The chief executive of HSBC (HSBA.L) has said multilateral trade deals are more effective than bilateral ones, suggesting Britain should focus on joining regional trading blocs rather than striking individual trade deals.
Speaking at the World Economic Forum’s Davos Agenda conference on Friday, Noel Quinn said it was “important to be able to tap into multilateral trade agreements”.
The HSBC boss said he had led research in the past into the effectiveness of trade deals between two countries compared to regional agreements.
“The take up rate of bilateral agreements by small and mid-sized businesses was very low,” he said. “The take up rate of multilateral trade agreements was much, much higher.
“As supply chains diversify, in light of the issues people have faced in COVID, I think we’re going to need more multilateral, regional trade agreements rather than bilateral.”
While Quinn was not talking about the UK or Brexit specifically, his observations are relevant to Britain’s trade policy now that it has left the EU. The Department of International Trade has so far largely focused on negotiating directly with countries around the world, rather than targeting multi-country deals.
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The UK has signalled its desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement that spans Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
In a speech last year, Britain’s International Trade Secretary Liz Truss said: “Of all the opportunities I’ve seen, I think CPTPP is one of the greatest.”
Reports suggest the UK’s application could be lodged imminently.
As well as highlighting the benefits of multilateralism, Quinn downplayed fears of a bonfire of regulation in Britain now that Brexit has completed.
“I had some dialogue with the Chancellor and some other financial institutions the other day,” he said. “The purpose wasn’t deregulation, the purpose was about economic recovery and creating economic energy post-Covid, post-Brexit and looking at barriers to economic recovery.
“If regulation, to a degree, is a barrier, have a dialogue about it but the purpose of that dialogue wasn’t about deregulation, it was about driving the economy forward post-COVID.”
Quinn said the government would have to be alert to the challenges of recovery. He highlighted the huge debt burden of many businesses, which will create cash flow pressures for many.
“The recovery will also be painful, not just the crisis,” Quinn said. “There are certain industries that are fundamentally going to have to reshape themselves and are going to need investment.”
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