The UK’s Trade Rush Needs More Economic Strategy

national interest​​​

by Alisha Shaparia 

    Three years and dozens of trade agreements later, post-Brexit Britain shows no signs of hitting the brakes on its trade roll. In the quest to quickly put European Union (EU) membership in the rearview mirror and claim success, the United Kingdom (UK) has been in a mad rush not just to renew EU trade agreements but also to broker new ones. And yet, being able to freely exchange marmite, medicines, and microchips with over seventy countries has not translated into socioeconomic health.

    Trade numbers do not mask economic underperformance, remedy the growing chasm of inequality, or compensate for Britain’s security vulnerabilities in critical supply chains. Trade is a good thing, but it does have the power to catalyze progress. This will, however, require Britain to take a good long look in the mirror.

    The UK needs to quit relitigating Brexit and devise a robust, revitalized “securonomic” vision for its future. Trade must be treated as one, albeit powerful, piece of the puzzle to reinvigorate the UK’s role in the world. If placed correctly with interlocking industrial policies, it can unlock solutions for Britain’s mounting problems.

    Understandably, in service of stability and affordability, the post-Brexit government has struck several trade deals in the last three years: digital economy agreements with Singapore and Ukraine, free trade agreements (FTAs) with Australia, New Zealand, Japan, Norway, and Iceland—all negotiated at a staggering pace. Political flux and the upcoming election have created an added impetus for the incumbent government to conclude trade deals—typically requiring years of negotiation—in months. Yet, speed is not necessarily correlated to value.

    Ironically, if not underpinned by a coherent strategy, the fast pace and large volume of trade agreements risk compromising the UK’s national priorities. A string of disjointed deals would under-exploit the opportunities that trade can deliver for Britain’s economy, security, and environment. Worse still, a failure to adopt a bird’s eye view can create vulnerabilities by compelling Britain to default to suboptimal options. This would force reliance on countries that hold opposing values, represent security threats, or compromise their own environmental goals. To avoid such risks, the UK needs to ditch its traditional trade template and prioritize visioning over speed and quantity.

    What sectors can really turbocharge domestic growth? Where can import substitution improve resilience? What policies will incentivize foreign investment? Which allied relationships can securely plug critical supply chain gaps? Britain must guard against the risk of operating on autopilot and ask itself these tough questions.

    Yet, when it comes to trade, Britain appears to have the wrong idea but the proper execution.

    It is fitting to use trade as a tool and sustain the wide and deep international alliances it has enjoyed over the years. However, to maximize value from these alliances, it needs to think strategically about what it needs from each trade deal.

    The first step to answering this question is to determine which sectors it wants to strengthen in-house, as it cannot and does not need to do it all. Critical minerals processing, semiconductor design, electric vehicle (EV) production, 5G, and advanced robotics design are all up for grabs. The UK must choose wisely, assessing its comparative advantage alongside its political priorities. A solid choice will make it easy for the layman to fill in the blank: the advantage in semiconductors goes to Taiwan, cars to Germany, and shipbuilding to China. What advantage will go to Britain?

    The UK then needs to put its full weight behind its chosen sector(s), using a cohesive industrial strategy that is uniquely British. This is not as simple as simply copying another country. For instance, while “Bidenomics”—a focus on heavy public investment, middle-class workers, and domestic industry—is often held up as a potential model for the UK to emulate, its options are quite different, owing to a smaller internal market, tight fiscal position, and diminished regulatory weight. As Shadow Chancellor Rachel Reeves stated, the UK’s economic policies should not attempt to be a “British version of America,” but instead “a better version of Britain.”

    By earmarking supply chain segments or entire sectors as “domestic” (where it can compete) vs. “international” (where it cannot), Britain will be able to identify the correct set of trade partnerships to support domestic industry and strengthen national security.

    Britain’s approach to defense diplomacy proves that this is indeed possible. The “AUKUSpartnership is an excellent example of the UK leveraging a partnership with strong intent. After assessing defense needs vis-à-vis industrial capacity, the UK, the United States, and Australia brokered a unique partnership to build an integrated industrial base for submarine manufacturing that will create collective benefits.

    Parallel development of trade and industrial strategies can also create valuable synergies. The United States-Mexico-Canada Agreement (USMCA), coupled with America’s premier industrial policy instrument, the Inflation Reduction Act (IRA), offers a robust model for the UK to tailor to its context. The inclusion of free trade partners in the eligibility criteria for IRA’s EV subsidies generates mutual benefits for the United States and Mexico. The United States uses the free trade area to efficiently accelerate its green transition, while Mexico reaps development dividends from EV battery manufacturing and assembly. One plus one can truly equal three.

    Trade is ultimately just a means to many ends. The UK’s next government must adopt a vision that serves its goals by striking a balance between strategic autonomy and economic openness. A shift from intending to trade to trading with intention is a necessary stop on Britain’s pathway to a brighter future.


    Alisha Shaparia is a Master in Public Policy candidate and John F. Kennedy Fellow at Harvard Kennedy School and has a degree in International Relations from the London School of Economics.

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