Climate Commitments Could be the Way to Unlock Trade Talks
Notes from the CEO – February 2021

DE - Cirlce

Duncan Edwards
Chief Executive Officer
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A month into the new year and the political drama that we have become accustomed toÌý³ó²¹²õ²Ô’tÌýabated.Ìý I won’t add toÌýthe comment that ÐßÐßÊÓƵ made on January 6thÌýother than to say that the US processes designed to ensure a peaceful transfer of power prevailed,Ìýas we thought theyÌýwould,Ìýand a new administration is getting its program underway.Ìý

Trade continuesÌýto be a focus for our work at ÐßÐßÊÓƵ and three different issues are worth highlighting to our members.Ìý Included in a flurry of Executive Orders isÌýtheÌýÌýdirective which further strengthens rules which require that government procures goods and services from domestic firms and limits exceptions.Ìý Those hoping for a more liberal approach to trade policy will be disappointed by this pronouncement signaling potential further protectionist measures to come.ÌýÌýÌý

The EU’s decision to imposeÌýÌýand the triggering of Article 16 of the Northern Ireland protocol, thus creating a hard border in Ireland (thankfully since rescinded),Ìýwas an extraordinary response to what looks like a failure of planning and execution of a vaccination program by the commission on behalf of its members.ÌýÌýHoweverÌýthis plays out it feels that the natural protectionist tendencies of the EU are only just below the surface and are ready to break through at any time.Ìý

On a more positive note, the UK announced it would formally begin negotiations to join theÌý) theÌýPacific free trade agreement,Ìýas part of its medium–term objective to haveÌý80% of UK trade covered by free trade agreements.Ìý Although this isÌýoutside of our normal focus ofÌýwork,ÌýweÌýsupport the UK’s ambition and hope it is successful.Ìý

Unsurprisingly, the UK is still talking up its desire toÌýconclude a trade agreement with the USAÌýafter a huge effort by both sides during 2020Ìýand is waiting for the new US Trade Representative, Katherine Tai, and Commerce Secretary, Gina Raimondo, to have theirÌýnominations confirmed by theÌýSenate.Ìý As we have said before,ÌýweÌýthink there is a lot to be gained fromÌýan FTAÌýby both countries and theÌýtransatlantic business community,Ìýparticularly by setting ambitious new standards for digital trade, regulatory co-operation and making life easier for SMEs.Ìý At the same time, we know that some real issues remain unresolved andÌýtrying to get the new administration to give this deal the political focus it needs,Ìýat a time when Covid and other domestic issues areÌýblocking out the sun,Ìýis going to be tough.Ìý

Any significantÌýaction by the Biden team is going to need to check oneÌýof their key progressive boxesÌýon labor, healthcare,ÌýequalityÌýor climateÌýfor it to get urgent attention and this may be theÌýopportunity that the UK should pursue.ÌýÌýAn FTA could be used to proclaim overarching and cross-cutting commitments on climate, sustainability andÌýthe environment which build on the commitments both countries have made through the Paris Accord and which will be reported on at COP 26.Ìý GivenÌýthe domestic commitmentsÌýmade by both countries on carbonÌýemissionsÌýand longer–term commitments to net neutrality,Ìýit might be possible to place climate at the top of the agreementÌýwithout impacting theÌýcore commercial terms.ÌýÌýThere are still crucialÌýand substantive issue to be resolved but if these can be agreed,Ìýa set of climate clauses may make this attractive enough to get the attention it will need to pass in the timeÌýleft available.ÌýÌý

Our program of activityÌýhas quickly got back up to speed after the Holiday break andÌýI would point you to the following:ÌýÌýWe have partnered with the US Embassy in London to identifyÌýChampions of Trade,Ìýcompanies with stories to tell about the importance of trade to their businesses, their stakeholders and their communities; you can follow some of these storiesÌý, or if you have a story to tell and want to join our UK-wide Champions of Trade network, clickÌýhere.Ìý

We also partnered with the Department for International Trade to hearÌýfromÌýSMEs about what would help themÌýin aÌýtransatlanticÌýtrade agreement, andÌýyou can read these stories in our publication,ÌýMaking a DifferenceÌýand see the DIT’s commentsÌýhere.Ìý

Our convening program is also fully up and running with a variedÌýagenda reflecting the issues thatÌýboards andÌýbusinesses are thinking about.Ìý You can see whatÌýisÌýcoming upÌýhereÌýand I hope to see you at one of these terrific events in the coming months.Ìý

A final note on the Covid crisis and response.Ìý Throughout the last year we have declined to criticize either government for their response toÌýan extraordinary situation which would have presented challenges to whoever held the reins.Ìý In fact, our sense has been thatÌýtheÌýfinancial response byÌýboth the UK and the USÌýtreasuriesÌýhasÌýbeenÌýof a scale and speed that has made the economic crisis a lotÌýless badÌýthan itÌýwellÌýcould have been.ÌýÌýThe same might be said about the development and deployment of vaccines, a task ofÌýsupreme complexity and risk.Ìý At the time of writing,Ìýthe UK and USÌýamongst large,Ìýdeveloped nations,ÌýÌýboth countriesÌýare home to companies that have successfully developed vaccines in record time and both countries are thinking about their larger responsibility to make sure that these vaccines are shared with the whole world as soon asÌýpossible.Ìý There is a long way to go but these are successes worthÌýrecognizing.Ìý