What are the UK’s aims in the pursuit of new trade deals? It seems such a simple question, yet ministers are unwilling, or unable, to answer it, according to a growing band of critics. Rob Merrick digs into the issue.

More than three years after Brexit, and almost seven years since the referendum was won, critics are warning that the UK’s “priorities and objectives” in its multiple trade talks remain an enigma – an uncertainty damaging to businesses and government alike.

There are fears for firms at risk from cheap imports, that worker protections and economic security are being neglected, that wider opportunities to improve trade performance are being missed and the ‘net zero’ climate promise undermined. And, also, that the government is weakening its own hand in negotiations.

In the words of Michael Gasiorek, a trade expert who gave evidence to a recent parliamentary inquiry: “There is a lack of joined-up thinking about trade policy and how it might be used most effectively to achieve domestic policy objectives. 

“In the face of the challenges we face – geo-political tensions, supply chain resilience, climate change, regional policy, an industrial strategy – there is a lack of a conversation and transparency about those objectives and how we want to achieve them,” the director of the UK Trade Policy Observatory at the University of Sussex warned.

The rebuke opens up a new front in criticism of the post-Brexit trade revolution, which normally centres on the stark evidence that whatever deals are struck can never compensate for the economic harm from erecting trade barriers with the EU.

A chorus of voices is now calling on Kemi Badenoch, the business and trade secretary, to publish a clear “trade policy framework” for proper scrutiny – modelled on the USA and New Zealand – but with little sign she will listen.

Let’s take a step back. Ask the government for its aims and it replies “growing exports and inward investment, “reducing market access barriers” and “championing the rules-based international trading system” – but little else.

What the critics want is the details beneath the gloss: How important are labour and environmental standards? What about boosting the UK’s poorer regions, labour mobility, recognising professional qualifications, tackling climate change, protecting the UK’s economic security and foreign policy objectives? What is the balance between consumer and producer interests? Is the UK prioritising reform of the World Trade Organisation? And much, much more.

Moreover, they say, the likes of the USA and New Zealand have sought to answer these questions – the former with a “worker-centric” agenda, the latter with much-admired commitments to use trade to protect the environment and put climate centre stage.

It is a far cry from the secrecy surrounding the UK’s new trade agreements. Notoriously, the details of how the 2021 Australia deal opened up access for its farmers were published openly in that country – even as London tried to keep them secret.

Now the issue has been confronted by the House of Lords International Agreements Committee, which has demanded a proper trade framework after speaking to business and union leaders, civil society groups, academics and other experts.

They included the Food and Drink Federation, whose head of international trade Dominic Goudie told The House about the dangers of signing a deal with India without a clear-sighted approach.

Mr Goudie explained that the UK’s “thriving rice-milling sector” would be undermined by “flooding the market with processed rice” from India – which would also remove vital food safety checks and push up prices by running down domestic stocks.

“It could have a chilling effect on investment if those businesses fear the trade deal could undermine their UK operations,” he said, highlighting how attempts to uncover ministers’ intentions have hit a brick wall.

“It’s a question of public safety, price and jobs. It’s not about protectionism, or stopping imports – it’s just stopping that finished product coming in in a volume that could sink a domestic industry.”

For the Trades Union Council (TUC), a crucial weakness is a failure to even debate whether trade deals should enforce workers’ rights, in stark contrast to the 2020 United States-Mexico-Canada Agreement (USMCA).

It boasts an explicit “rapid response labour mechanism” already used to sanction six firms guilty of bad practice or union-busting in Mexico, a “core tenet” of a “worker-centred trade policy” says the Biden administration.

Rosa Crawford, the TUC’s policy officer for international trade, explained: “It stops the race to the bottom, with obligations for all the countries to adopt and respect International Labour Organisation conventions. There’s a legal underpinning through the trade agreement.”

Here in the UK, the TUC is required to sign a non-disclosure agreement to join an advisory group on any proposed trade deal – but protested it is told nothing more about objectives than is made public anyway.

“It’s absurd,” Ms Crawford added. “We sign these agreements, but we only see the text of the agreement when it is finalised and nothing can be done about it. In the US, material improvements were made because trade unions were consulted.”

A major problem is that the trade department, now the Department for Business and Trade since a February shake-up, is viewed as “semi-detached” from a government otherwise committed to net zero carbon emissions and restoring nature.

The Green Alliance said this was laid bare by the way the Australia deal flouts climate goals by expanding its agricultural exports, but also warned the mistake risks being repeated in the hunt for an agreement with the six-nation Gulf Cooperation Council.

It would boost UK’s long-term GDP by as little as 0.06%, the government’s own impact assessment admits – while pushing up carbon emissions from shipping by as much as 43%.

“Why is the government risking significant emissions increases for little to no economic benefit?” asked Shaun Spiers, the Green Alliance’s executive director.

“None of the Gulf states have legally binding targets on net zero and some don’t have any. If the UK is serious about the Cop26 Glasgow agreement and the UK’s environmental leadership, shouldn’t it be demanding more from countries with which it strikes trade deals?”

David Henig, UK director of the European Centre for International Political Economy, criticised “the absence of clear purpose” in trade policy and a “defensiveness that seemingly takes pride in secrecy and resistance to proper scrutiny”.

In an article, he attacked the focus on exporters as “extremely unhelpful, overly simplistic”, and echoed Professor Gasiorek in arguing: “Trade policy must demonstrate what a country stands for, and how the government is seeking to meet broad policy goals.”

In a letter to Ms Badenoch, the chair of the International Agreements Committee, Baroness Hayter, said the need for confidentiality over “sensitive information” is no excuse for the absence of a clear “policy framework”.

Publishing that strategy would “show third countries how any items outwith the agreed framework could jeopardise ratification by Parliament. Such an approach is used by other countries and clearly strengthens their hand,” the letter argued.

However, the Department for Business and trade shows no sign of budging, insisting last year’s Outcome Delivery Plan already charts a clear path forward.

A spokesperson said: “Our strategy is focused on making the UK the best place to live and do business by securing high quality trade deals with the world’s biggest and fastest growing markets, growing exports, and attracting greater levels of inward investment.”

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The European Union has been busy making bilateral trade agreements with diverse international partners since the mid-2000s. It has taken its integration with global markets into its own hands, and rarely relies on the WTO, the organisation that supposedly coordinate and monitor global trade cooperation. In this article, EUrologus seeks to explain the EU’s shift to one-on-one trading agreements, and its broader implications on how trade negotiations are currently conducted.

In 1995, the establishment of the WTO promised closer economic integration of world markets. The concept was appealing: to establish an organization that would create common rules for trade, adjudicate and settle any potential disputes. Experts and politicians alike had high hopes, especially after 2001, when even China signed on to be a member. Currently, the WTO has 164 member countries, which, at least on paper, looks like a blazing success.

But there is a problem. Most major decisions on trade cooperation currently simply forego WTO, and are negotiated between two or, at best, a small group of countries. These one-on-one agreements, also called bilateral trade agreements have a strong message for proponents of global economic institutions. Many countries no longer look to the WTO for strengthening economic cooperation opportunities, and simply take matters into their own hands. Resulting in negotiating closer trade agreements with their desired partners, one at a time. This is, by many metrics not ideal. Arguably negotiating agreements bilaterally is significantly more time-consuming and less efficient than coordinating as a group, and smaller countries may be at a significant disadvantage in one-on-one situations.

There are very few actors in the world right now who are keener on establishing bilateral agreements than the EU. The European Union has 83 bilateral agreements in place with international partners. According to the European Commission, an additional 25 agreements are already negotiated and are under ratification or adaptation. Most of these are relatively recent: according to our analysis, 59 out of the 83 started after 2008.

In our analysis, we grouped the EU’s bilateral trade agreements into three categories, corresponding to key years in the history of the WTO and global trade. The first watershed date is 1995, the establishment of WTO. The second one is 2008, the year of the global economic crisis, and by many expert accounts, the year when the WTO’s practices started to show significant cracks in their effectiveness. This gives us three time-categories: pre-1995 (5 agreements), 1995-2007 (19 agreements) 2008-today (59 agreements). We also counted provisionally applied agreements. In cases where an existing agreement is renegotiated later, we counted the agreement when its terms were originally made: even this way, there are significant differences between periods.

The past, present, and future of the WTO

While the shift away of the EU from WTO integration clearly does not help the initiative, the former is arguably just reacting to issues, not causing them. The first signs of the WTO stagnation became apparent after 2001, when the so-called “Doha round” of integration efforts, focusing on developing countries, ultimately failed, due to (seemingly unsolvable) conceptual disagreements. The 2008 economic crisis was the last straw, and negotiations did not pick up after the crisis. Some light can be seen at the end of the tunnel, as in 2013 the WTO was able to establish its first multilateral agreement since the creation of the organization: the Trade Facilitation Agreement . Still, we can argue that the pace of economic integration led by multilateral WTO processes is slow, and it is not surprising that some, including the EU, turn to alternative solutions to strengthen economic ties with trade partners.

Given that the WTO has a difficult time integrating global economic rules, let’s look at its other major function: dispute settlement. Since its establishment, according to the analysis of the Council on Foreign Relations (a well-established hub of experts and think-tank) over 500 disputes were brought to the WTO table, many of them from the US and China. The US was initially by far the most active participant of the WTO’s dispute settlement mechanism, initiating 124 cases and being the defendant in 156 more. At the peak of this tendency, President Obama’s administration alone filed 25 cases while in power, 16 of them against China. Interestingly, it was also the US that killed the WTO’s dispute settlement mechanism for good. More precisely, the Trump administration started to block new appointments to the Appellate Body of the WTO. As the terms of the initial seven judges on the panel gradually expired, the body became unable to hear cases; there is currently only one active judge, while cases need three to be settled

In this instance, despite its passive acting thus far, it was the EU that stepped up. Brussels led the initiative to establish an effectively functioning alternative dispute settlement mechanism: the Multi-party Interim Appeal Arbitration Arrangement (MPIA). The problem is that this is an additional opt-in agreement between countries, and currently only has 26 members. This results in a situation in which a country that does not wish to be held accountable for WTO rule violations, such as the US, can simply not join the mechanism. Currently, the US is not a member, but China is, which does give some hope for the initiative’s future.

The EU’s bilateral trade agreements

Hence, the EU has not been the actor who actively demolished WTO institutions, but it arguably still silently gave up. Prior to the establishment of the WTO, the EU was not big on international economic integration: something that is not surprising, given that the union was itself a relatively young integration project of countries. At the time, the EU only had 5 bilateral agreements, mostly with European partners such as Andorra, San Marino, and Switzerland. These were fairly logical agreements, considering the territorial proximity of these countries to the EU.

The difference gets striking between the 1995-2007 (13 years), and the 2008-2023 (16 years) periods. In nearly the same time span, the EU stipulated almost three times as many bilateral trade agreements in the most recent period as in the previous one. This is not even counting the 25 agreements that are waiting for final ratification or approval, most of which will likely become active in a few years. Moreover, many of the new bilateral agreements are ensuring cooperation with many of the developing countries the Doha round was unable to integrate. While negotiations are conducted with territorial blocks larger than a single country (Southern African countries, Pacific countries, the Western Balkans, etc.) the agreements are nonetheless bilateral. This means that members of the block do not need to agree about signing a partnership with the EU or negotiate together, they can sign on independently.

For example, in the case of the Southern African Development Community (SADC), some members of the block, namely Botswana, Lesotho, Mozambique, Namibia, South Africa and eSwatini (the former Swaziland) signed agreements with the EU, while others, the Democratic Republic of the Congo, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe are still in various stages of negotiations. So, the negotiation does not necessarily happen with the Southern African Development Community as a group, but with its individual members, and a successful agreement has little to no implication on negotiations with other countries.

There are clear reasons the EU likes bilateral trade deals. Firstly, it seems to be remarkably efficient in establishing them, an improvement of the slow WTO proceedings. Second, the EU has an excellent bargaining position in bilateral negotiations with small partners, as it is a large and influential market. Thus, the EU is very effective in negotiating with less economically powerful countries, while it is perhaps less so when it comes to stronger partners. In the Asian case, South Korea and Japan are positive examples of trade cooperation, and even the EU-China Comprehensive Agreement on Investment is progressing slowly, but relatively well. On the other hand, trying to negotiate a free trade agreement with the US (the Transatlantic Trade and Investment Partnership, TTIP), was a huge failure. Canada has a provisionally applied but functioning bilateral agreement with the EU, and an agreement with Australia is under negotiation since 2018.

In conclusion, the EU is far from responsible for the WTO’s failure in establishing efficient multilateral global economic cooperation, but the Union did shift its focus on bilateral agreements reasonably quickly when the WTO did not deliver at the expected pace. Is the EU’s choice fair? Surely so, given its own economic interest. But the lack of a functioning WTO does increase the risk of potential trade wars, something the organisation was set up to prevent. And shocks from a trade war such as the US-China one, do reach European markets as well: in the long run, the EU does have an interest in keeping the WTO at least functional, if not increasingly relevant. Given the US’s recent reluctant behaviour towards the WTO, this is no easy task, but the EU, given its undeniable economic and market power, is probably in one of the best positions to give the WTO the boost it so desperately needs.

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