International Trade Minister Liz Truss pitches services trade reform to WTO

Profile picture for user ddpreez By Derek du Preez March 4, 2020
Summary:
The UK’s speech to the WTO this week may provide some indication of the government’s Brexit trade strategy with the EU.

Image of Liz Truss Secretary of State for International Trade

For the first time since exiting the EU at the end of January the UK took an independent seat at the World Trade Organization, where Secretary of State for International Trade Liz Truss delivered a pitch to the WTO General Council on reforming services trade. 

The WTO could play a significant role in the UK’s future trading position with the EU, depending on the outcome of the Brexit trade talks that are due to conclude at the end of this year. 

If UK and EU negotiators fail to secure a free trade agreement in time, then the two trading blocs will have to revert to WTO rules (no deal). 

However, it’s also worth noting that the Prime Minister has indicated that the UK will be seeking a ‘Canada-style’ trade deal with the EU, which prioritises reducing friction on goods over services. Under the EU’s deal with Canada, there are still significant restrictions on services. 

As a services focused economy, the UK may therefore be pushing reform on WTO services rules as a solution to get the best of both worlds. A goods-focused trade deal with the EU, falling back on reformed WTO services rules elsewhere. Although the extent to which the possible reforms will replicate the trading relationship the UK had as an EU member remains to be seen. 

And there are many assumptions being made on our part here, given the early stage of negotiations. 

What did Truss say? 

Truss used her speech to declare that the UK is an “open, liberal and outward looking nation”. She said that world trading volumes are lagging behind global growth and that the rate of decline in global poverty is also beginning to slow. 

The Secretary of State said that the UK wants to turn the rise in protectionist measures being seen around the world and that the WTO is central to its future vision as a free trading nation. 

Truss said:

The more we allow people to shape their own lives, remove barriers to enterprise within and between nations, and allow human ingenuity to flourish, the more rewards we will all reap.

The greatest economic advances from steam engine to the internet, have resulted from increasing international trade and connectedness, the ideas chain reaction.

So we will work with all nations that share this multilateral vision, to lead the defence of free, fair, rules-based international trade, pioneering a route to prosperity that lies through working together, not protectionism.

She added that the UK wants to make sure the rule-based system is based on open, market orientated policies and is “transparent and fair”. The UK, Truss said, will in particular take aim at “trade tensions” such as industrial subsidies, state-owned enterprises and forced technology transfer. 

Leaders in services and tech

The UK will seek to advance trade for the “modern era”, Truss said during her speech, noting that the world has “experienced a revolution in technology and automation”. She argued that while technology services have changed our world and account for close to half the value of international goods and services, the barrier to trade in services are “around three times higher than for goods”. 

Truss said: 

As a services orientated economy, a world leader in sectors ranging from tech to finance, and the world’s second largest services exporter, this is a huge opportunity.

The UK will push to ease restrictions on cross-border data flows…preventing unnecessary data localisation requirements…and ensure customs duties do not apply to electronic transactions.

We will do this through multilateral or plurilateral groups at the WTO, a coalition of the willing, such as the JSI on e-commerce and through wider reform to trade in services, the UK seeks to be a future leader in these areas.

She concluded by saying that the UK will be a trading nation that pushes for liberalisation in trade in services and data, with the aim of turning around protectionist trends and delivering benefits of the “global digital revolution for all members”.