A second Elizabethan golden age of trade and investment
Speech delivered by Lord Price CVO, Minister of State for Trade and Investment, at the British Chamber of Commerce in Hong Kong on Wednesday 6th July 2016.
Hello, I am delighted to be here on my first official visit to Hong Kong and China.
I would like to thank the British Chamber for inviting me to speak and for all their hard work in supporting British businesses here in Hong Kong.
I will make 3 points, before opening the floor to questions. I’ll talk about the EU referendum and the positive opportunities for the UK and rest of the world to create a second Golden Age of trade and investment. Secondly, I will talk about the latest on what UKTI are doing to promote exports and finally, to touch on the UK and Hong Kong’s historic relationship.
For me, it has been an interesting and somewhat eventful first 3 months as Minister for Trade and Investment.
And in light of the EU referendum decision 2 weeks ago, I want to update you on what this means.
Referendum
I want to reassure businesses and investors that there will be no immediate change. For now, the UK is still a full member of the EU, and goods and services will still trade freely across borders.
Our economy has strong foundations. Over the past 6 years, we’ve worked hard to make Britain one of the best places in the world to start and grow a business. And we have no intention of seeing that change
The UK is and wants to be the most business friendly, open, dynamic and innovative economy in the world. That remains unchanged.
To carry out the decision of the British people, I believe we need, above all, a calm and collaborative approach. The imperative now is to ensure we have a collective and unified view of the Britain we want in the future.
Firstly we will need to negotiate a new deal with the EU. I want us to maintain as close a relationship as possible on trade with our European partners. We will also look to secure Free Trade Agreements (FTAs) with countries around the world.
We have and will continue to engage businesses and investors to help draw up the blueprints for what the UK’s future relationship with the EU and the rest of the world looks like. I am eager to hear your views and work together so we can get the best possible deals for the UK.
We need to avoid knee-jerk reactions. Trade deals aren’t agreed overnight. For some, we will be able to build on existing frameworks; others will have to be negotiated from scratch.
These negotiations will be wide ranging: including sector requirements from agriculture to financial services as well as regulatory issues such as customs, competition, and procurement.
Some sectors will slot into new deals relatively straightforwardly and others will be more complicated. We will therefore bring together policy experts from across government to ensure that we know what the UK needs.
Our UK trade team will also need to be resourced appropriately.
As no negotiations can take place before a new Prime Minister is in post and a new Cabinet formed, my job over the next few months is to lay out a set of options for the new PM.
However, the key thing for all of us here today is to see the opportunity this provides.
Take the current value of sterling. Its relatively low position will give our exporters a helping hand and attract more investment to the UK.
We are also, in essence, starting from a blank piece of paper when it comes to trade deals. Freed from Brussels’ more bureaucratic tendencies we will be able to tackle any excessive red tape that can choke small businesses.
We will also be able to make our tax system even more competitive, helping local businesses to grow and attracting investment from overseas.
A fresh start gives a unique opportunity to shape a bright future for the UK as a global trading nation and open economy.
And I will use this week’s G20 Trade Ministers’ meeting in Shanghai to start building these important relationships with counterparts ahead of our negotiations.
The key message here is that we have a strong economy: we remain a fantastic place to invest, and have plenty of innovative, successful businesses. I have every confidence we will make this work.
Government support for exports
My second point is what government is currently doing more broadly to promote exports and attract investment. Our work definitely does not stop regardless of the EU referendum result. My ambition remains for the UK to improve its position in the global league table for trade - we are currently sixth.
We are doing some exciting things to make this happen.
For the really high value export campaigns we have, for the first time, prioritised nearly 200 around the world. These could be worth up to £70 billion a year by 2020.
We will bring together the whole of government, industry and our extensive overseas network to help UK businesses win these deals.
In Hong Kong for example we have identified big ticket opportunities in 4 key sectors including in rail, airports and education.
For smaller businesses, we are developing a digital offer which will match exporters and potential exporters in the UK to demand for British goods and services overseas.
On investment, our Corporation tax is one of the lowest in the G20 - set to get even lower, and we can boast capability and expertise right across the UK. We are the number one destination for Foreign Direct Investment (FDI) in Europe and according to EY, London is the European city most likely to create the next tech giant.
Let me tell you why all of this is important.
Business and society’s success are inextricably linked.
Business is a force for good
I joined government because I believe that business is a force for good.
In the UK, it is business that collects the majority of taxes for the Exchequer which then go onto fund our schools, hospitals and national defence.
Simply put, when businesses win, we all win.
UK / Hong Kong
Before I close and take some questions, I would just like to celebrate the UK and Hong Kong’s strong relationship.
Our history needs no explanation. You are well aware of the long-standing connections between UK and Hong Kong across many fields.
Since the handover in 1997, Hong Kong has flourished to become an international financial centre, underpinned by the Sino-British Joint Declaration and the Basic Law.
Both continue to guarantee the rights and freedoms of the people of Hong Kong and long may it continue.
The potential for Hong Kong as an international commercial centre was never in doubt.
Your location on the Pearl River Delta and the South China Sea, as well as being a gateway to and from China, is what first attracted those British merchants in the 1800s.
And this trading relationship continues to this day – Hong Kong is the UK’s second largest Asia Pacific export market for goods, with turbo jet engines and food and drink making up our top exports.
As a ‘super connector’ to and from China, you’re a boon to the 630 British companies in Hong Kong. You help facilitate 60% of all Chinese capital outflows – a significant amount of which is invested in UK property development, manufacturing and infrastructure.
I know that many of you have significant investments in the UK that make a strong contribution to our economy. We want to keep working with you to grasp future opportunities both here and in the UK.
Conclusion
I’m optimistic about the future: particularly in helping create a second Elizabethan Golden Age. The first Golden Age was based on peace, prosperity, new trading markets and a flourishing of the arts.
The prize that now awaits us is a continued close trading relationship with Europe, which is based on millennia of trading history - from Neolithic times right up to the modern day integration of our aerospace and automotive sectors. The UK remains a very important destination for European goods.
There’s also a prospect for striking new deals with Canada, New Zealand, Australia and other nations – forming the beginning of a new commonwealth trading pact.
Turning to the West, we want to reinforce our historic relationships with both North and South America, which stretch back many centuries.
And to the opportunities in the East, where for centuries British merchants have traded with China for tea and porcelain - so called ‘white gold’ - as well as with Japan, South Korea and other Asian nations.
In fact, the Chinese Ministry of Commerce was quoted this morning in the China Daily newspaper saying they wanted to do a free trade deal with the UK.
The exciting prospect of continuing trading relations with Europe and enhancing trading relationships East and West provides the UK with an opportunity to be a super connected trading hub.
Reinforcing democracy, British rule of law, and tolerance through these enhanced business connections is how we will build trust which in turn leads to peace and prosperity.
I am optimistic that we can seize the opportunity to create a second Elizabethan Golden Age.
Thank you.