UK’s international trade ambitions: what do they mean for tech exports?
31 Mar 2021 09:56 PM
It has been nearly three months since the UK started to act as an independent trading nation following its departure from the European Union.
With the EU-UK Trade and Cooperation Agreement and UK-Japan Comprehensive Economic Partnership Agreement, the UK’s independent trade policy saw a strong start in 2021. The UK benefited from over 40 trade deals covering more than 70 countries as part of the EU. The UK government signed continuity agreements with 63 of these countries and is looking to enhance some of these bilateral relationships and build new ones. Trade has become central to the realization of the government’s Global Britain strategy as well as the Build Back Better strategy to drive growth and post-pandemic recovery. The government has committed to supporting export-led growth by opening up new international markets, championing free trade and establishing trade agreements with countries covering 80% of UK trade by the end of 2022.
The international trade ambitions are high. What opportunities do they bring to the UK tech sector?
Export-led growth across the whole of the UK
Exports will be central to the government’s mission to “level up” the UK’s nations and regions and build back better. Export-led recovery has strongly featured in the recent UK’s Board of Trade first report “Global Britain, Local Jobs”, calling for setting ambitious export targets by 2030 and raising awareness of overseas export opportunities.
Digital trade is set to play an important role in export-and investment- led growth. The Iong-awaited Integrated Review report published this month has emphasized the importance of establishing the UK “as a global services, digital and data hub” by drawing on our strong position in digital technologies to drive growth across the country. It also means a more active approach to science and technology, continuing to bring investment into the UK for research and development and commercialisation of new technologies, providing a platform for UK tech businesses to export their products.
DIT has also made a welcome move in bringing the benefits of the government’s global trade policy to the whole of the UK, including benefits from future free trade agreements with the US, Canada, Australia, New Zealand and CPTPP, with creation of four major new Trade and Investment Hubs in Edinburgh, Cardiff, Belfast and a new second major DIT site in Darlington.
Opening up global markets
The importance of emerging economies- especially those in the East-has been made central to UK’s international trade strategy. The UK’s Board of Trade report highlighted the importance of strengthening trade ties with fast-growing emerging markets, with 65% of the world's middle classes set to be in the Asia-Pacific by 2030. The Integrated Review further reiterated the geographical focus of a future UK trade strategy by positioning the Indo-Pacific as a key market for the UK to pursue deeper engagement with. The UK’s tilt to the Indo-Pacific region-which is set to dominate the global economy by the end of the decade- is underpinned by security and geopolitical objectives with clear implications for UK trade. What does this mean for UK tech businesses? More export opportunities and more advanced tech partnerships – if the UK follows the digital trade policy standards set in the trade agreements with Japan and the EU in future trade negotiations.
A potential comprehensive trade deal with India, alongside acceding to the CPTPP and becoming a Dialogue Partner of ASEAN are a cornerstone of the UK’s Indo-Pacific economic strategy. The UK government will announce a roadmap for a bilateral free trade agreement with India and launch an enhanced trade partnership programme during PM’s visit to India next month, with digital being one of its key priorities. techUK will continue working with the UK tech community to advocate for comprehensive digital trade arrangements in the future UK-India trade relationship. To capitalise on emerging tech opportunities between both countries, techUK believes that bilateral relationship needs to be based on cross-border data flow with a strong data protection regime, investment and innovation while also reducing barriers for business growth such as mandatory local data storage and re-imposing custom duties on e-commerce trade.
We have agreed cutting-edge provisions for digital and data in our deal with Japan, and are pursuing ambitious agreements with Australia and New Zealand, and the Digital Economy Agreement with Singapore. These countries are at the cutting edge of innovation in establishing the rules for digital trade, highlighting the importance of the region as a forum for establishing global rules. The UK should continue to build on this success and to create an Indo-Pacific community to drive digital trade. In addition, we continue pursuing free trade agreements with key markets like the US and Canada.
Last but not least, the Integrated Review has also highlighted the need to engage with China and remain open to Chinese trade and investment, but staying wary of practices that have an adverse effect on prosperity and security. In other words, this means the UK government will continue strengthening trade and investment ties with China as long as they do not pose a threat to national security interests.
Support in accessing digital trade opportunities
Digital technologies have been on a rising trend for decades. The COVID-19 pandemic has accelerated this trend and amplified the opportunities for non-physical trade. The UK has what it takes to ride this technological wave as it is already a world-leader in digital trade. The country is the fifth largest global exporter of digital tech services and ranked third (only behind the US and China) for venture capital investment in tech companies in 2019. Domestically it is a key growth sector – growing over four times faster than the overall economy between 2018 and 2019, contributing £150 billion to the UK economy in 2019 and supporting 1.6 million jobs.
Advanced digital trade provisions in future trade agreements setting gold standard rules in digital trade policy are vital in maintaining the UK as a global tech powerhouse. However, equally important is to help tech businesses realise their global potential and reap the benefits of new trade agreements.
techUK has called on the government to work more closely with tech businesses to help them build a good understanding of the trade rules and take better advantage of the new free trade agreements. There have been some positive steps to supporting the internationalization of UK tech businesses, with new Digital Trade Network for Asia-Pacific, which supports UK SMEs to break into the Asian market; the launch of a new Tech Exporting Academy, which will provide expert advice to UK scaleups on subject areas essential to expansion; a £38 million Internationalization Fund; and a comprehensive SME and e-commerce chapter included in the UK-Japan CEPA, committing tools and resources to support SMEs trade and investment.
With new trade agreements expected to be concluded by 2022, we need to see more mechanisms like this to help businesses internationalize.
If you are a member of techUK and interested in UK’s international policy and trade agenda, please join our Trade Working Group. You can register here or contact firstname.lastname@example.org.
If members have any questions about any of the above or would like to engage, please reach out to email@example.com.