From tariffs and FTAs to high-growth corridors with massive potential, lawmakers and business leaders weigh in on the trends shaping trade

Free trade agreements (FTAs) are important and need to be pursued, but a broader toolkit of instruments to ramp up international business exists and should also be leveraged, according to the UK's minister for trade policy.

Douglas Alexander's remarks were made on 24 April at TheCityUK International Conference, a major event in London attended by policymakers, senior figures from the financial and professional services industry, and regulators.

During a wide-ranging discussion, he spoke about the UK's forthcoming trade strategy, and how it would be "driven by data, and not by delusion." He also argued in favour of facilitating international business using a multifaceted approach, a point of view that's likely to resonate with firms in the UK and beyond.

"One of the insights of the trade strategy is that there is a much broader toolkit of instruments that you can use to accelerate and develop trade than a classic free trade agreement," Alexander said. "There are particular agreements – for example India and the Gulf – which we're looking at taking forward and making rapid progress on," he added.

Alexander was not alone when it came to talking about trade with India and markets in the Gulf. During a separate session at the conference, participants touched upon how global trade is being reshaped by factors including rapid technological developments and the emergence of young, tech-savvy populations in both India and the Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Panellists also highlighted the importance of tapping into high-growth corridors. It was noted that trade between the Middle East and economies in Asia had grown steadily in recent years, with organic, demand-driven links between the two regions underpinned by factors such as Islamic finance and the development of digital banking hubs.

With US trade policy in the midst of a seismic shift, it was argued that an economy like the UK – with its expertise in areas such as law, insurance, tech, academia, and financial services – could look to fill a void and support a variety of growth corridors.

Barriers beyond the border

On barriers to growth in the services sector, Alexander made the point that tariffs were not the only headwind to be mindful of. "If you look at the character of modern trade and the fact that we are a services superpower in the United Kingdom – we're the second largest exporter of services second only to the United States – then a lot of the real barriers that inhibit services growth have absolutely nothing to do with tariffs, and a great deal to do with barriers beyond the border," he said.

UK services exports hit £507.8bn in 2024, up from £471.6bn in 2023, the Department for Business and Trade, citing ONS data, says. Expanding on his point, Alexander went on to highlight the importance of intercorporate transfers and business mobility, as well as the mutual recognition of professional qualifications.

Away from Asia and the Middle East, he also addressed the importance of questions related to deepening and strengthening the UK's alignment with the European Union and countries such as Switzerland. Leveraging and harnessing advantages related to everything from legal systems and the UK's time zone to the English language and centuries of expertise within the City of London would be crucial on this front, he went on to suggest.

During his appearance at the conference, Alexander noted the current volatility rocking global trade, referencing the twin challenges of "unprecedented turbulence" and "the risk of a much more regionalised, much more protectionist world."

His comments, and this year's TheCityUK International Conference, come at a time when international trade has been roiled by geopolitical tensions and the US' decision to impose sweeping tariffs on economies large and small.

Although US President Donald Trump has announced a 90-day pause on his plans for tariffs, a 10% "baseline" levy still remains in place, while China has been slapped with an effective 145% tariff on its goods. On 22 April, Trump said this "would come down substantially, but it won’t be zero." For its part, China has hit US products with a 125% retaliatory tariff.