports, the technical transfer of existing EU-US agreements, and cooperation on financial regulation. It will hold its third meeting later this month.

And we’re partnering on technology. American firms will be crucial to the success of a future British spaceport, and we are following up this month’s successful multilateral space forum by sending teams to major industry events such as the Space Symposium in Colorado Springs.

In September we signed our first ever Science and Technology agreement, which began with us putting £65 million into a project at South Dakota to explore the physics of the early universe.

So Britain is not turning inwards. We will have an independent voice at the World Trade Organization, and we will use that voice to push for more trade, more openness and a deeper and stronger liberal trading system.

We will continue to have areas of policy where our interests coincide with the EU but we need to be free to pursue our own national interests where they differ.

And because we believe in free trade, our interests are not in opposition to other countries – trade is not a zero-sum game.

Open trade with Britain is in America’s interests and we have hundreds of billions invested in each other’s economies, maintaining jobs across both our nations.

British companies create more jobs in America than firms from any other nation. In fact, UK companies employ over a million people in America and US companies employ over a million people in the UK.

Trade and investment flows benefit both countries, I believe that politicians and business leaders in America appreciate this fact, judging by the number of positive comments about UK trade from members of Congress from both parties that I met yesterday in Washington.

As you would expect, one of the reasons I’m in the US is to talk about steel. We are, of course, disappointed by the recent decision to raise import taxes on steel and aluminium.

And this is an issue the Prime Minister and I have both discussed with the administration on a number of occasions.

I am confident that, together, we will find a solution that reflects the reality of the strong national security and trade relationship that exists between the UK and the United States, and indeed between the wider EU and the United States. A solution that preserves the economic, commercial and security interests of us all.

My department is helping to emphasise to political leaders across the US just how valuable those mutual interests are.

Last year we published an analysis of the importance of UK trade to every single congressional district.

For example, in the New York Tri-State area including Pennsylvania goods exports to the UK are worth approximately $7.8 billion a year.

Service exports to the UK are approximately $15.1 billion.

And 1,873 UK companies employ around 224,000 American citizens.

To put it simply, our economic relationship is invaluable.

The commercial bonds between the US and the UK are strengthened by cultural and personal ties.

800,000 of our citizens live in each other’s countries.

We speak the same language, almost – remember that there’s no other country America can trade with that has as many native English speakers as the UK.

We are one of the few major economies to use the same legal system as you, or vice versa depending on your view of history. That makes things easier when you choose to invest.

But it’s important we maintain those links – we cannot afford to let them atrophy under any circumstances, politics or economics.

That is why I am here this week. And that is why I’d like to thank British American Business for all the work you and your members do to cultivate these vital links.

Britain and America are an outstanding partnership, and what we have done together has truly shaped the world.

Thank you.

Liam Fox – 2018 Speech on UK Exporters

Below is the text of the speech made by Liam Fox, the Secretary of State for International Trade, on 8 March 2018.

Good morning.

It’s a pleasure to be here today at the British Chambers of Commerce Annual Conference, and a privilege to be invited to address the representatives of some of this country’s most distinguished businesses.

For more than a century and half, the constituent chambers of the BCC have protected and promoted Britain’s businesses.

In all that long history, the chambers have always been resolutely outward-facing, and eager to support global ventures.

And that expertise is especially valuable at this pivotal moment for our country.

If you read some of our national publications, you could be forgiven for thinking we were about to enter some kind of economic black hole. Nothing could be further from the truth.

We are seeing record foreign direct investment here in the UK; and our outward direct investment stock is now at £1.2 trillion, bringing prosperity at home and abroad.

Our country’s traditional strengths are prospering just as much as our new ones. We’re seeing record tech start-ups – 8,000 in the last year; but manufacturing order books are also well above their long-term trend.

Our employment levels are at an all time high and our exports of both goods and services are booming as an increasingly large global middle class is able to access the high quality products that Britain has to offer.

Investors continue to show their confidence in the UK. When we ask them why they choose the UK they tell us that our legal system is second to none, we have a skilled work force, a low-tax and well-regulated economy, cutting edge tech, some of the world’s best universities, we speak English and we are in a great time zone for global trading. Some black hole.

In fact, it is a time of historic opportunity.

There are great prizes for our economy as we leave the EU in this era of globalisation, if we have the courage to grasp them.

In fact global trade is leading our economy forward: exports rose by over 11% last year, 6 times faster than the economy as a whole. They reached well over £600 billion in 2017 .

The EU will always be a very important part of that, and this government has been clear that we want a deep and special partnership with the EU.

But we cannot let the practices and patterns of the past constrain the opportunities of the future.

In just 10 years the proportion of our exports that go to the EU has dropped by 11 percentage points.

And this is not a one-off change. Over the next decade or so, 90% of global economic growth is expected to be from outside the EU.

That could be reinforced as a higher proportion of trade comes from services, and transport costs for goods decrease: both of these trends could reduce the importance of geographic distance.

In my speech at Bloomberg last week, I spoke about how patterns of global trade were changing, and how shifting global prosperity will change the pattern of demand for goods and services.

I will not repeat all the arguments here. But if you consider the fact that, by 2060, there are predicted to be 1.1 billion middle class Africans – all demanding luxury food, cars, consumer goods and services – then you can begin to glimpse the potential that the future holds.

And London is the global financial centre with the closest time zone to the African continent, and therefore a natural choice to finance this growth.

China is another example. Because the Chinese economic phenomenon is now 40 years old it’s easy to become inured to the statistics, and forget how vast this opportunity is.

But every year China adds an economy the size of Switzerland to its GDP.

By 2030 China will have 220 cities with more than a million people. The whole of Europe will have 35.

Last month the Prime Minister and I went to China, for me the second visit in a month. While I was there I met the mayor of Wuhan, a city of which few in Europe have heard. Yet it has a booming economy and a population larger than London. It’s this kind of dynamism the UK can tap into.

No one knows the capability of British businesses better than you. Our firms are world-leading repositories of talent, knowledge and expertise.

But the government is not complacent here; and we can never rest on our laurels. We are building the economic base that will help our country compete on the world market.

Our firms lead the world on innovation, research and the deployment of new technologies. Nonetheless, we have committed to raising the proportion of our GDP spent on research and development to 3%, which would put us in the top quartile of OECD countries.

And UK businesses have unbeatable offerings on healthcare, infrastructure and education, that have enabled us to build a trade and development programme that is the envy of the world.

Nonetheless, our modern Industrial Strategy is making sure we have the right infrastructure, market frameworks, skills base and business support to build a strong economy.

My department is also working with businesses across the country to increase exports and investment.

Many are members of the British Chambers of Commerce. Some are represented here today.

They are the wealth-creators of society. Everything that my department does is designed to help them in that role.

Department for International Trade advisers based in 108 countries around the world are providing targeted support for those high-value export and investment opportunities that contribute the most to the UK economy.

And DIT also has an extensive range of resources available to SMEs and new exporters.

In 2016 to 2017 UKEF provided £3 billion in support, helping 221 UK companies sell to 63 countries around the world. 79% of these companies were SMEs.

And we are currently piloting a new Global Growth Service, increasing our support for those medium sized businesses with international ambitions.

I understand that elements of DITs offer to companies is remarkably similar to Export Britain – the BCCs own online resource.

This allows us almost unlimited scope to work together.

And of course, DIT will forever be indebted to the BCC for the tireless work that you have done for the UK’s exporters.

Today is, of course, International Women’s Day. One of this gathering’s key themes is diversity in business, and I am pleased that the BCC takes gender equality as seriously as the government.

I am proud to lead one of the best-performing departments in Whitehall when it comes to women in senior roles.

But there is more to do, and the British government is committed to achieving gender equality at all levels of society, and in all walks of life.

Internationally, we have championed the cause of e-commerce which offers unique opportunities for women, including those in the developing world, to have a future in the global economy.

It is a future that we all want to see.

But this country is also facing a wider choice about its own future.

Because we should not just be looking to maximise our existing opportunities – not when the pattern of global trade is due to change so significantly.

We have to look for and create new opportunities.

So our approach should not be premised on simply identifying how much of our current relationship we want to keep, but what we need to prosper in a rapidly changing global environment.

Before leaving the European Union, the UK’s trade policy is centrally coordinated from Brussels, exclusively in the interests of the EU.

Soon, we will have more control over our own economic and political destiny than at any time in the past 4 decades.

This government, and the Department for International Trade, is clear about the kind of Britain that we want to build.

We want a Britain that is open to the opportunities of the world – a country that treads a path to prosperity based not in protectionism, but in openness and economic cooperation.

It is a vision that is, I believe, shared by many of you in this room.

And it’s a vision that can be shared by many overseas, if we have the courage to embrace the opportunities of the future.

We want to maintain our existing links with partners outside of the EU.

We’re negotiating our new schedules at the WTO. We’re working to roll-over existing EU trade agreements – and we’re taking the Trade Bill through Parliament to give us the powers we need to do that.

But we also want to sign new agreements with key partners.

And we also want to use this opportunity – a seat at the international table for the first time in 40 years – to instil our values in the international system.

Regulation is a good example of this. Thanks largely to the WTO’s success in lowering tariffs, technical and regulatory barriers to trade have become comparatively more important.

Yet too often regulatory reform is presented as simply lowering standards.

This is a straw man invented by those who take a generally anti-trade view. No-one wants a regulatory race to the bottom – least of all the UK, where our comparative advantage lies in quality not price.

It’s not about high regulation versus low regulation, but good regulation versus bad regulation. Often you can achieve the same aim from regulation through a different route.

For example, cars made under EU and US regulations have similar safety records, despite very different standards.

That’s why we should move away from regulatory identity and towards regulatory equivalence – starting, as the Prime Minister said last week, with our future trade relationship with the EU.

If we can get likeminded countries to follow our lead, the opportunities are enormous – they would increase growth in our trading partners and therefore increase demand for our goods and services.

For me, the firms represented by these chambers are a source of inspiration.

Time and again, they have proved themselves infinitely adaptable.

Time and again, they have proved that they are forward-looking, and willing to rise and meet the challenges and prospects of a new era.

Time and again, they have driven this country to new heights of wealth and prosperity.

We are on the verge of a bright, prosperous future. The opportunities are there for the taking. We need only the courage to seize them.

Thank you.