Stephen Booth is Head of the Britain in the World Project at Policy Exchange.
A “Global Britain” needs to ensure it is relevant in and to all three of the world’s major economic and geopolitical hubs – Europe, North America, and the Indo-Pacific. Brexit or no Brexit, it is clear that the economic and political weight of Europe is in relative decline and that global power is shifting, predominantly due to demographics and the rise of economies in Asia.
Brexit has only emphasised the need for the UK to diversify its international relationships and that it must be prepared to do so across a wide spectrum of areas. It was significant, therefore, that last week’s Integrated Review (IR) emphasised such coherence across government, mirroring a world where the boundaries between prosperity and security, trade and development, and domestic and foreign policy are increasingly intertwined.
The IR reflects several concepts and recommendations that have featured prominently in the think tank I work for, Policy Exchange’s, research. Arguably, the most significant is the “Indo-Pacific tilt”. Trade policy was not highlighted alongside security, defence, development and foreign policy in the official title of last week’s IR, but did feature in its conceptual development and it is a key strand of the document. It has emerged as a key component of the UK’s new strategic approach and is central to the “tilt”.
The UK intends to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and become a Dialogue Partner of ASEAN. The UK has already secured a deal with Japan. Bilateral trade negotiations with Australia and New Zealand would be expected to bear fruit this year, while talks with the United States could take longer.
India is an increasingly important part of the UK’s Indo-Pacific economic strategy and the IR confirmed that a potential comprehensive trade deal is a long-term ambition. We may expect to hear more about the roadmap to a deeper UK-India economic relationship during the Prime Minister’s planned visit to the country next month.
Individual free trade agreements will provide important economic benefits, particularly for certain sectors of the economy, but their aggregate impact on UK GDP is likely to be limited in the short-term. Trade deals are best viewed as important elements of a long-term strategy of diversification away from – rather than immediate replacements for – the EU market and increasing the UK’s links to the economic and political developments of the world’s faster-growing markets.
The key to taking advantage of these opportunities will be to marry the twin aims of outwardly projecting “Global Britain” and “Levelling Up” those regions of the UK that have most struggled to adapt to globalisation. The IR recognises that for Global Britain to be a success, more of the UK must become integrated and competitive in the global economy.
For example, the government is launching new UK Trade and Investment Hubs in Scotland, Wales, Northern Ireland, and the North of England. This is a complex and long-term challenge. British businesses, smaller ones in particular, will need to be supported and encouraged to make the most of new opportunities which will take time.
It is welcome, then, that the IR acknowledges that the UK’s new trade policy is not simply a commercial endeavour. It is, rightly, viewed as an important part of a geopolitical toolkit that should be deployed to reinforce the wider economic, political and security relationships, upon which a successful Global Britain will rely.
It is noteworthy that the IR underlines the UK’s ambition to “move from defending the status quo within the post-Cold War international system to dynamically shaping the post-Covid order.” An important aspect of this means using “regulatory diplomacy” and working with like-minded partners to influence global rules.
This is particularly relevant in emerging technologies, as systemic competition intensifies, in particular with China. This is an often-underappreciated benefit of concluding trade agreements, particularly with platforms such as the CPTPP. It helps to embed and promote high-quality rules.
The IR’s emphasis on the UK “as a global services, digital and data hub” highlights that the UK’s natural economic strengths often sat uneasily within the wider EU’s order of priorities, where the UK’s approach in these sectors has often differed from the other big players, France and Germany.
In my previous column, I noted that the UK is now able to put forward a distinct voice and approach that plays to its competitive advantage and confronts head-on the political reality that global power is shifting away from Europe, particularly in these innovative fields. France, Germany and the Netherlands have all adopted their own national strategies for the Indo-Pacific, prompting the EU to signal that it will set out a common vision in the “coming months”. The challenge for Brussels will be to produce something pragmatic that rises above the lowest common denominator.
Several commentators have remarked that the IR says relatively little about how the UK views its long-term relationship with the EU developing, both in terms of future cooperation and competition. This is perhaps unsurprising given the proximity of the publication of the IR to what has been a turbulent Brexit process.
In recent days, we have seen examples of both forces at work. The UK and the EU, along with the US and Canada, have co-ordinated new sanctions against China over its treatment of Uighur Muslims. However, the threat of an EU vaccine export ban, chiefly targeted at the UK, illustrates that any UK strategy for national resilience must now consider the prospect of an uncooperative EU.
The EU acting as a bloc can have the advantage of economic scale and collective weight but, due to internal tensions, it can lack coherence and focus, often particularly evident in its efforts to implement a collective foreign policy.
There follows a strong argument that the advantages of the EU were better suited to the relatively benign international order of the late twentieth century – an order underpinned by the US security guarantee – and its drawbacks less so to a world increasingly characterised by great power rivalry and systemic economic competition. Many within the EU have historically been reluctant to acknowledge that the transatlantic relationship, based as it is on NATO, is fundamentally asymmetric.
It is also worth recalling that during the Brexit negotiations, it was the EU that held out hope of a formal agreement with the UK on foreign and security policy. The UK ultimately decided it would not pursue such an agreement. The UK has made it clear in the IR that its commitment to European security is “unequivocal”, that it “will continue to be the leading European Ally within NATO”, and will “actively support” EU-NATO exercises.
However, in terms of direct engagement with Brussels, the IR highlights the opportunity for a “distinctive approach to foreign policy” outside the EU and the advantages of flexibility and coherence from acting independently. The UK has also committed to finding “new ways of working with” the EU on “shared challenges” and “where our interests coincide”.
There remains no sign that the UK is interested in any formal agreement with Brussels in this area. The implication is that the merits of cooperation will continue to be assessed on a case-by-case basis and therefore cannot be taken for granted, particularly if the economic relationship were to be further soured.