COMMONS

Government must harness the potential of deeper trade ties to tackle development challenges

29 November 2018

A report published today by the International Trade Committee has called upon the Government to reconsider how it trades with developing countries after Brexit, using the opportunities afforded by the UK’s current status as Commonwealth Chair-in-Office holder to lead by example in areas such as supporting gender equality through trade policy.

As Brexit approaches, and in the wake of the Commonwealth Heads of Government Meeting (CHOGM) in London earlier this year, the question of how the UK will trade with developing countries after Brexit has taken on clear political and economic significance.

The Prime Minister’s subsequent visit to South Africa, Nigeria and Kenya confirmed this. The Committee’s report identifies key areas where action could be taken not only to improve trade links with developing countries, but also to help meet development goals.

Chair's comments

Launching the report, Committee Chair Angus Brendan MacNeil MP said:

“The extent to which the future UK-EU relationship will leave the UK free to develop and implement its own independent trade policy remains unclear. Assuming that the Government is in the position to exercise relevant trade competences, our inquiry makes a range of proposals regarding how the UK should approach its relationship with developing countries over the coming years. In our report, we are clear that the Government should ensure continuity in the short-term, but then must review the current arrangements to see if there is more that can be done so that our terms of trade fully support development.

“As current Commonwealth Chair-in-Office, the UK has a rare chance to lead the way in which trade policy addresses fundamental challenges like gender inequality. If the Government shows leadership on this issue, this Committee will be the first to praise them for doing so.

“During the course of our inquiry, we also looked at the need for Departments across Whitehall to work together – you cannot have the Department for International Trade pushing a trade deal that would indirectly undermine an initiative from the Department for International Development. Early signs of a joined-up approach have been positive, but the rhetoric must translate into reality.”

Trade between the UK and Commonwealth countries

The report argues that whilst World Trade Organization rules prevent the granting of non-reciprocal preferences to Commonwealth countries as a group (i.e. without granting such preferences to other developing countries), the UK could strengthen the unilateral preferences it grants to developing countries to the mutual benefit of developing countries and the Commonwealth (given that the majority of Commonwealth members are developing countries).

The Committee also notes that the Government may in time also consider whether it wishes to improve the arrangements it currently has with Commonwealth countries (through reviewing the Economic Partnership Agreements it is seeking to roll over), or negotiate new trade agreements with Commonwealth partners, to allow for enhanced trade relationships that support trade and development.

Trade and gender

The report highlights an explicit connection between trade and gender. Women are disproportionately affected by trade policy decisions, particularly in developing countries, and if the Government is serious about actively promoting gender equality, it should use its time as Commonwealth Chair-in-Office to set an example when it comes to developing and implementing a gender-responsive approach to trade policy that moves beyond the simple ‘do no harm’ maxim.

Practical ways of achieving this would be for the Government to publish an analysis of its understanding of the relationship between trade and gender, and for subsequent trade negotiations to be informed by impact assessments relating to the impact of any agreement on gender inequality. These should be conducted in close co-operation with the Department for International Development.

Increased collaboration with DfID

Despite the success of initiatives such as Aid for Trade, considerable scope remains for greater alignment of trade and development policy. The report warns that such an alignment will not come about without significant efforts from both the Department for International Trade and the Department for International Development, as well as other government departments. Measures such as additional Aid for Trade funding from the Department for International Trade, the introduction of trade and sustainable development chapters in trade agreements and greater collaboration with UK companies that have developing countries in their supply chains should be considered.

Supporting investment and exports

In addition to cross-Government initiatives, the report emphasises that if increased trade with developing countries is to be achieved, tailored support for UK exporters will be required.

The Committee recommends that the Government should encourage investment into developing markets that supports sustainable development, particularly in the area of infrastructure. Stronger relationships with investment promotion agencies should be also be established.

Current and future unilateral arrangements

The Committee welcomes the Government’s stated intention to maintain current levels of UK market access to developing countries, under EU unilateral preferential arrangements, post-Brexit. This promised continuity will be essential, both for developing countries and UK businesses.

Given the lack of detail set out in the Taxation (Cross-border Trade) Act for the unilateral preferences to be granted to countries that are not least developed countries, the Committee will monitor how the Government’s intentions are translated into legislation. The arrangements should however be reviewed in the longer term, and the Government should set a time limit for carrying out such a review.

Reviewing ‘rolled-over’ EU Economic Partnership Agreements

The Committee reiterates its previous recommendation from its report into the Continuing application of EU trade agreements that Economic Partnership Agreements should be rolled-over, at least in the short-term, to ensure continuity. Given that March 2019 is fast approaching, the Committee requests monthly updates from the Government on progress relating to roll-over. 

In the longer term, rolled-over EPAs should be subjected to review, covering issues such as Most Favoured Nation clauses, rules of origin, requirements for economic liberalisation, and sanitary and phytosanitary measures, with a view to potential future renegotiation.

Further information

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