Harvest what you sow - four ways to improve business engagement in future negotiations
December 18, 2018
Deal, or No Deal, let’s not forget that it’s business that trades. While government negotiates the future trade agreements, it’s business that delivers on the ambition of economic growth. Unless businesses respond to the new opportunities created from a trade deal, then the costly and lengthy investment in a trade negotiation won’t pay off.
As the UK looks to leave the EU, government should focus on the complex nature of engaging business in shaping its future trade relations with the EU and other third countries.
However, as we have learned from experience, these consultations can be “one-size fits all” - broad consultations or online questionnaires that can often be unwieldy and time-consuming and, after the event, government doesn’t always publish the outcomes.
At any one time we can be involved in a number of different government-led consultations. And, as an illustration, it would be fair to say that the recent online consultations on trade policy, have been challenging, lengthy, and required a level of understanding about trade barriers many businesses in the UK simply don’t have.
We recently carried out a pilot survey of 132 business decision-makers across the UK on their
export experiences. We found small to medium sized enterprises (SMEs) were more likely to have no experience, or only limited experience, of exporting compared to larger firms. 86% of companies with a turnover greater than £50 million reported having a reasonable level of exporting experiences, compared to only 41% of companies with less than £2 million turnover. It’s no wonder that most businesses can struggle to engage meaningfully with Government on what they want from trade and exports.
Delivering on trade is going to require government to get smarter about how to get business to input into its trade negotiations. Some departments, including Home Office on the EU citizen settlement scheme are leading the way by inviting employers of large numbers of EU citizens to input into the design of communications materials for the scheme.
Based on our experience, here are four suggestions of how government could improve business engagement during trade negotiations.
Use data to target and tailor the approach. A one-size fits all approach will be wasted time for many businesses - and could substantially inhibit engagement. For example, professional services firms are less likely to engage in discussions on tariffs than manufacturers. Likewise, online engagement is an effective channel to add reach, but long questionnaires are too blunt. What’s needed is a more modular and targeted approach. To do that, government needs the right data models to understand which companies to target and when - that means understanding value chains, regional presence, diversification ambitions etc, so that trade policy options are discussed with the companies that could be most affected.
Break down the issues, make them tangible. Trade relations and barriers between countries are complex issues. Government needs to find ways of translating these macro issues in to practical examples of how they might affect business, much like the chlorinated chicken story did for UK consumers. This means getting into to the detail. For example, how might changes in rules of original impact a business’s supply chains, access to markets and customs procedures?
Use agile and targeted consultations to test specific options. For example, BEIS as part of its Brexit preparations has established stakeholder groups looking at statutory audit and corporate reporting. These groups are a policy sounding board, and members give an expert view on the practicalities, or otherwise, of the options, as well as helping to identify unintended consequences. The explicit nature of the consultation in terms of scope and participants has enhanced the quality of engagement and response. Once negotiations are live, some countries establish a “room next door”, where business representatives advise on how their sector might respond to a trade policy, which is something that government could consider in due course.
Use behavioural modelling tools to anticipate business response to changes in trade policy. A trade negotiation is by its very nature a long process with many steps. What’s often lacking is high quality data and intelligence to understand the potential effects of the deal and how business might respond as the negotiations proceed. This requires a good understanding of business, segmented by different types of sector or service. By combining that understanding, with rich data on UK companies and digital tools, government could model business behaviour and predict the effects of a negotiation. If we can model patient behaviour in healthcare, or how home buyers might respond to changes in the housing market, why can’t we model business behaviour to a free trade agreement (FTA)?
The success of future trade policy will be measured in part on how business responds, and whether or not the deals make it easier for them to export and import, or to invest. If government can get business engaged at an early stage, then it’s setting the process up for success.