AUGUST 26, 2923
Rishi Sunak has an opportunity to cement his legacy through locking the UK into an Atlantic-Pacific trade deal – Leon Neal/Getty Images
It won’t be his efforts to get schools to focus more on maths. Or his drive to get us playing more chess, as worthwhile as that might be. And it definitely won’t be his management of the economy, or improvements in public services.
When Rishi Sunak is freed from office, as he almost certainly will be some time next year, he won’t have a great deal to show for his tenure.
But he might have this: a trade deal with India that will cement Britain’s pivot towards the East, and prevent us from ever re-joining the EU. The only snag is, he needs to show some genuine drive and energy to make it happen.
There is plenty of high-level contact. The trade secretary Kemi Badenoch was in India this week for a meeting of the G20 trade ministers, and Rishi Sunak is due to visit the country in September.
Either event would have been the perfect moment to finally unveil the long-awaited free trade agreement between the countries. And yet, there were briefings over the last few days that there are still many issues to be ironed out.
Business and Trade Secretary Kemi Badenoch has led much of the recent effort to clinch an agreement with New Delhi – HENRY NICHOLLS/Pool via REUTERS
The timetable keeps slipping and slipping. Even Boris Johnson at one point promised to get it wrapped up before Diwali in the autumn of 2022 – and yet, as so often, he over-promised and under-delivered. A year on, there is still little sign of it getting over the line.
That is not good enough. In fact, a trade deal with India is by far the biggest short-term prize of Brexit, and one the Government needs to seize as soon as it can.
Hardcore Remainers are quick to dismiss any trade deals outside of Europe, such as the ones recently signed with Australia and New Zealand, as if the EU Single Market was the only one that mattered or made any difference to the economy.
That, however, is blinkered nonsense. The EU is shrinking all the time, and now accounts for something like 15pc of the global economy, while its top-heavy system of regulation means it often suffocates growth and innovation, leading to less trade overall.
Other trade blocs are increasingly attractive alternatives. And India is the crucial one right now. Here’s why.
First, since a deal with the United States looks to be off the table for the foreseeable future – the Biden administration is not interested, and no one has any idea yet who will be in power after the next presidential election – India is a natural alternative.
It has already overtaken the UK as measured by total GDP (although admittedly that is not much of an achievement anymore) and is expected to overtake Germany and Japan to become the third largest economy in the world by 2030.
It will become an undeniable force in global trade that is set to keep growing.
Next, a deal will cement the UK’s critical pivot towards Asia that it started when we signed up for the CPTPP free trade zone, which stretches across much of the continent, as well as parts of South America.
Again hardcore europhiles may try to deny it, but the Asia-Pacific region is growing at a rapid pace, becoming a lucrative market for the mix of legal, financial and consulting services that the UK has become very good at exporting.
With a much deeper economic relationship with India as well, Britain will have the opportunity to embed itself deeply into Asia’s commercial infrastructure.
Thirdly, there are already well-established family and historic links between the two countries.
The investment by Tata, the Indian owners of Jaguar Land Rover, in a £4bn electric vehicle battery factory is just the latest example of the flow of money between the two economies.
Plenty of major British companies already have a presence in India and vice-versa, and with lower tariffs, easier movement of executives and staff, and common trading and product standards, that can only grow.
Finally, and perhaps most significantly, are the geopolitical ramifications. A UK-India pact will help steer India towards the Western trading system, and away from President Xi’s attempts to lock it into a Chinese-dominated Brics alternative complete with its own rules and potentially its own currency system.
Moreover, it will effectively prevent the UK from ever re-joining the EU.
With the combination of the CPTPP and a deal with India, as well as our huge trade with North America, the UK will be locked into an Atlantic-Pacific trading arrangement that will be very different from the Brussels system operating across mainland Europe.
As much as a Starmer-led administration might try to steer Britain back into the EU, it will have become virtually impossible.
There would be too much to give up, with the economy already on a divergent path. The disruption of trying to move back towards a slow-growth Europe would no longer be tenable.
For Sunak, that would be a genuine legacy, and with his family links he is surely the right man to tie up a trade deal.
The trouble is, there are worrying signs it is getting bogged down in details. It is very easy for officials to start dragging their feet, and for lobby groups and vested interests to block progress with demands for extra protection for one sector or another.
There might not be enough time left to get it signed by the time he visits India in September. But the PM should put everything into getting it wrapped up before Christmas. It is simply too important.
