Disruption, Deals and Delivery

Three thoughts on UK trade strategy: remarks to IPPR Trade Conference

Three thoughts on UK trade strategy: remarks to IPPR Trade Conference

Warmest congratulations to the IPPR for picking their moment.

The next quarter is basically going to define the future of UK geopolitics—probably for the next decade. In theory, over the next three months, we should see the Strategic Defence Review, the National Security Strategy, the Industrial Policy, the Trade Policy, and the Comprehensive Spending Review. So, you know, the next three months—well, they’re quite a moment.

I just wanted to say a word this morning about *disruption, deals, and delivery*—to help get the conversation going.

Disruption

Let me start with disruption, because we are obviously now at a riptide in the international order.

It’s been coming for a long time—it hasn’t crept up on us overnight. But for the generation of politicians in place today, much of their work will now be defined by what comes after America - what you might call Amexit.

America is now leaving the multilateral system that it created—between the 1944 Bretton Woods Conference and the creation of the OECD in 1961.

If you haven’t seen it, it’s worth looking at a brilliant piece in Foreign Affairs this week by Ngaire Woods, the founding dean of Blavatnik School of Government.

Ngaire makes a simple but powerful point: *you need a hegemon to create a multilateral system—you don’t need one to run it.*

So the next year or two are going to be defined by, in lots and lots of different spaces, by coalitions of the willing coming together to take on the mantle of American leadership.

We should give ourselves comfort by looking not just at the supply side of power, but the demand side for order.

Look at the smaller, open trading economies who need safeguards against anarchy and discord. They account for about 80% of global GDP.

What you’re about to see is those nations—those blocs—coming together:

- To safeguard against revanchist behaviour like Russia’s,

- To deepen trade ties,

- And to remember that we’ve also got a development and climate agenda that must be advanced.

We mustn’t be disheartened. The UK’s role now has to shift. We must become a *system enabler*—helping safeguard peace and prosperity for the next 20 to 30 years.

Deals

That has big consequences for the deals we now need to do—on trade, yes, but also on defence

If you go back to the 1950s—one of the last big moments of global flux—and look at Churchill’s famous Sinews of Peace speech in Missouri, he later repeated that message to a Conservative Party Conference in about 1954.

He talked about the “three majestic circles” of UK foreign policy.

Now, the story is more complicated. You're probably talking about *five majestic circles*.

*First*, we’ve got to get the alliance with the English-speaking world right. Driving through on a US trade deal is important. And we are very lucky to have Lord Mandelson on the ground, at the front end of that work.

*Second—and most importantly—we must deliver the most **ambitious and bold reset* with the European Union.

For those of you who are pessimistic about that—look no further than the draft report my committee published a few weeks ago, outlining 20 different ways to reset our relationship with the EU.

The Best of Britain analysis shows that deeper trade with the EU could actually offset the damage that tariffs have done.

And if you want to feed in, our trade specialist, Abi Millis—heroically drafting the final report—is right here on the second row.

That report will be published the week before the Prime Minister’s summit with President von der Leyen.

*Third*, across the Asia-Pacific: the US and Japan are now the two biggest economies in CPTPP. The Japanese were far-sighted in driving it forward after America left TPP. They knew they needed a mechanism to lock in a wider arc of the Asia-Pacific into a high-quality, rules-based trading system.

We are now one of the two largest economies—alongside Japan—in that alliance. Driving that wider arc of CPTPP is a hugely important priority.

Put together, the EU and CPTPP account for around a *third of global GDP*. These are serious alliances.

*Fourth*, we need a deeper relationship in the Gulf—by finalising the deal with the GCC.

*Fifth*, we must broaden ties across the Commonwealth—starting with the India deal.

Do that, and you begin to see the UK *emerging as a hub of international trade*—at the centre of a post-American, rules-based trading system that drives peace and prosperity for the next 20–30 years.

Delivery

All of that *raises the stakes* for the trade strategy we hope to see published next week.

We now need a *recalibration of UK sovereign capability* when it comes to trade.

I’d highlight *three things* here.

*First*, His Majesty’s Government must stop trying to do everything. When it comes to driving trade and exports for our smaller traders, the Government should create the right platform—the right enabling strategy—and then get out of the delivery business.

As Marley's brilliant report argued, this work should shift the lion’s share of the work for supporting smaller exporters to *our Chambers of Commerce and mayoral combined authorities*. That’s where trade support for UK SMEs needs to move.

*Second*, this frees up our to embassy teams to do two things:

- First, *focus on government-to-government work* in particular our *defence alliances* which will drive so much of our exports in the years to come.

Think about Euro-NATO, AUKUS, especially AUKUS Pillar Two, GCAP Tempest, the Five Power Defence Alliance, our longstanding alliance with Saudi Arabia and other Gulf allies. These defence pacts are the steel core in our new trade alliances. The inner steels in the ‘majestic circles’ of our trade partnership in the future. A system that ensure trade rests on trust.

Where I disagree with Marley is this: while I value his emphasis on the Green Industrial Revolution—and it's important— in reality the realpolitik of our trade alliances will be our defence partnerships.

And when you look at those defence allies—bruised by American behaviour, and without access to US technology—there’s an *enormous opportunity* for the UK to help create a safer world, as global defence spending passes $2 trillion.

*Third, we need to liberate our embassy teams even further. As Douglas Alexander says, we need to move **from signing free trade agreements left, right and centre* to *deepening the relationships we already have*.

That means:

- Driving through the government-to-government deals that unlock defence sales.

- Working harder on non-tariff and behind-the-border barriers.

- Pushing for regulatory reform.

- Ensuring good policy environments in the countries we export to.

We must *free our embassy teams* from the week-to-week, year-to-year tick-box objectives—and give them latitude to go *whale hunting*.

So, a bit like Lizzie’s introduction, I was pretty pessimistic about the world back in January.

But the conversations we’ve had on our committee—in Brussels, Switzerland, Japan—and as we now head to the United States—have filled me with confidence.

This is a moment to seize—for the United Kingdom.

And that’s why events like this—and reports like the IPPR’s—are so very, very important.