Services trade essential priority for 2018

A key Government priority in 2018 must be to build on our continued economic success following the referendum result by ensuring our services sector is an integral component to future trade deals, says Rory Broomfield. 

After the doom-mongers were proven wrong about the UK economy in 2017, the Government should take the initiative to make 2018 – and subsequent years – even better for Britain by incorporating the service sector within our trade deals.

Despite all the anti-Brexit rhetoric and roadblocks put up in Westminster and in the media by the many opponents to Brexit last year, the UK economy has outperformed the pessimistic forecasts made by of its detractors.

Of course, I'm not holding my breath to hear an apology from Osborne and co; however, given the position the UK is in after last year's results and the opportunities that lie ahead in 2018, the UK government should not just continue to make the case for Brexit but also increase its ambition for the UK's trading position when we finally leave the EU treaties and institutions.

There has been excellent work in this regard coming out of Liam Fox's Department for International Trade (DIT) over the past couple of days. News that the UK is looking at joining the Trans-Pacific Partnership has been quickly followed by an understanding that the government, through the DIT, will champion tech investment with China in the forthcoming years. This should be greeted with celebration from a tech sector that saw rapid growth in 2017, although there will be continued concerns over the security and privacy of data.

What should also be greeted with celebration is that the UK is looking to include services within the trade deal with the EU. A well-worked deal with the best of the 'Canada plus plus plus' model would be great for the City and the UK as a whole. By including services into the mix of a UK-EU trade deal, the UK would be leading the way in revolutionising the concept of what a free trade agreement can achieve.

As Dr Lee Rotherham has pointed out, the EU has over 40 different types of free trade agreements with other countries. It seems ridiculous in my view that the EU would not want to have a deal with the UK on services and risk subsequently shutting itself off from the world's leading financial centre – the effect of which could lead to a credit crunch for eurozone banks and make the financial crisis in 2007/8 look like a walk in the park. As a result, a bespoke deal between the EU and the UK is a strong possibility – and in the EU's best interests – no matter what Michel Barnier is currently saying.

However, what the EU can do, the UK can do better. After it leaves the Customs Union the UK can make its own trade deals with the rest of the world. This won't happen in 2018, but the UK can be prepared. What we know is that the UK is currently the leader in financial and legal services – surpassing all others. What we also know is that economies around the world are developing and demanding these services to a heightened degree. As I pointed out at the Friedman Conference in Australia last year, if the UK can tailor its trade agreements to include services, it could not just give businesses located within it an advantage over those choosing to locate themselves elsewhere (such as the eurozone), it could provide the platform for better regulation (and regulatory competition) worldwide.

I say regulatory competition because, as pointed out in Iain Murray's and my book entitled 'Cutting the Gordian Knot: A Roadmap for British Exit from the European Union', Matthew Sinclair and Dalibor Rohac warned in 2010 that 'the increased internationalisation of financial regulation risks amplifying future global booms and busts'.  However, with the UK's preeminence in the service sector, it can help create solutions to knock down both regulatory and non-regulatory barriers to help open the door to businesses – both in Britain and elsewhere – to enhance their trading connections and power with both developing and developed economies around the world.

So, in 2018, the government should make its ambition to include services in deals with countries across the globe. And when the remain camp say that 'the UK doesn't have the clout to do that when we leave the EU', remind them not just that the UK is the world leader in the services sector (therefore we have more clout than the EU in this) but that the EU hasn't managed what we are proposing in its history thus far.

Let's look to open more doors and create further market opportunities that won't just deliver deals but also prosperity to both the British people and other peoples around the world.