This week the British Prime Minister announced the UK’s strategy for its Brexit negotiations with the European Union. Her speech explicitly ruled out membership of the EU’s Single Market while seeking to retain some elements of the customs union arrangement.
It also stressed that this will not prevent the UK from negotiating independent free trade agreements (FTAs) with other countries, which formed the ninth point in Theresa May’s 12-point plan outlining her vision for ‘a truly Global Britain’. She specifically referenced Britain’s need ‘to increase significantly its trade with the fastest growing export markets in the world’.
Yet, worryingly, her speech didn’t mention developing countries once. (And it is telling that no developing country has been included in the ‘trade audits’ that the Department of International Trade is already performing with many potential FTA partners).
This is a huge missed opportunity.
‘Do no harm’: Brexit must not leave developing countries worse off in trade terms
May’s speech suggested that if Brexit negotiations fail, the UK will end up trading with the EU (and the rest of the world) on the ‘most favoured nation’ basis – a lose-lose result meaning higher tariffs for both the UK and the EU.
While emphasising the costs that would be shared with European businesses and citizens, she didn’t mention that many developing countries will also face huge challenges and costs if the UK does not introduce provisions for them.
Britain’s new trade policy should be based also on a ‘do no harm’ principle to ensure that its decision to leave the EU doesn’t leave developing countries worse off. I would have liked to see the Prime Minister offer reassurance to the UK’s existing and future developing country trading partners on this. In fact she could have gone further, confirming that the UK aims to provide a simpler and better preferential regime for them.
This would prevent major disruption to existing market access for developing countries receiving preferences under an FTA with the EU, as well as improve current EU preferences. Critically, it would also provide ‘certainty’ (as per the first point in May’s 12-point plan) to firms and workers from developing countries that rely on exports to the UK.
Britain should reassure developing countries they won’t face further costs
Brexit poses other risks for developing countries, which the UK should commit to mitigate. For example, leaving the single market may increase the cost of certifying compliance with quality standards if the eventual agreement does not include ways to mutually recognise these with the EU.
And if harmonising standards between the UK and the EU is not guaranteed, they could gradually differ and duplicate production costs for developing countries wishing to supply both markets. The UK government should quickly confirm it will seek to avoid this.
New FTAs could also affect developing countries by reducing their preference margins. Britain should consider this in its negotiations and commit to reviewing the impacts on poorer nations. It could go further, making these agreements work for developing countries by including development provisions that facilitate the use of inputs originated in developing countries and/or mutual recognition.
Overall it is concerning that while the Prime Minister highlighted the importance of continuing to cooperate with the EU on security and defence, she did not say that the UK would seek to maintain existing cooperation on trade and development policies.
As the Kenyan proverb says, ‘When two elephants fight, it is the grass that gets hurt’. The Prime Minister must ensure that her government’s exit negotiations with the EU do not harm some of the poorest people and countries in the world.
But the argument goes beyond the ‘do no harm’ principle. The ‘Global Britain’ vision presents the UK as a truly open, global player; this should go hand-in-hand with a belief in trade as one of the best ways to develop your economy, create jobs and tackle poverty – for the UK and developing countries alike.