New UK trade strategy will bolster country’s ‘trade defence’ toolbox

The new strategy, which has a strong focus on UK services, is aimed at navigating a turbulent global trading environment. It comes hot on the heels of three recently-agreed significant bilateral trade deals: the free trade agreement with India; the deal between the UK and the US; and the UK-EU trade deal.

Despite these agreements, last month the Centre for European Reform reported that the UK was facing its “most severe trade challenge in decades”. Trade barriers introduced after Brexit have made trading with the EU – the UK’s largest trading partner – more arduous and costly, amidst growing global trade uncertainty.

In real terms, UK trade volumes have grown by just 1% since 2019, while both the EU and G7 have enjoyed an 8% growth over the same period. The World Bank has identified that total trade restrictive policies increased five-fold between 2015 and 2023.

The government’s strategy identifies several key initiatives to increase trade in both goods and services. This includes expanding the capacity of UK Export Finance (UKEF) – the UK’s export credit agency – by £20 billion to a total of £80bn to support businesses to secure foreign orders and finance and creating an economic security advisory service, based in the Department for Business and Trade, that will streamline the government’s approach to partnering with businesses on economic security issues.

Additionally, a new “Ricardo Fund” will be established – named after British free trade economist David Ricardo – which will support UK regulators and overseas trade teams in identifying and removing regulatory barriers for UK businesses trading abroad.

The strategy acknowledges that free trade agreements (FTAs) are not the only means of boosting international trade. Instead, it highlights alternative tools such as bespoke agreements to govern e-commerce, sector-specific agreements, and mutual recognition agreements – particularly with countries and in relation to sectors offering the greatest potential for growth.

“The government has taken a realistic approach in seeking to maximise opportunities for UK businesses,” said Dr Totis Kotsonis, trade law specialist at Pinsent Masons. “This approach takes into account the political and technical challenges in negotiating free trade agreements, which can take years to complete and can involve substantive concessions depending on the negotiating strength of the other party. As a case in point, the recent US-UK Economic Prosperity Deal – which has yet to be implemented fully and which is not in fact a comprehensive FTA – was negotiated in unusually record time, but arguably involved some material concessions on the UK side to gain access to parts of the US market on terms which are ultimately less preferential to the access which the UK had prior to Trump’s presidency.”

The new UK trade strategy also emphasises the importance of mutual recognition of professional qualifications in high-value sectors, with key partners in Europe, the US, Canada, Australia, New Zealand, India and the Middle East, to boost the UK’s status as a services superpower, said Kotsonis.  “In May, the UK and EU already committed to tackling challenges around the mutual recognition of professional qualifications, aiming to improve market access for regulated services such as law, consultancy and accountancy. The trade strategy builds on this commitment and reinforces efforts to facilitate cross-border provision of services,” he said.

According to Kotsonis, the new strategy also “reflects a broader geopolitical awareness”, with the UK government signalling its intent to reinforce the global rules-based trading system, not least by joining the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) – an EU-backed initiative which operates as a temporary mechanism for resolving trade disputes at the World Trade Organization (WTO) – whilst  the WTO’s appellate system continues to be non-functioning.

Domestically, the government intends to respond to the increasingly protectionist global environment by strengthening the UK’s trade defence mechanisms and refining its trade remedies system. When parliamentary time allows, legislation will be introduced to expand the UK’s powers to respond to unfair trade practices and to enhance the UK’s trade remedies system, making it more “accessible, assertive, and agile.” This is aimed at ensuring stronger protection for British businesses and guarding against global turbulence in critical sectors.

In parallel, the government has launched a six-week consultation on the future of steel trade measures. The UK currently applies a global safeguard on certain steel products to address issues of global overcapacity and unfair practices. However, this measure is set to expire in June 2026 in line with WTO rules. The consultation, which closes on 7 August, invites stakeholders to help shape the UK’s future trade approach to steel.

Under the new strategy, the government also intends to consult with businesses on the potential benefits of joining the Pan-Euro-Mediterranean convention, which establishes common rules of origin among its members to facilitate trade and support the integration of supply chains.  “Whether that would be achievable, however, remains unclear,” Kotsonis added. “Not least in light of the fact that this is likely to require review of the current rules of origin provisions of the UK-EU Trade and Cooperation Agreement which, according to press reports, the European Commission does not seem to favour at this stage.”

Elsewhere the strategy paper notes that environmental and labour standards must be enforced in all UK trade arrangements if the country is to meet its goal of being true to its values. In line with this, the paper indicates that the government will launch a review of the UK’s approach to ensuring responsible business conduct, focusing on the global supply chains of businesses operating in the UK.

Overall, Kotsonis said the new trade strategy appeared to be based on a pragmatic assessment of the UK’s comparative advantages – particularly in services and digital innovation – that seeks to “maximise” the UK’s trading position in the context of the current uncertain global trading environment.