The impact of the UK’s post-Brexit trade policy on development
Following the vote for Brexit, the UK is facing a formidable challenge: designing a new trade policy to address its new strategic interests. Considering the different and frequently opposing interests, this task is far from straightforward.
Many Brexit supporters have argued for a need to redefine the role of the UK in international politics, with trade at the centre. From the use of international development assistance to the negotiation of trade agreements, trade is regarded as the basis on which to pursue national interests as well as retain global leadership. Unfortunately, little attention has focused on how a new UK trade policy could contribute to development.
The potential to define a new trade strategy, agree new trade agreements and use new aid and trade tools constitutes a major opportunity for the UK to continue championing the cause of trade and development. It is also an opportunity for the UK to make trade policy work more effectively and efficiently in delivering development opportunities.
At the same time, there are significant concerns over whether the UK is willing and able to assume such a role. The challenge of defining a new trade policy is considerable, and one for which the UK Government is ill-prepared. Given the magnitude of the tasks and the number of negotiations that the UK will face in the next few years, there is a major risk that developing countries will be overlooked.
This collection of essays offers a number of perspectives on how a new UK trade policy towards developing countries and regions could be designed and implemented, in both the short and longer term. It also conveys the concerns, opportunities and expectations from a group of leading trade specialists from academia, international organisations and think tanks in the UK and elsewhere.
The essays are structured into five sections:
Principles for a new UK trade policy and the relationship with developing countries
The potential effects of a new UK trade policy on developing countries: some scenarios
The value of preferential access to the UK market for developing countries
A new UK trade policy: opportunities beyond tariffs
Regional perspectives on a new UK trade policy
Options for the UK’s offer to developing countries on international trade: a perspective from Africa
by David Luke and Jamie MacLeod, UN Economic Commission for Africa
Beyond the headlines in reaction to the vote to leave the EU – which have dominated both the UK and world media alike – are the emerging nuances of Brexit. Most importantly, these include development-friendly options for the UK’s post-Brexit trading arrangements with Africa. From an African perspective, we highlight, the three principles that should underline the UK’s trading engagements with the continent: support for Africa’s regional integration priorities, pro-poor and pro-development trade arrangements, and market access continuity.
When the UK joined the European Economic Community (EEC) 43 years ago, it transferred all authority for its trading arrangements to the EEC. In 2014, the UK’s $1.1 trillion in trade was channelled through these clear and predictable legal and institutional frameworks.
For Africa, this included the Cotonou Agreement, which expanded preferential access to the EU market while setting up the Economic Partnership Agreements (EPAs) through which Africa is poised to gradually open up 75-80% of its own market to the EU.
Once outside the EU, the UK must design and build its own replacement trade policy for Africa, drawing lessons (where applicable) from the EPA experiences, recognising Africa’s policy priorities, being an ally to Africa at the World Trade Organization (WTO) and ensuring continuity and certainty for African businesses and countries reliant on the UK market.
Supporting Africa’s regional integration priorities
The UK must consider foremost a continental approach to a comprehensive trade agreement with all 54 African countries. This would align with Africa’s plans for continental regional integration as proposed by the African Union’s Agenda 2063, in particular the Continental Free Trade Area (currently under negotiation) and an eventual Continental Customs Union. Complementary to this would be the scaling-up of the UK’s investment in support of Africa’s integration efforts. Doing so will help realise the development of Africa’s intra-regional value chains and markets for industrialisation.
A single continental approach would also reduce the multiplicity of new arrangements facing UK negotiators, easing the post-Brexit negotiating burden. The US has proposed such an approach as the successor arrangement to its Africa Growth and Opportunity Act, which is scheduled to be phased out after 2025.
A continent-wide trade agreement with Africa should incorporate limited reciprocity, immediate access to the UK market, flexible rules of origin that allow for cross-cumulation and phased-in access to the African market. Indeed, these are core elements of the EPAs that would likely form the basis for discussions.
But the UK should aspire to a truly development-oriented trade agreement that includes references to the environment and climate change, and in particular green technology transfer; that removes subsidies that unfairly disadvantage African agriculture, fostering a rural poverty trap; and that creates partnerships in services to help African countries learn from the UK’s strengths.
The UK should also address EU technical barriers to trade, which restrict the UK market for products in which Africa has a comparative advantage, such as tropical fruits and vegetables, fish products and bovine meats. The Citrus Growers’ Association of Southern Africa has suggested that revised UK plant health regulations on citrus imports could be easier to comply with than present EU regulations. Similar improvements could be arranged for fish and beef, of which African exports to the EU have fallen following compulsory and expensive regulations. An example is provided by the regulations to prevent bovine spongiform encephalopathy (BSE), which are applied to African countries in which BSE has never been diagnosed. In realising these advantages, the UK could continue to recognise EU standards so as not to duplicate regulations where unnecessary.
Beyond trade agreements, the UK should prove itself an ally to Africa at the WTO, championing African priorities such as special and differential treatment and eliminating agriculture subsidies.
Market access continuity
Transitional trading arrangements will be required while any continental agreement is determined. The UK will have many negotiating priorities during Brexit, and these transitional arrangements must bridge the gap to a more comprehensive and progressive trade agreement, which is likely to take more time.
The preferable option is for the UK to incorporate transitional arrangements into its EU leaving conditions such that it temporarily continues to participate in EU-Africa trade arrangements. Article 50 does not define the scope and content of the withdrawal arrangements, so it is feasible that the UK could negotiate to retain transitional membership of certain agreements. This would provide legal certainty and assurance for African exporters and investors, and continuity for African businesses.
The UK faces a considerable range of negotiating priorities. Africa, as a rapidly developing and historically linked trading partner, should not be overlooked in these. In crafting its trade policy approach to Africa, the UK must reinforce the continent’s regional integration initiatives; it must ensure market access continuity and certainty; and it should base its agreements on a pro-poor and pro-development principle.