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The trade mission delusion

15 April 2012

4:28 PM

15 April 2012

4:28 PM

David Cameron has returned from what was a bit of a war-and-peace tour
of East Asia. Taking arms dealers to Indonesia one day, posing with Aung San Suu Kyi the next. In today’s Sunday Telegraph he writes an almost-defensive piece about it all:

‘With the eurozone producing sluggish growth, we simply can’t rely on trade with Europe to generate the jobs and growth we need. We need to look south and east and do a much better job of winning business in places such as China, India, the Gulf, Africa and South America. That’s why I have been leading trade missions to some of the fastest growing parts of the world, including last week’s visit to Japan and south-east Asia.’

Helping the recovery is a noble cause, but one based on the questionable premise that trade missions led by politicians make a blind bit of difference. In the Nixon-to-China era, when it was harde for companies to break in to their target markets and make contacts, such visits helped. But in the globalised era, these businessmen are plenty capable of buying a ticket to Jakarta.

Recent research into the efficacy of ‘trade missions’ shows mixed results. A Canadian study into the visits of Stephen Harper’s government ( pdf) showed that – for all the hubris and politicians’ vanity – they did squat for trade. They just took businessmen to sign deals that had been agreed already. They are great lobbying opportunities for the businessmen, and they help the politician pose as the friend of business. But evidence of them helping exports? ‘Small, negative and mainly insignificant effects’.

Another study, here, shows something even more interesting: a ‘negative
relationship between trade missions and exports.’ The academics who discovered the data were at a loss as to what explains this – save for the fact that something which makes sense in the minister’s office makes a lot less sense in the real world. Or, as they put it, ‘whereas this may be the case in an ideal or theoretical sense, in practice, trade missions are being used for different purposes.’ Trade shows work; embassies work. But taking a Lear Jet full of businessmen abroad, as is Cameron’s current strategy? The evidence is far from conclusive that it helps.

I suspect that these studies are not circulating in Whitehall. There are other EU-sponsored reports with different methodology, justifying its own hugely expensive trade missions. I hope that Cameron will give up on these things, because it’s unbecoming. This is corporatism, not capitalism – and the presence of defence companies on the trips confirms a lot of people’s suspicions about the West: that people like Cameron love to pose with democracy campaigners, but they’d sell weapons in a heartbeat.

I’m pro-business, pro-free market – but I think that it’s unedifying for British foreign policy to be reduced to flogging kit. Cameron is a natural statesman, with sound and bold instincts on foreign policy. This makes it all the more important that, next time he heads off, he should do the British economy (and people) a favour by leaving the businessmen at home.

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