Populism and Global Trade
In an extract from the 2017 annual Journal Jonathan Roberts, Communications Director, discusses the changing political environment and the affect it might have on industry.
It is hardly an original insight to say there is a huge political recalibration going on across the western world. Low level of trust in politicians is not especially new. The electorate being prepared to take a significant risk against the advice of the supposed establishment, however, is a less common occurrence.
These movements, be they the ones that led to Brexit or Donald Trump taking office in America, can often be dismissed as populist. But I recall that the great Whig MP, Edmund Burke, in his ‘Address to the Electors of Bristol’, said:
“Your representative owes you, not only his industry, but his judgment; and he betrays, instead of serves you, if he sacrifices it to your opinion.”
Sadly for him, the electors of Bristol did not agree – they voted him out of office just days later. Burke would perhaps have called his defeat an act of populism; the electors would simply have called it an act of democracy.
Whether voters or customers, they are in charge and failure to adapt and respond to their needs will result in failure. It is as true in politics as it is in business.
By now we have all learned to take the projections and predictions on Brexit with a healthy pinch of salt – the predictions made by almost every economist of economic collapse in the weeks after the referendum vote did not materialise, but the true implications for shipping and broader business continues to be uncertain.
In reality, few people believe Brexit will cause Armageddon and few believe it will take us to Utopia. It does, however, mean our fate is in our hands, and that principal is guiding our public affairs response – lobbying to ensure government is aware of the risks, but putting forward thoughtful and ambitious proposals to reform the business environment for shipping, to ensure we are on the most competitive footing possible. Our Blueprint for Growth sets out the importance of free flowing trade through our ports and access to the world’s best talent. But it also set out measures the UK can commit to now, be they on tonnage tax, Support for Maritime Training, UK content in government’s offshore contracts, or indeed the revitalising of the UK flag.
After all, there would be no more potent symbol of the maxim that Britain is open for business, than to see the red ensign hoisted above ships entering the world’s ports.
There is, of course, a whole world out there to do business with – countries that want our expertise and our custom and we want theirs in return.
The biggest mistake commentators made last year – with the EU referendum, the apparent fall of TTIP and question marks over the Trans-Pacific Partnership – was to suggest that globalisation is dead.
We in the industry take great pride in saying how much of the world’s trade we move, and the death knell of globalisation would indeed be devastating. But whatever the fluctuations of shipping indexes may be, every piece of data that exists tells us that the world has never traded more. The world has never been more interconnected, never more reliant on each other and, by implication, never more reliant on shipping.
Of course, trade matters, and it matters much more than just for bottom lines. There has been no liberator of the world’s poor quite like free trade. In the past 30 years, we have witnessed the single greatest decrease in human deprivation in history. In 1993, 45 per cent of India’s population sat below the poverty line; in 2011 it was 22 per cent – it is no coincidence that in the intervening period India embraced globalisation and liberalised its economy.
Trade facilitates human progress. It is the rock upon which a strong global economy, international diplomacy and mutual respect is built. Heaven knows we need all three.
When – 240 years ago – Adam Smith published The Wealth of Nations, he argued that the essential element of a successful trading system is mutual benefit. Mutual benefit is why we should be confident of our future, because we know that whatever the rhetoric or bluster, both the UK and the EU understand that maintaining quality trading links is in both of our interests.
Particularly in relation to whatever system replaces our membership of the Customs Union, this concept of mutual benefit is most instructive. Each year, £120bn of trade moves through Dover alone. The return of significant customs reporting in our ports and, for that matter, European ports, would have a detrimental impact not just on local traffic conditions but, over the long term, on trade volumes. This concern has been front and centre of all our dealings with the Department for Exiting the European Union, and they are well aware of the importance of what they call ‘frictionless’ movement through ports.
Indeed, all of the UK Chamber’s priorities for Brexit negotiations have been accepted and understood by the British Government. Whether their confidence is justified remains to be seen, but there is little doubt the UK’s view is that its huge trade deficit with the rest of the European Union is of significance. Why? Because of mutual benefit – it is in both our interests to find a reasonable solution.
There is no point in fearing Brexit. And there is no point in negotiating with ourselves, second-guessing our abilities or handwringing about our place in the world.
Our skills have not evaporated. The size of our market, our time zone, our use of common law and the English language haven’t disappeared. Our military will be no less strong, our contribution to global diplomacy no less important.
The UK is not starting from scratch. We have a huge trade deficit with the EU because we are good customers. Millions of European jobs depend on that custom and, just as it is incumbent on us to inform government of the effects of a bad deal on us, so too must we inform European governments of the effects of a bad deal on them – and, in accepting those warnings, a good deal becomes possible.
Pragmatism and mutual benefit, not political rhetoric and gamesmanship, must guide negotiations with the EU, just as it must guide our negotiations with new markets further afield.