Make Trade, Not War.
Episode Summary
Our first episode of Trade Knowledge Matters, Amar discusses with David Skilling about the challenges that Russia’s invasion of Ukraine and the global response to it has affected international trade.
Full Transcript
Amar (00:10.126)
Hello and welcome to today’s edition of the Trade Knowledge Matters podcast. On today’s episode we will be discussing the challenges that Russia’s invasion of Ukraine and the global responses to it are creating for international trade. Some of these challenges are obvious. Food prices are increasing, as are energy prices, which in turn will exacerbate the supply chain bottlenecks we have been facing for some time.
Amar (00:35.202)
But beyond that, the conflict is bringing about profound changes to the basis on which countries trade with each other, and the way in which major trading partners think about trade policy. Are we at a turning point in international relations and the governance of world trade? Well, to discuss this issue with me is Dr David Skilling. David is the founder and director of Landfall Strategy Group.
and a global expert on economic policy. He has enjoyed a distinguished career in the New Zealand Civil Service, primarily as senior advisor to the permanent secretary for foreign affairs and trade. He has also been a fellow of the McKinsey Institute. And after spending over a decade in Singapore, he is now based in The Hague. He’s therefore well-placed to guide us through some of the issues raised by the conflict in Ukraine. David! Welcome to this show.
Amar (01:27.802)
David, you pointed out on various occasions that we are at a point of rupture in the governance of international trade and investment and more generally in the governance of global economics. What do you mean by that and how did we come to this point of rupture?
David Skilling (01:49.146)
Well, I think it is a rupture and it sounds like quite a dramatic term, but I think it’s accurate enough. We’ve been, I think, over the last several years, as you mentioned in your introductory comments, in a period of proxy wars if you like. We’ve had Brexit, we had the trade wars under the Trump Administration. Various sanctions and restrictions between the US and China and others being implemented over the last period of time. So, not all has been well in the global trading and investment system for some time. The pressures have been building. And I think the consequences of the Russian invasion of Ukraine and particularly the Western liberal response to that, you know I think have crystalized..
David Skilling (02:32.126)
in quite sharp relief for stakes. I think there’s a sense that there have been a range of challenges to the rules-based system from China, now obviously from Russia. And if you like, a red line has now been crossed. The West has unleashed a very aggressive battery of sanctions from central bank, reserve freezing, ejection of Russian banks from SWIFT, as well as various bans and restrictions on the trading system.
David Skilling (02:58.000)
And I think that Western response is, you know, in part informed by the experience of the last several years that maybe have been these challenges and in a sense now is a time to respond in a fairly aggressive way. Now clearly that’s been motivated by the aggressive Russian action, but I think there’s a backstory here in terms of various challenges. So in the near term, you know, clearly many of these sanctions and restrictions of the like are targeted at Russia and I think over time is going to degrade the Russian economy very significantly.
But I think the bigger picture here is what all of these actions mean in respect of China. China obviously, depending on how you measure it, the second largest economy in the world, the largest exporter and importer in the world and a very central place in the global system. And I think what this signals to China and to other large players in the global system is that the global system is fragmenting and it’s fragmenting in a much more explicit way. It’s been fragmenting obviously in slow motion for some time.
David Skilling (04:00.000)
You know, I think the freezing of central bank assets, the ejection from SWIFT, the kind of weaponizing of various international instruments, has kind of brought home that you cannot separate geopolitics and politics more generally from the international trading system. In a way that you can’t fudge or ignore that anymore. And so, this process of decoupling of, or call it ‘The West’. ‘The West’ is somewhat of an awkward term, because Japan, South Korea, Singapore and others are also very involved in the sanctions process
against China and sort of friends of China is becoming a lot more explicit. And so I think from a Chinese perspective, they don’t want to be exposed to these kind of risks. China is already beginning to decouple dual circulation policy, a much greater drive toward self-sufficiency. So China is looking to figure out how does it manage its exposures to the West, which it now sees as a rival. Similarly, I think the experience of imposing sanctions on Russia, if you like, reinforces the existing tendency, particularly in the US,
David Skilling (05:00.052)
To impose aggressive sanctions on China, particularly around technology investment and the like. So I think those tendencies are reinforced and we’re also seeing aspects of this manifest in Europe as well with much greater scrutiny of inward FDI and the like. So I think the reason I use the word rupture is it seems to me we’ve reached a point at which we’re entering a new world. We’re kind of skirmishing that we’ve seen over the last several years, I think has come to an end.
David Skilling (05:29.872)
The Ukraine event has kind of crystalized some of those tensions and brought them home. And the phrase that I use is a Winston Churchill quote where he talked about this is the beginning of the, sort of the end of the beginning, right? There’s a series of allied victories in Northern Africa and it wasn’t close to final victory, but there was a sense that the initial war was over and now we’re moving into the main event, so to speak. And that strikes me as one perspective I’m supposed to adopt when thinking about the current events. So although initially, as I said, targeted on Russia and rightly so.
David Skilling (06:00.913)
These are going to have global repercussions but I think are going to be quite meaningful.
Amar (06:06.024)
So just building on that and backing up a bit, we talked a bit about decoupling and fragmentation, that presupposes a period where we were really going through a process of integration and coming together. And I suppose there were two drivers for that. One was the strong consensus in what you call Western countries that actually liberalization is good for you. You liberalize because it helps you.
Amar (06:36.020)
when the US in particular pushed for the Uruguay round, one of the motivations is that they wanted to discipline their own internal protectionist constituencies. So that’s the economic logic. And there’s some, there’s a fair amount of evidence to show that China’s integration into global trade actually had beneficial effects in the US in terms of reducing inflationary pressures, sort of a topical issue at the moment. And…
Amar (07:00.960)
alongside that economic argument was a geopolitical argument which was basically that integration will make countries converge in terms of their political systems.
It seems to me that the economic argument is now less powerful in the face of internal political pressures. So while you might have had aggregate benefits of China joining the World Trade Organization and aggregate benefits to the US from that, there are very specific costs that are associated with loss of industrial capacity that have led to the sort of protectionist pressures that the US faced. And suddenly, I guess, there is a sense of buyer’s remorse.
Amar (07:41.506)
that China and Russia simply haven’t changed their forms of economic governance. So when we now talk about a point of rupture, is it a reversal to a much more inward looking approach to trade policy or is it more the case that countries will be just…
Amar (08:05.652)
blocks like the Western block if you can characterize it like that, will just be much more selective in terms of whom they trade with and we’re moving from, if you like, a world of globalization largely driven by MFN to perhaps a different form of globalization on a much more selective basis and if that’s the case what will be some of the implications of that?
David Skilling (08:29.106)
So look at a few things here. I think, you know, I’m very much in the latter camp. So I think we are moving from kind of a Tom Friedman kind of world, which is always a caricatured version of it, but kind of, you know, flat world open to a world that’s much more…
David Skilling (08:44.782)
politically and regionally organized so kind of a regional global economy. So if you like going from Tom Friedman to Janet Yellen, perhaps Janet Yellen, Treasury Secretary in the US gave a speech a couple of weeks back where she talked about friend shoring. So rather than reshoring or nearshoring, friend shoring is the notion that you are going to condition trade and investment relations based on your friends. I call this kind of values based globalization. So a sense that you’re, let’s call it the West again. It’s not simply a geographic concept because it extends to various countries in Asia as well. But you are trading and investing and doing business with countries that are in some sense like you. With whom you share interests and values, and where the political risk profile is lower.
So, I think in large measure they will be regionally organized, although not completely so. So, we should expect, I think, to see a much more fragmented model of the global economy, along largely political lines. So, a lot more intra-regional trade
because often countries of share values are gonna be co-located. So within Europe, within ASEAN, within a China block, I think we’re gonna see, now those blocks will kind of overlap. It’s gonna be a slightly messy environment, but I think those kind of political fault lines, if you like, are gonna be much more salient in sort of shaping the pattern of global trade and investment flows over time. So I should also say that I’m not in the camp that says we’re gonna see an unwinding or reversal in global flows. I mean, yes, it’s gone.
David Skilling (10:07.576)
Global trade to GDP that’s gone basically sideways to slightly down over the last 10, 15 years since the global financial crisis. But I wouldn’t overstate that either. I don’t think that’s gone backwards in a meaningful way. It might be the case that we’ve reached the high water mark, but I don’t see this is all going to unwind or reverse and we’re going to move into a world of basically autarky. I don’t see that it’s happening. There are still powerful economic forces at work that support cross-border flows of trade and investment. I think in large ways, these trade and investment flows are going to be diverted as opposed to destroyed. But, it is going to assume a set of different geographic properties to them.
Then, I think this notion of fragmentation is largely driven by politics, domestic and geopolitics as well. So, I think, you know, if you try to form a view on what trade and investment flows will look like five, ten years in the future. I think it’s going to be shaped increasingly by these political fault lines. And I think, you know, to your point, in the way that you framed the question; yes, there are some domestic political constraints..
so we shouldn’t expect to see a mass push for further reductions in trade barriers. There’ll be some. So the EU, for example, is negotiating FTAs with various countries and general friends of the EU, so Australia and New Zealand. I think we’ll see more of that done on a selective basis, and you’ll see things like RCEP in Asia, perhaps TPP extended a little bit in Asia. So there’ll be bits, but it’s gonna be quite selective, I think. But I think more broadly, beyond the domestic political pushback, I think there is a
a greater sense of realism, if you like, particularly in the large countries like the EU as a whole, all like the US, that using global integration or economic integration as a tool for getting countries to move in your preferred direction, you know, hasn’t worked bluntly in the last 25 years of engagement with China. Well, China is what China is, increasingly autocratic and inward looking, you know, the German policy of engaging with Russia through energy flows, that clearly hasn’t worked. And so I think there’s a sense of actually we called this wrong.
both for the US and respect of China, for Germany and the broader EU and respect of Russia. Both of those haven’t generated the results we wanted. And so I think again, there’s a sense that rather than using economics to shape politics, politics is now shaping economics. Our political worldview, if you like, is going to shape the way in which we sign FTAs, the way in which we kind of try and direct our trade and investment flows and try and de-risk our economies by trading with countries that are more like us.
David Skilling (12:36.216)
So again, it’s diversion as opposed to destruction. And so I don’t think that it’s, you know, the sort of globalization is going to go away, but it is going to look, I think, quite different than it has.
Amar (12:42.928)
Even within that reconfigured format for international trade relationships, there still seems to me to be an interest for, for example, the US and the China to engage with each other substantially on trade and investment. At the same time, you can see that within the Biden administration, there seems to be a general philosophy of, well, don’t mention free trade, and that seems to be the new political consensus in the US.
Amar (13:12.902)
And similarly under Xi Jinping’s leadership in China there now seems to be a marked tendency towards an interpretation of the dual circulation approach that is more inward looking. So you can see that notwithstanding the interest that the two parties have in collaboration, there are political forces that seem to be driving towards a less optimistic outcome. And can anything be done to sort of change that dynamic? What might be some of the steps? Can other nations play a role in brokering,
Amar (13:46.070)
a more open modus vivendi.
David Skilling (13:47.410)
Look, I think in the US and China, not very much can be done. These are quite powerful economic dynamics. So the US, the Biden administration, as you say, is not particularly kind of pro-openness. I mean, TPP is not going to happen. It’s not behaving particularly well at the WTO. So in a sense, it’s a continuation of the Trump administration policies, just in a more structured, disciplined way after the chaos. Substantively, not very much has changed. I think they’re jumping at shudders a little bit.
David Skilling (14:15.184)
Amar (16:03.254)
I don’t see any real likely political…
Amar (16:08.316)
and some of them tend to try and know exactly as you say.
David Skilling (16:09.164)
exactly as you say, Mr. Xi is very domestically focused. The closed borders due to Covid, if you like, are a feature, not a bug. They kind of reinforce this kind of inward turn sense of self-sufficiency, dual circulation. So although China clearly is reliant on external markets and also on importing big commodities or some technology, there is going to be selective decoupling. This is not binary, of course, and China and the US both need each other. And so bilateral
Amar (16:13.504)
very domestically focused, the closed borders due to COVID, if you like.
Amar (16:22.340)
and social efficiency of your circulation. So although China clearly is reliant on the
Amar (16:31.540)
or some technology, there is going to be selective decoupling. This is not binary, of course, in China and the US both need each other. And financial trade between the US and China is at or close to equal highs. So the Trumpet workforce didn’t actually have much of an effect on dampening that. There was a bit of a blip, but then it continued. So it’s not this relationship that’s going to zero. But I think there is going to be much greater weariness, and there is going to be decoupling, particularly in sectors that are sensitive. So technology is an obvious one.
David Skilling (16:39.024)
trade between US and China is at all close to record highs. So the trade force didn’t actually have much of an effect on kind of dampening that. There was a bit of a blip, but then it continued. So yeah, it’s not this relationship is going to zero. But I think there is going to be much greater weariness and there is going to be decoupling, particularly in sectors that are sensitive. So technology is an obvious one. And over time, I think more and more and more. So I don’t see that either US or China are going to, the kind of domestic political incentives
Amar (17:02.624)
So I don’t think that either US or China are going to, the domestic political signals don’t really force them to compromise.
David Skilling (17:09.624)
compromise, they’re kind of forcing each other to kind of stick to where they are at the moment. Now there are other countries where they can act as an honest broker. So Japan got TPP across the line. Once the US walked away, Japan kind of stepped in and managed to get TPP across the line, I think. So Japan, South Korea, others in Asia, they kind of have strong relationships with China and also with strong relationships with the US. You know, they don’t want to get drawn into a, in the middle of a trade war. So yes, US alliance matters, but economics with China also matters.
Amar (17:13.677)
There are other countries where they can…
Amar (17:19.817)
and walked away, Japan kind of stepped in and…
Amar (17:27.936)
Thank you.
Amar (17:31.540)
I don’t want to.
David Skilling (17:38.864)
days and the like. So there is, even if the US and China are not particularly invested, there are some countries that continue to push, that give us, I guess, a measure of confidence. The only other point that I would add, and this is more of a negative point, I suppose, is in terms of US-China.
of Chinese netizens and the like as well as their stakeholders at home. So I think that’s also going to become an increasing sticking point as these geopolitical relationships become more tense between the US and China but also potentially between the US and China. Do Western firms find it more difficult to operate in China as well? And might that be an additional source of friction that adds to the decoupling even in non-sensitive sectors, even in consumer-facing sectors? The fact that you’ve got growing stakeholder pressure
from in a sense in a more bottom-up way you know it might also complicate the trade and investment relationships going forward.
Amar (19:37.212)
Yeah, and that certainly has been visible for a while behind the scenes, I think, when Germany and France were considering reforms to…
Amar (19:51.668)
their competition policy and merger policy. One of the reasons behind that was to create national champions. But while that rhetoric’s been around for a while, the businesses involved were supporting that, saying that they had obligations towards their workers. And basically, the idea that they were being undercut by Chinese rivals meant that they weren’t in a position to fulfill their obligations to an important set of stakeholders. Whereas in the past, you know,
Amar (20:21.782)
the dominant paradigm for considering competition policy was what’s delivering to the consumers. So I think there’s a perhaps a more multifaceted approach here. But precisely on this point, when we see corporate taking the lead, if you like, on foreign policy matters and becoming de facto actors in foreign policy, you know,
Amar (20:44.724)
beyond the specific case of Russia and perhaps China, what is on the broader implications for the way in which economic policy is formulated and how do you ensure actually that we are not just in another sort of form of corporate capture of policy making, that it’s actually that these, if you like, this values-based approach that corporations might be following are also channeled in a way that’s beneficial for the public good.
David Skilling (21:14.598)
Yeah, I’m not sure that it’s going to be corporate capture because I also don’t think that companies are completely in control of this agenda anymore either. I mean, over the last, let’s say 25, 30 years, corporates have been very involved in kind of pushing for greater integration with China, for example, or with Russia. So in Germany, it’s the large industrials that are pushing for German integration with China, with Russia, supply chains, energy, and like
Amar (21:35.623)
Hmm.
David Skilling (21:44.372)
table wing of respective parties, financial institutions as well, have been very important in terms of providing support for greater integration with countries that might otherwise be seen as rivals. But I think now, it’s not that if you speak to the chief executives of these companies, they’ve kind of completely changed their mind. In fact, many German companies are actually quite happy with the status quo. They’d like the shooting to stop and if they can go back to doing business with Russia and the like.
Amar (21:45.284)
Hmm.
Amar (21:57.728)
I think now it’s not that we speak to the chief executive of these companies.
Amar (22:05.937)
Many German companies are actually quite happy with the status quo that like…
David Skilling (22:14.192)
I think the issue is the agenda has been somewhat taken out of their hands. I mean, they’re responding now to stakeholder pressure. And if you look at the way, and yes, Russia is somewhat idiosyncratic, but you look at the way in which firms responded to the Russian situation, going from a situation where they won’t invade on February 23rd to they have invaded, within a few weeks, many of these companies had had to leave and take big write-downs and were like, you know, it’s hard to know what they would have done with complete freedom of maneuver. But in large measure, I think their hand was for.
Amar (22:34.420)
that had had to leave.
David Skilling (22:44.692)
The hand was forced by various stakeholders, partly by the government, yes, but also by attitudes of employees, investors, consumers, and the like, in a sense being forced to do things they actually really didn’t want to do. You can argue the rights and wrongs of the case. And similarly in terms of China, companies are being said, why do you have this presence in China, given South China Sea or Xinjiang or human rights issues and the like.
Amar (22:46.112)
stakeholders, partly by the government, yes, but also by attitudes of employees, investors, and consumers and the like, in a sense being forced to do things they actually really didn’t want to do.
Amar (23:00.560)
Some of you in terms of China.
Amar (23:09.562)
So even where companies would like to engage in a more aggressive, fulsome way in these markets with whom political disputes exist, in some cases they’re not able to do that. So I worry less about corporate capture of the type that you described because I just don’t think that will go…
David Skilling (23:14.092)
some way with these in these markets with whom political disputes exist. In some cases, they’re not able to do that. So I worry less about corporate capture of a type that you described, because I just don’t think, although corporates clearly do have an agenda and would like things to play out in a particular way. I don’t think that they have got the full range of power, so to speak, their hand is often forced. I think what that means is you’re
Amar (23:39.764)
I think what that means is you’re likely to see a couple of things, one, kind of jumpy up moves in terms of engagement with certainly from Western countries, in countries where the West has various disputes. So if a Xinjiang issue suddenly becomes salient or Taiwan suddenly becomes salient, these things can ruck it up, the list of state-of-the-concerns and companies might lose.
David Skilling (23:44.092)
jumpier moves in terms of engagement with certainly from Western countries, countries with whom the West has various disputes. So if a Xinjiang issue suddenly becomes salient or Taiwan suddenly becomes salient, these things can rocket up the list of stakeholder concerns and companies might need to move quite quickly. So I think you’re more likely to see kind of jumpier shifts, kind of, if you like, kind of just come out of the blue, things that went on the agenda a week ago suddenly are high profile today. And I think
Amar (24:04.468)
Mm-hmm.
Amar (24:07.882)
that went under your finger. We could go suddenly down.
Amar (24:12.232)
And I think also, if you like, a supercharge process. If anything, public opinion is more aggressive on Russia than in China than chief executives.
David Skilling (24:13.972)
a supercharged process, because if anything, public opinion is more aggressive on Russia and on China than chief executives would be. So these things can, as much as we see with China, often it’s kind of at bottom-up nationalist pressure that Chinese authorities struggle to contain. The same could be seen in a Western context as well. So it’s all to say the issue
Amar (24:27.592)
These things can, as we see with China, often it’s kind of brought up nationalist pressure that Chinese authorities struggle to contain. They’re the same could be seen in a Western context as well. So it’s all to say, the issue it seems to be going forward in terms of keeping these relationships on even.
David Skilling (24:43.912)
and making sure that engagement can continue. There’s less about managing the risks of corporate capture. I mean, it’s not that it’s zero risk, but I don’t think that it’s the big risk as much as making, providing or managing risks of sort of what’s the word, sort of kind of undue stakeholder pressure or kind of where these things just become, kind of assume a life of their own and become quite difficult to manage. That strikes me as the much bigger risk.
Amar (24:47.798)
about managing the risks of corporate capital.
Amar (24:53.908)
provide.
Amar (24:56.901)
of.
Amar (25:11.836)
So again, backing up a bit, so we’re in a world where we have a higher level of fragmentation and greater level of selectivity, less predictability and as you said with multiple actors now involved and prone to make quick decisions based on stakeholder pressure. For an interview you specialize in advising smaller countries who typically value predictability in a rules-based system.
Now the UK isn’t exactly a small country, it’s a G7 economy, however it is not.
part of any major trading block at the moment. So it does share some characteristics with smaller countries and in leaving the EU, the working assumption the UK government had at the time was that there’d be a working multilateral system of rules, which is not really quite the case anymore, to put it mildly. Well, I mean, what are some of the things you would, what’s some of the advice you would give to the UK at this current juncture?
David Skilling (25:53.646)
Thanks for watching.
Amar (26:45.536)
for a bit of time. So I guess there’s some learnings from other small economies in terms of how to make… ..
David Skilling (26:55.376)
or like are more challenging. One, it’s getting very active around the trade agenda. So you take a country outside, but you like a New Zealand or Singapore or the like, they are very aggressive and often leading in terms of FDA negotiations of all of their major partners and beyond. And also crafting regional institutions. So if you look at the precursor to the TPP, the Trans-Pacific Partnership, that was New Zealand and Singapore,
Amar (26:58.694)
being very active around.
Amar (27:02.152)
So you can take a country outside, but you like in New Zealand or Singapore or the like. They are.
Amar (27:15.629)
and also crafting in a regional institution. So if you look at the precursor to.
Amar (27:24.916)
Singapore, Chile and Brunei. Before that it was basically a New Zealand idea. But when it took this up it said look we…
David Skilling (27:25.596)
and Brunei. And before that, it was basically a New Zealand idea, but kind of cooked this up and said, look, we want something that kind of brings the US kind of into the region and then kind of act as a world class trade agreement. So that was small countries realizing that if you leave the large countries to their own devices, the US, Japan, South Korea, this will never happen. So small countries need to act. And it’s in our interest to act to make sure that these platforms do exist. So small countries can aggressively push both on the bilateral front, also in terms of exercising
Amar (27:33.730)
and they kind of act as a world class trade agreement. So that was small countries realizing that if you leave the large…
Amar (27:43.456)
So small countries need to act, and it’s in our interest to act to make sure that these platforms do exist. So small countries can aggressively push both on the bilateral front, also in terms of exercising strategic creativity on the regional front.
David Skilling (27:55.216)
the regional front, TPP, and also through the pandemic, various supply chain, digital agreements, and the like. But also, I think, so you want safety in numbers, right? You want to craft FTA so you have as much coverage as possible with various preferential agreements. Also recognizing in this new world that a lot of, well, the countries of whom you are much more likely to make progress are countries of whom your values aligned, right? So at the moment, New Zealand and Australia
Amar (27:58.496)
through the pandemic, through supply chain, digital agreements and the like. But also I think so you want safety among us, you want to craft FDAs where you have as much coverage as possible for various preferential agreements. Also recognising in this new
Amar (28:22.324)
So at the Mountain Museum in Australia, I’ve over…
David Skilling (28:25.756)
with Europe. Obviously, it’s a big market, but it’s also a values aligned market. So yeah, I think there’s a few things. One, being very active on the FTA front and the regional agreement front, particularly with countries with whom you share interests. I think one of the other lessons is that geography matters a lot, right? So for the UK, politically challenging
Amar (28:27.784)
obviously it’s a big market, but also it’s a values aligned market. So yeah, I think there’s a few things. One, you know, being very
Amar (28:45.504)
I think one of the other lessons is that geography matters a lot. So for the UK…
David Skilling (28:55.356)
economically and politically back on an even keel in a way that’s kind of sustainable and sometimes predictable, I think matters a lot because I think, you know, we’ve talked a bit on this call about the Western values aligned and like, and from a UK perspective, the US is a very important part of that. But getting a USFTA that’s meaningful is going to be deeply, deeply challenging given the political constraints we talked about earlier in the US, which I think if anything, are going to get more challenging if there’s a change in administration, quite possibly.
Amar (29:03.968)
We talked a bit on this call about the Western values aligned and the like, and from a UK perspective the US is a very important part of that. But getting a new SFA that’s meaningful is going to be…
Amar (29:17.070)
We talked about earlier in the US.
David Skilling (29:25.076)
the US becomes even more inward looking. So I think that adds a level of urgency, I suppose, in respect of UK trade policy to be securing as many of these meaningful FTAs as you possibly can. And so, yes, exceeding the TPP, it’s wonderful, by all means, try and do that. But the elephant in the room really is the EU. It’s your largest proximate trade and economic partner more broadly. And so for small countries, I think the consensus view on Brexit is just one of
Amar (29:26.976)
So I think that adds a level of urgency, I suppose, in respect of UK trade policy to the securing as many of these meaningful FTAs as you possibly can. So yes, exceeding the TPP, that’s wonderful. By all means, try and do that. But the elephant in the room really…
Amar (29:51.860)
I think the consensus on Brexit was just a puzzle. Why would a country be extricating itself from this well-established, well-functioning platform at exactly this moment in time when we can all see the world is moving into a much more challenging phase for a small open economy?
David Skilling (29:55.956)
Why would a country be extricating itself from this well-established, well-functioning platform at exactly this moment in time? And we can all see the world is moving into a much more challenging phase for a small, open economy. So the UK is not going to join the EU again anytime soon, but there are ways in which you can kind of stabilise the relationship in a way that kind of just removes or reduces some of those frictions and gets trade flows pointing in the right direction again.
Amar (30:13.140)
again at any time soon, but there are ways in which you can kind of stabilize the relationship.
Amar (30:19.176)
or reduces some of those frictions and gets trade flows pointing in the right direction again. So for small countries, you do business with anybody that you can, just like the FDAs have as many.
Amar (30:43.008)
It’s a fairly obvious answer, I suppose. But I wouldn’t, from a small country’s perspective, looking at the world, the global environment, as it’s emerging, particularly post-Newclay, there is a sense of real concern about fragmentation, unpredictability, domestic politics, kind of contaminating the trade policy debate in large countries. And there’s a sense that we are moving in a direction where we’re not just going to be able to do that, but we’re going to be able to do that. And I think that’s a very important point.
David Skilling (30:55.096)
about fragmentation, unpredictability, domestic politics, kind of contaminating the trade policy debate in large countries. And there’s a sense that we are moving into a much, much more challenging environment. There is a need both to kind of manage the kind of external strategy well, it’s not the FTAs, but there’s also a need to get your domestic house in order, right? So to compete in this new environment, yes it’s partly about the legal institutional framework, but it’s also about making sure that at home you’re investing in
Amar (32:06.376)
Yeah, thank you, David. That’s a…
That’s been a very interesting overview. We’ve reached the end of a lot of time. So we could spend probably a few more hours going over these issues, but you’ve provided us with a very comprehensive panorama of where we’re at. And a number of these issues are ones which we will look at in greater detail in forthcoming episodes of the podcast, getting down into the detail of international trade rules and the UK’s relationship with the European Union and other partners.
Amar (32:40.198)
coming your way. But for the moment I thank you very much David for taking part in this podcast. To all our listeners remember to sign up and you can do that through your preferred platform whether it’s Apple or Spotify and stay tuned for further episodes. Thank you.