Liam Fox: ‘I’m not a Little Englander, I’m a free marketeer’
As the International Trade Secretary champions UK plc in Africa, he tells Anna Isaac of his vision for a truly open economy
‘Sometimes you benefit from a period of dull normality,” says Dr Liam Fox, Secretary of State for the Department of International Trade, as we talk through recent events. And boy, he means it. Leaning back in an armchair in the Ugandan High Commission residence, Fox is remarkably relaxed given that he found himself unexpectedly flying solo on this trade mission into the heart of a media storm.
The governmental trip, also involving a visit to Ethiopia, should have been the first joint visit of the heads of the Department of International Trade and, sister ministry, the Department for International Development in order to showcase how they will work together to leverage opportunities for UK trade.
But things did not go according to plan. Within less than 24 hours of the mission starting, his fellow ardent Brexiteer, and now former secretary of state, Priti Patel, had to be bundled out of Nairobi and back to London after being publicly invited home to resign, by Theresa May, the Prime Minister.
At one point early in the morning, an aide warns he might not be in much of a mood to talk, such was the apparent chagrin about the reporting of events surrounding Patel’s disappearance to London.
But Fox is clearly relieved at the opportunity to talk about trade after so much Westminster pantomime. He launches into his vision for Britain as a modern trading nation. “I’m no more a little ‘Europeaner’ than I am a little Englander,” he says, as he explains why a post-brexit Britain will be a truly open economy.
Fox’s passion for the subject is palpable; he waxes lyrical, his left hand clutching his red ministerial file and a list of things he’s meant to say, the other – often waving about – strokes the fabric of the sofa every time he mentions the words “free trade” and “Brexit”.
His cheerfulness about the free trade strategy is in large part due to one of his pet figures: that 90pc of global economic growth in the next 20 years will come from outside the EU – according to the European Commission’s own research.
In terms of what will make the UK attractive as these non-eu markets expands, it’s simple, according to Fox: “The assumption [is] that if you buy goods or services from the UK that you buy quality,” he says, “People say they’ve bought cheaper contracts elsewhere, but they weren’t very good.” And as he goes about selling the UK to new or high-growth potential markets the man is his brand: he’s wearing his trademark, Union Jack cufflinks (if one watches his appearances in front of select committees they are always on display). He’s even sitting on a Union Jack cushion. But this national pride does not amount to a sense that the UK is superior in all matters of economics and trade. When Fox looks to the future for the nation he sees it as one built on “interdependence” – it’s time to ditch any notion of being purely transactional, and to think much more about longer term, shared prosperity. It’s a message that played very well with his Ugandan hosts.
That interdependence agenda is why he is in east Africa. Fox is selling the UK’S expertise in infrastructure and finance to two rapidly growing markets: Uganda, which grew by an average of 4.5pc a year over the past five years, and Ethiopia, which has on average expanded by 10.5pc each year for the past decade. These countries need infrastructure improvements.
The World Bank has blamed poorly managed public projects for Uganda’s slip down to 3.5pc growth in the past year, and Ethiopia is also in great need – it has one of the lowest road densities in Africa: problems such as poor roads can cripple cities’ growth, as commuting times make accessing jobs more difficult.
Scoping out these sorts of potential markets for UK firms is Fox’s latest mission and what’s driving him to innovate in his nearly two-year-old department. Country by country, Fox is leading his department’s Trade Board and team of economists to assess the potential appetite for UK plc’s money and goods. “It’s an entirely new structure,” he says.
But it’s not just the style of the department’s structure that needs to change, in order to meet its objectives of a prosperous Britain. The way Whitehall operates needs to, as well.
“We need to bring an end to trying to govern at a micro-managing level from Whitehall,” he says.
His approach is, he says, that of a more autonomous, modern company, “What’s the point of having intelligent and intuitive staff if you don’t allow them to use their intelligence and intuition?” Working across departments is also vital, in his opinion, partly in order to give any country doing business with the UK reassurance that work is cohesive, but also that through pursuing an effective developmental agenda, the UK can help countries become prosperous, and build relationships with future crucial markets.
“I’m a great believer that the aim of our development policy is not to create a global client state, it is to give people the ability to trade their own way out of poverty,” he says.
The question on aid for trade is, according to Fox, one of philosophy: “I think it comes down to whether or not you believe in the free market or not. I do think it’s under threat.”
Consumers need to be told that a more protectionist view will mean less choice in the supermarkets. “You can’t get cheaper school clothes in Tesco,” Fox says, if you have a closed global economy. He leans forward: “I’m a totally unreconstructed freemarketeer.”
That doesn’t mean that governments can give up on tackling issues like automation. Rather it means grabbing opportunities like new independent membership of the World Trade Organisation.
Fox’s target areas? One is that developing countries should be better able to add more value to their own produce without being hit by tariffs. Coffee beans are, according to Fox, a great example of this.
In 2014, Africa earned $2.4bn from its coffee production, according to Calestous Juma, a Harvard professor Meanwhile, Germany, a leading processor, generated $3.8bn from coffee re-exports. Germany benefits from processing coffee but EU tariff barriers make it punishing for African growers to do likewise. This tariff behaviour, Fox believes, is equivalent to prosperous nations “pulling up the drawbridge”. “What we want to do is encourage British investment in these value added capabilities – it becomes a win win.”
Ahead of the trip, a senior economist at a large management consultancy explained that he believed one of Fox’s great triumphs has been his investment strategy.
Fox is a particular fan of the Pink Book, a set of figures on the nation’s current account produced by the Treasury. He really does flick through it all the time as he claims – even on flights. “We’ve seen our current account deficit go up from 2.5pc to 5.9pc in recent years,” he says.
That gap between in-goings and out-goings will not be closed by just trying to spend less, Fox argues, it’s about spending wisely. Outward direct investment (ODI) should not be thought of as exporting British jobs, he claims, but rather helps grow global brands and ultimately bring capital flowing back into the country.
On a site visit with Jaguar Land Rover in Johannesburg, South Africa, Fox says he saw this in action. The country is an important market for JLR, but it’s also considering how to broaden its reach beyond sales of vehicles in the country, by training
apprentice mechanics and salespeople – actively recruiting economically deprived young men. “My greatest ally [in pushing this sort of trade strategy] has been the Prime Minister. She’s been game-changingly supportive.” ODI, has been, according to Fox, the main catalyst for him gaining his own department. Businesses are starting to see how these opportunities can work.
But when challenged with the suggestion that May is less enamoured of the free market more broadly, the topic is soundly dodged. A key part of Fox’s strategy is to ensure that businesses feel confident enough to enter riskier markets, such as Mozambique. The country has vast gas reserves which can offer ODI opportunities to the British oil industry with exploration and extraction expertise – by creating a form of insurance that gives companies’ boards the certainty they need to push forward investment decisions and sell their services in new areas. Underwritten by UK Export Finance, new overseas investment insurance will offer protection to companies’ investments if they are hit by, for instance, political events.
Despite listing the many efforts to make UK trade strong enough to withstand Brexit headwinds, it’s clear that Fox feels the pressure of the task. “We may think that we will be judged by other criteria but we will be judged by the success of Brexit. It is our historic task. We are the Brexit government,” he says.
However, devising an effective trade strategy in order to achieve a positive legacy for this Brexit government is going to be more difficult if a trade deal with the US is not forthcoming, and fast.
While at first glance, the right approach with the current US regime might seem to be one of big picture, macro planning, Fox says he’s had to play the small game. Forget the trillions of dollars tied up in NAFTA spats – the contested tripartite deal between Mexico, Canada and the US – for Fox, getting any deal will be down to winning over Congress, voter by voter.
That means showing each, in meaningful terms, what’s in it for them. “It [a deal] doesn’t in any way interrupt the president’s election promises”, Fox explains, given that US jobs are unlikely to be migrated to the UK as both have services-led economies, and are far apart geographically. And Congress, he claims, is in favour of a deal.
“Remember that Trade Promotion Authority – the rules that allow the president to negotiate trade agreements – comes up for renewal next summer,” and Congress, Fox argues, is warming towards the idea of a deal.
His approach on a recent visit, to show the benefits at a district-level of greater UK economic participation with the US, hit home, he believes, leaving the door open for negotiations. They will be hard-headed in a trade deal, he insists, but free trade has to been seen as a choice: do you want more jobs? Or less?
Any attempts to revisit the Patel drama or chat about chlorinated chicken are shot down by Fox. It’s clear he’s had enough.
“What we will do is what we believe is good for Britain. It’s annoying that some of the media think that all we do is trade policies.
“When people give us little irritations in the today we just focus on the tomorrow,” he says.
“There’s a world of economics beyond the EU you know,” he adds.
When this meets with a nod, “Thank God, I was beginning to think it was just me,” he says. His tone implied more: that there’s a world of economics beyond the Westminster bubble – perhaps that’s something the rest of the “Brexit government” could do with remembering.
‘What’s the point of having intelligent and intuitive staff if you don’t allow them to use their intelligence?’
Liam Fox is passionate about securing free trade deals and, below, he visited a leather factory in Addis Ababa this week as part of his trade trip to Uganda and Ethiopia