The Daily Telegraph - Business

This FTA is just the start of seek­ing out new op­por­tu­ni­ties across globe

- LLOYD DORF­MAN COM­MEN­TARY Sir Lloyd Dorf­man CBE is the chair­man of Dod­dle Business · Finance · UK News · Politics · Elizabeth Truss · Japan · United Kingdom · European Union · Europe · Asia · China · India · Australia · United States of America · United States Postal Service · Netherlands · Belgium · Thomas Cook · British Petroleum · Vodafone · Unilever NV · International Monetary Fund · Motegi · William Adams · Miura · James I of Scotland · LeBron James · Tokugawa Ieyasu · Yamato · Australian Postal Corporation · Travelex

The news that In­ter­na­tional Trade Sec­re­tary Liz Truss and Ja­pan’s For­eign Min­is­ter Motegi Toshim­itsu have agreed a his­toric free­trade agree­ment is wel­come. The UK’s eco­nomic, strate­gic and his­tor­i­cal ties with Ja­pan are strong. The first English­man in Ja­pan, Wil­liam Adams – an ex­cep­tion­ally well-known his­tor­i­cal fig­ure in Ja­pan, where he is known as An­jin Miura – was the driv­ing force of the first trade agree­ment be­tween, be­tween King James I and Toku­gawa Ieyasu in 1613.

Ja­pan be­comes the first coun­try the UK gov­ern­ment has reached a new trade agree­ment with, yet this is only the start. There is much work to do to take for­ward other ne­go­ti­a­tions.

Ja­pan is a coun­try I have ex­pe­ri­ence of do­ing busi­ness over sev­eral years. In­deed, ear­lier this month, my com­pany Dod­dle, the e-com­merce so­lu­tions provider, an­nounced a new part­ner­ship with Ja­pan’s largest car­rier, Yam­ato.

Of course, at this time Ja­pan, which boasts the world’s third-largest econ­omy, should have been bask­ing in the glory of a suc­cess­ful Olympic Games. The pan­demic, how­ever, led to the post­pone­ment of the Games till next year. De­spite this, busi­ness can­not and should not be post­poned. In fact, it’s more im­por­tant than ever that we look for new eco­nomic, trad­ing and in­vest­ment op­por­tu­ni­ties.

There are three main rea­sons why I see the UK-Ja­pan FTA as im­por­tant. First, it is a re­flec­tion of the broad lens the UK has to adopt post-Brexit, look­ing at far-flung in­ter­na­tional markets. The agree­ment is ex­pected to in­crease trade flows be­tween the two coun­tries by over £15bn.

The Covid cri­sis has pre­oc­cu­pied ev­ery­one, but it’s worth re­mind­ing our­selves that when the tran­si­tion pe­riod fin­ishes at the end of the year, a new ar­range­ment be­tween the UK and EU will come into force. Clearly, con­ti­nen­tal Europe will re­main an im­por­tant mar­ket due to its prox­im­ity. Yet, many ser­vices, es­pe­cially tech­based, do not rely on ge­og­ra­phy and the UK needs to look at a set of other trad­ing re­la­tion­ships. It is es­ti­mated that over the next two decades, 90pc of global growth will come from out­side Europe.

The US re­mains our largest trad­ing part­ner and other ter­ri­to­ries like Asia, Africa and Aus­trala­sia are set to play an im­por­tant role. Asia, fu­elled by the gi­ant economies of China and In­dia, now rep­re­sents nearly half the world’s GDP and most of global growth. At Dod­dle, we started a part­ner­ship with Aus­tralia Post last year, and in the US, we have re­cently en­tered into a new part­ner­ship with the US Postal Ser­vice.

The se­cond rea­son the UK-Ja­pan FTA is wel­come is that it should pro­vide en­cour­age­ment for the UK’s ex­porters. Our for­mal exit from the EU in Jan­uary seems like a long time ago, but clearly UK com­pa­nies need to ex­plore ex­port markets beyond con­ti­nen­tal Europe. Al­ready over 230,000 Bri­tish busi­nesses ex­port, rep­re­sent­ing around 10pc of all com­pa­nies. When busi­nesses ex­port, they grow, on av­er­age, 20pc more than busi­nesses that don’t ex­port. If you can sell your goods and ser­vices beyond your do­mes­tic mar­ket, why wouldn’t you look to do that?

While I am op­ti­mistic about the op­por­tu­ni­ties for UK busi­nesses trad­ing over­seas, I am not naive about the chal­lenges. Over the past 40 years, I have ex­pe­ri­ence of build­ing busi­nesses all over the world. In fact, af­ter I es­tab­lished Trav­elex, the for­eign ex­change com­pany, in 1976, our first over­seas for­ays were to the Nether­lands and Bel­gium a few years later. We then ex­panded into other in­ter­na­tional markets, but it was not un­til 2003 that we en­tered the Ja­panese mar­ket. In that year, we took over the old Thomas Cook busi­ness and grew it to be­come the largest re­tail for­eign ex­change busi­ness in the coun­try. Of course, it takes time to estab­lish your­self, and build the trust and re­la­tion­ships that so much of busi­ness is re­liant upon.

In the fu­ture, we will need large Bri­tish cor­po­rates like BP, Voda­fone and Unilever to con­tinue to op­er­ate in­ter­na­tion­ally and strengthen their trade. We will also need new buc­ca­neer­ing en­trepreneur­s to set up busi­nesses which can grow through over­seas ven­tures and ex­ports. Last year, well over 600,000 busi­nesses were cre­ated in the UK, to cre­ate em­ploy­ment, wealth and trade.

The third sig­nif­i­cance of this FTA is that it is a re­minder of the im­por­tance of trade. This is even more pro­nounced at this time when the pan­demic has buf­feted the global econ­omy. The IMF pre­dicts that there will be neg­a­tive growth of 4.9pc this year and this is cou­pled with a risk that gov­ern­ments are turn­ing in­wards and cling­ing to pro­tec­tion­ism. This is the wrong re­sponse.

Trade is one of the en­gines of global growth, and we are in des­per­ate need of a re­newed com­mit­ment to it. The busi­ness com­mu­nity must show its in­ge­nu­ity and drive to iden­tify new op­por­tu­ni­ties and pur­sue them. Politi­cians can help by ac­cel­er­at­ing their in­ter­na­tional ne­go­ti­a­tions. We need both trade deals, de­liv­ered by the gov­ern­ment, as well as busi­ness deals.

De­spite all the dif­fi­cul­ties and un­cer­tainty, com­pounded and mag­ni­fied by Covid-19, I be­lieve there are great op­por­tu­ni­ties for high­qual­ity busi­nesses. UK plc needs to con­tinue to look for trad­ing and other op­por­tu­ni­ties. And the Gov­ern­ment can help by mak­ing progress with its ta­pes­try of new trade agree­ments.

 ??  ?? In­ter­na­tional Trade Sec­re­tary Liz Truss speak­ing to Ja­pan’s for­eign min­is­ter, Toshim­itsu Motegi as the UK se­cures a free-trade agree­ment
In­ter­na­tional Trade Sec­re­tary Liz Truss speak­ing to Ja­pan’s for­eign min­is­ter, Toshim­itsu Motegi as the UK se­cures a free-trade agree­ment
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