Asia will be at heart of British Government’s approach in new era of trade

UK Minister for Asia and the Pacific Alok Sharma MP said that as the world enters a new era of trade, the British Government wants to work with business to champion global free trade and "Asia, all of Asia, with its dynamic economies and vast potential" will be at the heart of that approach. Photo by George Torode

UK Minister for Asia and the Pacific Alok Sharma MP said that as the world enters a new era of trade, the British Government wants to work with business to champion global free trade and "Asia, all of Asia, with its dynamic economies and vast potential" will be at the heart of that approach. Photo by George Torode

Asia will be at heart of British Government’s approach in new era of trade

23/11/16

By Naomi Canton

The UK’s Minister for Asia and the Pacific Alok Sharma MP has stressed that as the UK leaves the EU the British Government wants to work with business to champion global free trade and is not stepping back from the world.

Speaking at Asia House on Wednesday morning Mr Sharma, Parliamentary Under Secretary of State at the Foreign and Commonwealth Office, said: “I want to reassure you that the UK will not be stepping back from the world, as some people may fear. Quite the reverse: outside the EU we will be free, flexible and agile.”

As the world enters a new era for trade, the British Government wants to work with business to champion global free trade, to remain outward-looking to harness these opportunities, Mr Sharma stated.

“Asia, all of Asia, with its dynamic economies and vast potential, will be at the heart of our approach,” he said in a keynote speech at the signature conference titled ‘A new trade era – what it means for Asia and the UK’, held at Asia House in partnership with HSBC.

The Reading West MP referred to this century, the 21st century, as the Asian century.

Asia’s share of global GDP is currently just under 30 per cent but most forecasters predict this will grow to over 50 per cent by 2050, perhaps even by 2030, he said.

“Asia was, is and will remain one of the most economically dynamic regions of the world,” he said.

He explained that the British Government planned to strengthen its engagement in Asia, reinvigorate existing relationships and “reach out to new partners who have not always received the attention they deserved.”

“The Prime Minister’s first bilateral visit outside Europe was to India. That speaks volumes about her commitment to enhancing Britain’s relationships across Asia,” he pointed out.

Ferrero Rocher and diplomatic life

“Diplomatic life for UK diplomats is less about consuming Ferrero Rocher and more about promoting high tech widget manufacturers in the Midlands,” he said tongue-in-cheek.

“As the Minister for Asia, I am part of a wider Government effort working hard to intensify and enhance UK-Asia trade,” he explained.

He said that since being appointed Minister in July, he had travelled extensively round Asia meeting investors, government ministers and business figures. Whilst the first question they always asked was about Brexit, the second was always about boosting bilateral trade and investment.

“You will see more travel to Asia, more trade missions and you will see ministers from every department going out and promoting the UK in Asia. I will take more companies with me in 2017,” he said.

People in the Asia Pacific were “increasingly positive” about the UK’s future and the “opportunities it presents,” he stated, pointing out Asian inward investment continued to flow, citing several examples including Chinese developer ABP’s £320 million investment in Phase 1 of the £1.7 billion London Royal Albert Docks project and Nissan’s renewed commitment to the UK, after announcing it would build the Qashqai and Xtrail here.

Asian investment in the UK

“This country is home to more Chinese investment than any other European country, with a total stock of £9.8 billion and an investment flow of £1.2 billion in 2014 – including Huawei, which is headquartered in my own constituency of Reading West. China is expected to be the UK’s second largest foreign investor by 2020. ASEAN now ranks as our sixth largest foreign investor,” he said.

“The cumulative stock of FDI from Singapore, Malaysia and Thailand in the UK is over three times that in the US and Germany combined,” he added.

“India is our third largest investor, with more Indian companies investing in the UK than in the rest of the EU combined,” he added and he pointed out more than 1,000 Japanese companies were based  in the UK.

Meanwhile UK exports to China have risen 57 per cent in the last six years, making China the UK’s fourth largest export market in 2015. Mr Sharma said the UK was looking forward to engaging in different ways with Asia once outside of the EU, for example through the Regional Comprehensive Economic Partnership (RCEP)and ASEAN.

The six largest ASEAN economies  of Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam together make up the UK’s 11th biggest export market.

Trade working groups

He added the UK had already established trade working groups with Australia, New Zealand, China, Japan and India.

“The broad aim of these is to discuss on a bilateral basis how we can improve trade and scope out FTAs with countries outside the EU,” he said.

“Bilateral trade and investment is improving. We are doing all we can on this. We know we can do better and we will,” he said.

But he added that whilst the UK remained in the EU “we will continue to support EU FTAs such as the EU-Japan FTA.”

He said after Britain leaves the EU, the UK will play a global role in foreign policy, international security and development, as well as trade.

“We will be an independent nation working alongside the traditional trading blocs and trading freely with others – in our best interests and theirs,” he said.

The Conservative MP said he recognised there is something of a debate at the moment “about the merits of free trade and globalisation.”

“Of course we must acknowledge that there have been downsides,” he said referring specifically to the 2008 financial crisis. “That while the tide of globalisation has carried many with it, it has also left many trailing in its wake. I believe it was their voices that could be heard in the results of the EU referendum and the US Presidential election,” he said.

Mr Sharma said that “we must listen to their voices, but our response should not be to reject global trade or to retreat into protectionism.”

He then spelled out the British Government’s stance on free trade. “The Prime Minister recognised the overwhelmingly positive impact of liberalism and globalisation. That these twin forces have lifted millions out of poverty, broken down barriers between nations and people and strengthened the rules based international system on which we all depend for our security and prosperity,” he said.

Benefits of globalisation

He said the UK would continue to champion the benefits of globalisation but must “also recognise that some things have to change”.

“We believe that, once outside the EU, the UK has a great opportunity to be the strongest advocate for free markets and free trade. Our approach is not going to be about propping up failing industries or picking winners – we will leave that to free market competition.

“What it will be about is creating the conditions, through our new industrial strategy, for business to thrive, to the benefit of all,” he said.

Despite the gloomy economic forecast in Wednesday’s Autumn Statement, Mr Sharma, who spoke just before the Statement, was upbeat. “The sky has not fallen in. In fact the UK economy continues to grow,” he said.

He pointed out the UK business environment remained highly regarded and the UK was ranked seventh in the world – one place above the US – in terms of ease of doing business by the World Bank and seventh in the world in global competitiveness by the World Economic Forum.

He added the UK had a respected system of contractual law and the lowest corporation tax in the G20. “The UK is very much open for business,” he said.

naomi.canton@asiahouse.co.uk

To read the story Brexit and Trump are ‘positive disruptions’ to the economy, says Indonesian textiles boss, which is based on a panel discussion between Anne Patricia Sutanto, Vice President Director, PT Pan Brothers Tbk and Noel Quinn, Chief Executive of Global Commercial Banking at HSBC, which took place at the same conference ‘A new trade era – what it means for Asia and the UK’ click here.

To read the speech in full click here.