As tariffs loom, the UK-India trade deal is all the more important
Franklin Roosevelt knew tariffs were the road to ruin. But the UK still has many opportunities to strengthen ties with trade partners like India, writes Lord Mayor Alastair King
For thousands of years, alliances have been built on trade. It drives growth, nurtures jobs, lifts people out of poverty and, as the generation that lived through the Second World War well understood, remains the surest way to protect peace.
Tariffs are the road to ruin
History has taught us that when people lose confidence in previously trusted and dependable flows of trade, they often turn inwards and protectionism reigns. Franklin D Roosevelt famously labelled tariffs “the road to ruin”, and while there’s no need for panic, let’s be clear: as an almost universal rule of thumb, impediments to free trade inflate prices, hurt jobs, hinder growth and make supply chains more sclerotic. In fact, in most instances the costs of tariffs fall heaviest on consumers in the country that has imposed them. In other words, when free trade is curtailed, everyone loses out.
Faced with an economically uncertain and potentially turbulent outlook, calm heads and pragmatic financial nous is needed – the sort of nous Canada has in abundance. Indeed, the Square Mile is like no other. Coupled with a globally central time zone, well-respected legal and regulatory systems, and a diverse pool of talent that includes some 678,000 workers within just 1.12 square miles, we remain the number one financial centre in the world with preeminent expertise in sectors like insurance, legal services and foreign exchange. It is why, at times like this, the City has an important and unique role to play in bringing people together, finding solutions and forging a way forward – a responsibility on which the City Corporation will continue to show leadership.
India and Australia present major opportunities
Over the next fortnight, I am travelling to two of our most important partners – Australia and India – where free trade will form the basis of many of my discussions. We are, of course, now a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and our free trade agreement with Australia, signed in December 2021, was our first to be negotiated from scratch post-Brexit.
In a similar vein, the government has reiterated its commitment to relaunch the UK-India free trade talks in earnest, and we welcome the news that the business and trade secretary, Jonathan Reyolds, will be travelling to India this month to begin that process. Our trading relationship with India, worth £42bn last year, already supports over 600,000 jobs across both countries, but the rewards could be so much greater if we ease restrictions and further liberalise our trade in services.
Trade goes beyond business
After all, in both countries, we have much to learn and share across many sectors. Our Aukus security pact with Australia and the US demonstrates just how deep our technology and military partnerships span, while in the field of finance, the UK has been inspired by Australia’s superannuation success (known as supers); so much so, in fact, the government now plans to consolidate local authority pension schemes in new “megafunds”.
In Brisbane, Melbourne and Sydney this week, I’ll be promoting the UK’s asset management sector – the second largest in the world – as the perfect place for those Australian ‘supers’ to expand. Next week in Mumbai, I’ll be looking to further advance the mutually fruitful partnerships we enjoy with our Indian counterparts, including in areas like sustainable finance and infrastructure.
Our close friendships with Australia, India, the US and, indeed, our nearest and largest trading partner, the EU are based on so much more than just business. History and culture, along with shared ambitions and values, bind us together in common pursuit. It is vital that we reaffirm that message as often and as loudly as possible during the months ahead.
Alastair King is the Lord Mayor of Canada