What level of stakeholder consultation is required for the UK’s future trade policy?

There is a common theme among virtually all United Kingdom trade policy stakeholders at the moment, whether business or civil society: they are not being sufficiently consulted by the UK’s government. So why is this a problem, what exactly is the government doing wrong, and how can it be fixed? This article draws upon the UK Trade Forum co-organised event on 8 May on ‘Should the UK have an inclusive trade policy?’

Why is stakeholder consultation particularly important in trade policy?

It is widely accepted that stakeholder engagement is an essential part of good public policy making. As UK Cabinet Secretary Jeremy Heywood has written, “by consulting effectively we improve both the making of policy and its implementation.”

In trade policy, stakeholder consultation has three specific purposes beyond the general ones that apply across government:

• Ensuring trade policy delivers the greatest possible benefits;
• Demonstrating fair process, particularly with regard to winners and losers;
• Building support for the specific measures, in particular but not exclusively trade agreements.

Assuming that the primary purpose of trade policy is to improve trading opportunities for businesses, stakeholder consultation is essential for a government to understand these opportunities, and in turn set a strategy to capitalise on them.

Government should be asking business what barriers they face in different markets, the impact on their performance and how the barriers can be tackled. The barriers could be high tariffs or a restriction on access to supplying a specific service, which may only require a single “one-off” might be clearer engagement. In many other cases, however, the barriers will be regulatory, in which case government and business may have to work together throughout the negotiating process, testing what is said by the other party to make sure it will properly remove the barrier.

Once the government has a broad understanding of all the potential opportunities, they need to be synthesised into a strategy that identifies which barriers will be tackled in which countries – as it won’t be possible to fix all issues. Given that this means picking winners and losers among producers, it is important to show the decision has been reached through an open, fair process, and to justify it publicly. For example, British sugar beet growers have expressed concern that removing tariffs and quotas on imported sugar cane will jeopardise their future. A choice has to be made, and the reasons for it spelled out. The overall trade strategy also needs to consider and incorporate demands by non-business stakeholders covering many different issues such as climate change, anti-corruption and labour standards.

As we then move from a general trade strategy to specific trade agreements or other initiatives the stakeholder consultation needs to be a basis for ensuring enough political support for a deal to pass  Parliament. If a process is perceived to be unfair, those fearing they will lose out may well join forces to lobby against an agreement. As we saw with the Transatlantic Trade and Investment Partnership (TTIP) in the EU and the Trans Pacific Partnership (TPP) in the US, such opposition, particularly when it involves both business and civil society groups, can be strong enough to disrupt government plans or scupper legislative approval altogether.

What’s wrong with the government’s current approach

It is at this point worth a reminder that concluding Free Trade Agreements is the main “prize” of having an independent post-Brexit trade policy, and the UK government hopes to start negotiating these as early as April 2019. Indeed, preparations are under way with Australia, New Zealand, and the US. This is conditional on the still unresolved question of whether there is a customs union with the EU, with opponents warning that in this situation these talks are unlikely to start.

Despite the preparations already under way, there is no evidence the UK government has been doing any of the stakeholder consultation referred above in a systematic way. Stakeholders have complained about meetings that do not go into specifics, about a lack of consultation on what the UK’s specific priorities will be, and of a failure by government to seek information from business. For example Australia, New Zealand, and the US were named as priorities without any explanation or justification as to why they should be.

The content of future UK trade agreements equally remains a mystery. We don’t know what may be priorities, whether the UK for example would try to protect Geographical Indications as the EU does, whether there will be quotas for agricultural imports or whether there will be chapters setting minimum requirements for labour and environment standards.

All of this is leading to suspicion on the part of stakeholders. They are asking what precisely is being discussed at the various working groups the UK has with other countries, and whether their issues are being taken seriously. They worry that government is not coordinating across departments, and that when they do find an official to meet their message may not go anywhere in particular. In short they are highly concerned that with 10 months to go until Brexit day, the government doesn’t seem ready.  

What should the UK government do about stakeholder engagement?

The UK government needs to start by recognising that the engagement to date has not been satisfactory. It is well known that the UK has a major task ahead preparing for an independent trade policy, and an honest admission that not everything has been perfect to date would actually win a little breathing space to put in place a new approach, even if  the tight timetable does not allow for much delay.

Next, the government would do well to read and respond to a report commissioned by the British Chamber of Commerce on stakeholder engagement mechanisms in trade policy. Drawing on examples from across the world, the authors, students from the London School of Economics, propose establishing a formal engagement mechanism grounded in law, including a committee structure, a ‘room next-door’ mechanism in trade negotiations, and an independent body to ensure transparency. While not all members of the panel at the 8 May event necessarily agreed with every recommendation, all of them recognised the need for action.

Last week, business and civil society stakeholders came together to propose ‘A Trade Governance Model That Works for Everyone’ to the UK government. That is another input that the UK government should consider when putting in place stakeholder consultation mechanisms.

Putting in place structures is of course not sufficient; the government must also take an open approach to engagement. One way to show that would be to justify those elements of trade policy that it has already announced. Why, for example, are Australia, New Zealand, and the US priorities for new trade agreements? Ideally, the government would follow its explanations with a formal gathering of evidence about these and other options, moving towards a public declaration of aims for the UK’s first post-Brexit trade negotiations.

Conclusion

There is much for the UK government to do in the coming months. It can be done without effective stakeholder engagement but if it is, the results won’t be very good. If formal trade talks are to start as early as April 2019, and given the existing activity, time is running out for the UK government to do the right thing.