Do state visits from world leaders benefit business and trade in the UK?
US President Donald Trump made his inaugural state visit to the UK this year from 3rd to 5th June. Donald Trump is only the third President of the United States (POTUS) to attend an official state visit, following Barack Obama in 2011 and George Bush in 2003. But what impact do such visits have on business and trade in the UK?
What is a state visit?
A state visit comes at the invitation of the royal family, under advisement of the UK government. Such visits last a few days and follow a set formula, with a ceremonial welcome, gun salute, and carriage procession to the palace. A State Banquet is held in the visiting dignitary’s honour, and talks are hosted with politicians and industry leaders. The Royal Family usually hosts one or two state visits per year.
In June, President Trump made headlines for bringing all his adult children along for the trip, but the Foreign and Commonwealth Office limits the direct expenses it will cover for state visits to accommodation, transport, food and incidentals for the Official Delegation.
How much do state visits cost?
According to the UK government’s figures, the average cost of a state or ‘Guest of Government’ visit between October 2017 and July 2018 was £50,727. State visits are traditionally much more expensive than ‘Guest of Government’ visits due to the pomp and ceremony, but Donald Trump’s 2018 working trip cost over £320,000 in direct expenses – almost double the £176,374 spent on the King of Spain’s 2017 official state visit.
Trump’s 2018 visit was the most expensive since Chinese President Xi Jingping’s 2015 state visit, which cost about £3,000 more but also included accommodation and translators.
Direct costs like accommodation and food are just the start. When Donald Trump made a ‘Guest of Government’ visit last year, his arrival inspired mass protests and considerable security concerns. Though Trump pointedly avoided London – and the biggest protests – the UK police forces spent an estimated £14.2m on additional policing, according to figures released under Freedom of Information laws.
£7.9m was later reimbursed to the Metropolitan Police, Thames Valley Police, and Essex Police by the Home Office. The Treasury further refunded Police Scotland £3.2m for additional policing expenses incurred by Trump’s two days of golfing.
Costs have not yet been published for Donald Trump’s state visit in June.
What are the benefits of state visits?
If state visits are such a drain on the public purse, why bother? What do state visits offer beyond photo opportunities?
Before the US delegation’s arrival, Theresa May said: “The state visit is an opportunity to strengthen our already close relationship in areas such as trade, investment, security and defence, and to discuss how we can build on these ties in the years ahead.”
Though much of a state visit is swallowed up by entertainment and tradition, there are pockets of time dedicated to areas like trade and industry. After President Xi Jingping’s state visit in October 2015, the Department of UK Trade & Investment released a statement that claimed almost £40bn worth of deals were agreed during the visit.
Dr Jonathan Swift, Senior Lecturer in International Business & Marketing, Salford Business School, cautions: “I suspect the business that comes out of state visits has actually been organized months before. So you have this big flourish to sign contracts, but it’s all been agreed beforehand.”
State visits vs. trade missions
Where state visits are for political figures, trade missions are intended for business leaders to make contacts abroad. Rather than attending banquets, the delegates of trade missions meet the key business players in an area – such as agents, distributors, partners, buyers and sellers. Trade missions may be organised by the public or private sector.
As with state visits, trade missions have sometimes been criticised as vanity projects rather than an efficient use of public funds. Dr Swift says: “If they’re properly thought out and targeted, and the groundwork is done in advance, trade missions can be a good use of public funds. The waste of time comes when they are a sort of political adjunct. If they are planned by business, they are worthwhile, but not when they mix politics and business.”
For one notable example in 2013, the First Minister for Wales Carwyn Jones was censured for attending two trade missions to Turkey and Ireland and neglecting to take any Welsh businesses with him.
Andrew RT Davies AM said at the time: “Trade missions can be an effective way to encourage investment and nurture job creation, but such missions must focus on the promotion of Welsh businesses and not just the First Minister’s face.”
Should you consider a trade mission for your export business?
Trade missions can be worthwhile – but only with thorough planning, proper execution, and solid post-mission support.
Dr Swift says: “It all depends on how well they’re organized and who’s going. If someone like Liam Fox, the International Trade Secretary, is involved then it becomes high profile, and companies – especially SMEs – are able to make contacts that they couldn’t on their own.
“Trade missions introduce our exporters to export markets. The problem with them, which you hear from businesses which have participated, is that once the trade mission is over, they’re left high and dry. They don’t know what to do. What’s needed – and this is a role universities can step into – is continued training with things like languages, markets, analysis of demands, and so on.”
So, weigh the pros and cons and do your research. Not all trade missions are created equal.