Industry must ditch protectionism and take advantage of the opportunities globalisation presents, says Lord Mandelson


Avocados, olives and soy sauce are now available in even the smallest stores; hi-tech tills have replaced inventory counts and the internet has created a new outlet.

It is admirable how smoothly grocers have adapted to this changing world. And while a big part of the grocery trade will always be local, not least because carbon- and quality-conscious customers demand it, we must always remember this is a globalised industry. Competition from foreign companies has intensified, multinational supermarkets have wiped out many high-street grocers and consumers are hungry for discounted exotic goods.

The challenge for government and grocers is to take advantage of the opportunities globalisation brings and to work with countries across the world to make the market as open and transparent as possible. Short-term protectionism will harm global value chains and block the flow of goods.

We also need to ensure this slump in global demand and contraction in the supply of trade credit are temporary and reversible. That's why the G20 pledged $1.1 trillion at the London Summit to support the world economy, with additional finance for international trade.

The UK is also part-funding the Global Trade Alert initiative, a new independent watchdog that will provide analysis to the public on trade-distorting policies. The more we highlight these practices, the more chance we have of stamping them out. We must also recognise that the real force driving sustaining greater trade integration isn't the World Trade Organisation or governments negotiating fair trade agreements; it's traders trading. It's vital that the retail and supply chain businesses source opportunities internationally. Customers will benefit both in terms of price and choice.

We need to make it easy to import into the UK by minimising the barriers and delays companies face. Last year's pre-Budget report asked the Department for Business and HM Revenue & Customs to review the costs of complying with international trade regulation at the border. The food and drink sector has been a key contributor and we aim to put forward workable, affordable proposals in our final action plan, which will be published alongside this year's pre-Budget report.

We're also committed to helping exporters. The government is considering the responses to our consultation on a scheme to underwrite letters of credit from banks for exporters. We are also consulting on expanding the business model of ECGD to provide a wider range of support for exporters.

Finally, we need a global trade deal. The average grocer may feel that such a deal has no bearing on them, but that couldn't be further from the truth. It's been 15 years since we last agreed such a deal, so any new agreement will need to reflect the changing face of the market. It will be used to lock tariffs at current levels or lower and act as an insurance policy against future protectionism. If our businesses are to compete globally, their ability to compete on price is critical.

The companies that exploit opportunities from international markets, that think beyond today and that feed customer demand are the ones that will not only survive the recession but come out fighting.


Peter Mandelson is Secretary of State for Business at the Department for Business, Innovation and Skills .