Trade and immigration: two hornets nests combined

14 September: There was a time when trade was associated with dusty rooms and unfathomable agreements, and immigration was the hot potato best left alone. Brexit, COVID, the rebuild and concerns about global freight and people flows have put paid to all that.

There’s nothing like grabbing the bull by both horns. In this case, global, national and regional struggles are putting both trade and immigration under the spotlight – from both the business and policy angles.

People and trade are inextricably linked. Economic success, export, innovation, growth, cluster building, sector development, and so on, all depend on talent. People are the backbone of any economy. Sally Jones, EY Trade Strategy Partner, says it is time to link the previously separate concepts. She talks of bold, innovative and deeply operational ideas being the order of the day.

Now we have a new report entitled ‘International trade agreements and UK immigration policy: a practical blueprint for evolution’ from TheCityUK and EY that sets out the issues and demonstrates just how interwoven people and trade really are.

In the report, Miles Celic, Chief Executive Officer, TheCityUK, points out: “The financial and related professional services industry generates employment, contributes to economic output and is the biggest exporting industry with a trade surplus almost equivalent to all other net exporting industries combined. It supports businesses and individuals through its various sectors. None of this could be done without its people.”

The next stage for the UK and its people is clear. He says: “The UK is now transitioning to its new place in the global economy after leaving the EU. COVID-19 has brought further transformations, not least in spurring technology adoption and facilitating remote working – trends which could have an impact on immigration in the long run. 

“UK policymakers must retain a strong focus on building the UK’s attractiveness in their response to the COVID-19 crisis and approach to new trade partnerships.”

The report delivers six recommendations which, Celic says, “will allow the UK to seize the opportunity to use its new, independent trade and investment policy to build a more attractive, innovative, and truly international UK economy”.

Seema Farazi, Partner, Global Immigration, EY, points out that the report is published in a transformed world: “Transformed by ecological challenge, transformed by an extraordinary human

response — at once creating a perfect storm, and a perfect opportunity to reframe thinking.” 

She says that international trade and the immigration system have both been tested “in very different but equally unprecedented ways at an unprecedented scale”. Farazi says: “If ever there is a time to evolve the discussion, to look at the long-standing challenges around trade agreements and migration policy in a changed way, it is now.” She talks of the risk of not being ambitious enough, especially in relation to services.

The key findings of the report are straightforward:

• Domestic immigration policy can move at speed to deliver innovation
• Global trade frameworks are often comparatively less agile.
• Gaps remain in the UK’s domestic immigration policy for an industry reliant on specialised skills
• Mobility agreements with trading partners have the potential to alleviate pressures for the industry
• But effective free trade agreements will require UK policymakers to be unhesitatingly innovative, crafting trade agreements that will be positive for business and attractive for business to use
• The UK’s system can be complemented by bilateral agreements with other jurisdictions, implementing mutually beneficial immigration routes. 

Having probed the issues, the report makes six recommendations:

1. Increased certainty for UK business around short-term travel
2. A hybrid streamlined short-term category to allow productive work
3. Simplified immigration rules supporting service delivery commitments
4. Prioritised agreement of reciprocal youth mobility schemes with trade partners
5. Where mutually agreed, introduce an intra-company transfer (trade partner nationals) route
6. Clearly articulated and accessible principles.

The UK’s immigration rules are, of course, changing in 2021. The UK’s Migration Advisory Committee has had its work cut out aligning Brexit, immigration, the industrial strategy and now the recovery. The new system – set out clearly in the report – will be in force as of 1 January 2021, with routes expected to open in the Autumn to enable applications from those planning to enter the UK from 2021. 

Kevin Foster MP, Minister for Future Borders and Immigration, is emphatic that the new points-based system is aimed at attracting talent while controlling borders and building a strong economy. He also comments that the new system will attract a wider range of skills to the UK.

Professor Catharine Barnard from research group UK in a Changing Europe welcomed a simplified approach to immigration and stressed the importance of having an immigration system that is fit for purpose and up and running on 1 January 2021. 

Mark Garnier MP, Member of the International Trade Committee, pointed out that it is a mistake to think of immigration solely in terms of social policy. He urged for there to be business thinking in the Home Office. 

Ultimately, people, and to some extent, the movement of people are the lifeblood of business whichever the direction of travel. Above all, the system has to be workable.

Find a range of resources to help you prepare for future UK-EU trade during this post-Brexit transition period on ICAEW’s Brexit Hub.