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

The Sunday Telegraph - Money & Business - - Front page -

‘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

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