New export strategy is a good start but imports too much of the old model

The new UK export strategy has much to commend it. The incoming top team has listened carefully to business representatives and summarized those views as Annex A testifies. The revised 35% of GDP target (up from 30% now) is realistic, not least because no date has been set for achieving it. Export shares of GDP vary somewhat from source to source but the World Bank found in 2016 that most of the large EU countries clustered around 30% with Poland and Germany well ahead at 52% and 46% respectively. Germany’s world ranking is 49 with all the high shares held by small economies.

In other words, we could get to 35% without any change to exports simply by reducing our imports, or GDP as a whole, as some claim Brexit will achieve.

The new strategy is also realistic in focusing government on doing what only government can do, namely:

• Encourage and inspire businesses that can export but have not started or are just beginning; placing a particular focus on peer-to-peer learning;
• Inform businesses by providing information, advice and practical assistance on exporting;
• Connect UK businesses to overseas buyers, markets and each other, using our sector expertise and our networks in the UK and overseas; and
• Place finance at the heart of our offer.

The finance side (UKEF) has long been a strength of the Government’s export support and having an ex-banker (John Mahon) appointed to lead this strategy must be welcomed. Encouraging firms to export, or export more, and networking from the UK into chosen export markets are fundamental and good to see at the top of the agenda.

But, I am sorry to have to say, there are four concerns:

1. The Secretary of State rightly calls this plan “ambitious”. The 42 pages of things that the Department will do, along with other Whitehall Departments, trade associations, export providers (they mean consultants), Trade Commissioners, Export Champions, the Export Strategy Partnership Group and other organisations, look like a spider’s web of confusion. As reported in Annex A, the difficulty firms have encountered in navigating the existing complexity is one of the main reasons the previous strategies did not work. The new strategy seems to be even more bureaucratic. Networking overseas is vital to exporting but this UK-based plethora reminds one of Gerard Hoffnung’s Concerto for Solo Violin and Massed Conductors. Most of it could be swept away and replaced by partnering the British Chambers of Commerce.
2. Baroness Fairhead’s admirable Foreword makes it plain that firms export, government does not. The strategy should be governed by providing what business needs, not imposing top down plans. Yet the strategy is to prioritise (p.13) resources according to DIT Regional Trade Plans confected by Trade Commissioners, Ambassadors and High Commissioners. Admirable diplomats as these people undoubtedly are, how will they know the minds of exporters better than exporters do? Elsewhere the strategy is to push the wishes of DfID and developing countries ahead of what UK exporters may want. Whitehall fat cats do not change their spots.  
3. Similarly, DIT seems to have absolute faith in supplying potential exporters via the “Great” digital platform despite continued evidence of its inadequacy. There has long been an academic debate about whether exporters should begin with economic and market analyses and formal plans or getting into the most likely market(s) and networking. The simple truth is that one cannot plan the unknown. How can one possibly estimate the number of widgets that can be sold into a market when that capacity, as much as anything, depends on how it is marketed. No digital platform will ever be able to do that, no matter how much is spent on it. Many countries do make good use of databases but they're best used as a supplement to networks and introductions, which are the true cornerstone of any real business relationship. 
4. Finally, the strategy does acknowledge that financial incentives are needed because most small firms consider, rightly or wrongly, that they have neither the time nor the finances resources to export. It addresses that merely by telling firms to look elsewhere for those incentives themselves: “assessing the potential for financial incentives such as vouchers, grants and loans, and by improving signposting to the relevant export support in the public and private sector.” Baileys Irish Cream was only launched because of the then Irish Government’s tax incentive and the Portuguese government used to make generous allowance for firms engaged in trade. Surely it is obvious that a government free of the EU should be providing the necessary tax or other financial inducements at home to motivate potential exporters.

This new export strategy has good features but when it gets down to the nitty gritty too much of it is the same old. Baroness Fairbairn misquotes the modern version of Abraham Lincoln’s governing principle (Government should only do what only government can do) by missing out the crucial first “only”. From that omission, flow all the excesses in this strategy which is not the radical focused provision that we need. But maybe, just maybe, we are getting there.