Don’t settle for the minimum: extending preferences for developing countries after Brexit

27 June 2017
Comment

The UK’s announcement that it would roll over preferential trading terms for the world’s poorest countries after Brexit is welcome step. It has reduced the year-long uncertainty among Least Developed Countries (LDCs) who benefit from the duty- and quota-free access under the European initiative known as Everything but Arms (EBA).

ODI research shows that the 48 poorest nations who have access to this scheme, will continue to save about £323 million in duties when exporting to the UK. This will help protect trade, production and jobs in those countries. And it is good news for British consumers who will continue to benefit from the good value of these imports: it is a win-win for Britain and developing countries alike.

But there is still more that could be done for a post-Brexit Britain to improve its trade policy towards developing countries. Firstly, the UK government should not simply replace preferential trading terms laid out in the current European Economic Partnership Agreements. The existing regime is complicated and introduces arbitrary distinctions between developing countries. We need a simplified replacement involving all Least Developed Countries, lower-middle income countries and small island states.

Secondly, the UK departure from the EU has important implications for the value chains binding together British, European and developing countries’ firms. The UK should aim not to introduce different import standards compared to the EU or demand that developing countries’ businesses must certify separately UK and EU standards. In this way, firms will avoid paying extra costs and the burden of regulation will be keep at a minimum.

Thirdly, and more radically, the UK could apply a pro-development lens to all the new trade agreements it is negotiating with emerging and developed economies. It could negotiate provisions in these new deals, which benefit the use of products from developing countries. In this way, the government could fulfil its commitment to helping “developing countries grow their economies and reduce poverty through trade,” as the Secretary of State for International Trade, Liam Fox, has said.

Lastly, aid has positive effects on the UK economy and the Aid for Trade commitment should be both stepped up and coordinated with other donors – including the EU. Specifically, the UK must continue funding other donors’ successful programmes ­– just as other donors fund aid for trade programmes developed by the UK.

Whilst Brexit brings clear risks for our trading partners in the developing world, it also brings opportunities too. We hope the EBA announcement is the beginning, not the end, of what the UK will do.