Liam Fox’s Department for International Trade has nothing much to do, because we can’t negotiate any trade deals until after Brexit. So runs one take on Theresa May’s new creation. It is wrong.
This is so not only because there is plenty to be done to prepare for such deals, but for wider reasons. Indeed, the department is the more significant of the Prime Minister’s two Whitehall inventions. The Department for Exiting the European Union, after all, will fold in the wake of Brexit, which may be only two years away. But the new trade department is likely to endure, even if May doesn’t win the 2020 election – so crucial will boosting exports be, especially outside Europe, in the aftermath of Britain leaving the EU. So how is Fox getting on?
To answer the question, one must first of all grasp how indispensable trade is to Britain. We think of ourselves as a trading nation, and this is correct: our exports count for over a third of our GDP; Europe is a declining market for them and, since that trend is set to continue, it follows that other countries must replace it (at least if we are not to consume more of our own products and fewer from abroad). This would have been as true if we had voted to Remain as it is now. But we have not been preparing for change as energetically as we might.
Not so long ago, we had a department with the splendidly old-fashioned title of the Department for Trade and Industry – reflecting the importance of trade to the economy. The trade part of it was represented in the Commons by a senior Minister: a slice of Alan Clark’s diaries is about his time and travels as Minister for Trade. But since Labour replaced it with the Department for Business, the trend has been to appoint senior Ministers in the Lords, the first being Digby Jones.
Trade has had six Ministers since 2010, but only one of them has been an MP – Mark Prisk (and he was in charge only briefly and without the title). The logic of Gordon Brown and David Cameron was that a senior businessman such as Jones or Ian Livingston, or a banker like Stephen Green, was likely to have more commercial nous than a mere member of Parliament. Whatever the merits of this view may be, it had the effect of distancing Britain’s export drive from the Commons – and perhaps from the department itself, since the Minister was usually abroad.
Fox’s appointment has changed all that. Trade is now back at the centre of Whitehall, with its very own department – almost literally, since it occupies part of what is usually thought of as the Foreign Office. The new Secretary of State is on the same corridor as Boris Johnson (which apparently “comes in very handy”), with his office tucked in above a corner of Whitehall and Downing Street. The last of Cameron’s trade ministers, Mark Price, has stayed in the department. Greg Hands is Trade Minister; Mark Garnier Under-Secretary.
Fox has had to shape a department before: the Ministry of Defence, at the time of a cost-cutting Defence Review – an experience that friends of his describe as “like redesigning a ship at sea while under fire”. Forming the trade department has been easier, though there were tussles with the Foreign Office over the summer over functions and staff. The core of the department is the old UKTI, but it has also taken trade functions from Johnson’s department, Defence and elsewhere.
Some three thousand civil servants are in place. A Permanent Secretary is shortly to be appointed, not necessarily from within Whitehall. But all this, and the very creation of the new department, could be no more than shuffling government furniture. Is Fox really making a difference? Or will he simply tour the world, preaching the benefits of free trade, while nothing much really changes – at a time when his department also needs to get to grips with the complexities of Britain’s future tarrif rate quotas?
The Trade Secretary has kept much of Cameron’s network of trade envoys intact. One of them – not at all a man I would have put down as a fan of the Trade Secretary – told me that “I honestly think that he is setting about this with real vision and determination”. He said that Fox and his team “are introducing a new online capability for people abroad to be able access information about our companies which can offer actual supply chains, which has never happened before”.
“Additionally, Ministerial visits abroad will require involvement in pushing possible business contracts during their visits: this is standard practice by other countries and is pursued ruthlessly. Fox is also trying to get much greater involvement in export activity by SMEs which has been thus far wholly inadequate. UKEF which does export finance saw its funding for SMEs doubled in the Autumn Statement, which of course is higher risk but will hopefully encourage the sector to think more of exporting”.
Some other sources are less impressed. One said that the Trade Secretary doesn’t always go down well in the City, and that we have heard it all before on SME funding, which was also increased on George Osborne’s watch. But most of those ConservativeHome has spoken to believe that the restructuring is important, and that Fox’s tiggerish energy is making a difference. “I would have put down in the summer as the most likely of the Brexiteers to jump or be pushed,” said one experienced observer. “I don’t think so now.”
The Trade Secretary recently announced that Britain will preserve its current tariff arrangements after we leave the EU – which drew fire from different quarters. Some Leavers were disappointed. And some Remainers were critical, claiming that his announcement showed the Leave campaign’s promises on trade to be threadbare (though had he not done so, they would have said that he plunging British business into further uncertainty). But Fox’s position is essentially a holding one, like the Government’s broader approach of carrying over EU regulation.
He and his team have two huge tasks ahead. The first is to match the best of our European competitors – the inevitable example is Germany – at exporting to the rest of the world. The second is to carry out as much scoping as possible abroad in order to map a path to new trade deals – identifying barriers to trade, for example. And to do so at a time when our future relationship with the EU’s customs union is uncertain (the Government seems to want some sort of hybrid arrangement). The more closely we stick to it, the more Fox’s wings will be clipped.
Then there is the uncertainty of knowing when we will agree a trade deal with the EU – if one is struck at at all. Plenty to occupy the Cabinet’s most irrepressible advocate of an Open Britain and of the moral case for free trade.