Wondering how Brexit might affect trade with people in the poorest countries? Or what Traidcraft thinks should happen?
Read on to find out more.
What’s Brexit got to do with developing countries?
The European Union has been involved in many aspects of the UK’s policy towards developing countries – from aid to agriculture to human rights – so Brexit is likely to have an impact on all these areas. But probably the most immediate and significant impact will be on our trade relationships.
Millions of people in developing countries rely on exports to the UK. They produce or process things like fresh fruit, tea, coffee, cotton, textiles or even diamonds or coal. Every year, the UK imports around £34 billion-worth of products from developing countries.
That trade earns vital foreign exchange for the countries concerned – and for the families involved it means jobs and money to pay for things like school fees and medical help.
For more than forty years, the terms of trade between the UK and developing countries have been set through the European Union. Some of these have helped ensure poor countries’ trade supports development and fights poverty, while others have been less helpful. Some EU trade policies, for example, have protected the interests of European producers at the expense of very poor farmers in other parts of the world.
When Britain leaves the EU, all this could change. It’s a chance to build on our experience of being part of the EU and put in place trade policies which will really tackle poverty.
What specific things does Traidcraft want to see?
Firstly, Traidcraft and others are calling on the government not to rush into free trade agreements with developing countries. We know from past work on European ‘Economic Partnership Agreements’ (EPAs) with developing countries that these really don’t help poor countries prioritise development and can force them to open their markets to competition before they are ready to do so.
Instead, we want the UK to offer a non-reciprocal preference scheme to imports from economically vulnerable countries. In plain English, what this means is that imports from the poorest countries would enter the UK tax-free.
At the moment many products from developing countries do get tax-free access to the UK market through several different European schemes. This helps keep prices competitive and supports the companies, workers and farmers who produce these products. If the UK leaves the EU Customs Union and doesn’t put anything else in place, these imports could attract an extra £1 billion in taxes. This would increase the cost of these products in UK shops – which could reduce sales and make it harder for the people who produce them in poor counties to make a living.
Done in the right way, a non-reciprocal preference scheme could enable developing country producers to diversify away from primary commodities and trade more with their neighbours to develop more valuable processed products for export. This could bring more skilled jobs and new technology.
The government has already said that it wants to negotiate free trade agreements with countries like the US, Canada, China, Australia and India. We think it’s important that these new agreements don’t undermine developing country competitors. For example, a free trade agreement which offered tax-free market access to the UK for products from a country with a well-developed agriculture sector would mean significant unfair competition to similar products from a developing country.
Finally, we would like the government to take the opportunity to review the UK’s investment agreements with poor countries, and to ensure that future trade negotiations are open and transparent.
Hard Brexit, soft Brexit – will it make a difference?
Yes, the terms of Britain’s departure – for example whether we stay within the Customs Union or not – will make a difference. But we probably won’t know exactly what the final deal will look like for months if not years. We think we need to make a noise about the needs of people in developing countries right now – so they don’t get overlooked. And there are some things the government could do immediately to help: for example, giving a guarantee that the producers from poor and economically vulnerable countries won’t lose out and reviewing investment agreements with developing countries.
Does it matter whether my MP supported ‘Leave’ or ‘Remain’?
This campaign is for everyone, whether they voted ‘Leave’ or ‘Remain’. There were, and still are, strong views on both sides, but we think the most important thing now is to make sure that Brexit works for people who trade with us from developing countries. All MPs can join us by raising this issue within their party and in parliamentary debates. They can write to the Secretary of State for International Trade to ask what he is planning to do to mitigate the risks of Brexit for the poorest countries and how he will use the opportunity to develop trade policies that support development.
Is Traidcraft the only organisation calling for change?
No, Traidcraft is working with the Fairtrade Foundation on this issue and also with some of the bigger development agencies like Christian Aid and Oxfam.
My head’s spinning! Just give me the Brexit basics please…?
We’ve written this blog to focus on the possible impact of Brexit on trade with developing countries. If you want to know more about the basics, you might find this ‘All you need to know’ guide to Brexit from the BBC helpful too.