The empire strikes back! The proposed drive to increase trade with the Commonwealth has the eyes of Remainers rolling as Brexiteers continue their incessant harking back to the 19th century. The Civil Service has been going into snide overdrive in response to the latest hair brained scheme floated by Liam Fox and his infant Department for International Trade.
Thanks to some equally snide reporting many people in the UK and beyond seem to think that “Empire 2.0” is the tag Ministers have given it rather than Civil Servants mocking the idea. So is it another example of Brexiteer’s archaic dreaming?
Well, yes and no. Building a “free trade area” of Commonwealth countries does indeed sounds like the product of a moustachioed Ukipper’s nostalgic imagination. However, it may well be a matter of a poorly communicated idea being thought of in over simplistic terms compounded by the unhelpful sneering of Civil Servants. This is hardly the new scramble for Africa.
There is nothing inherently wrong with a strategy of developing further our trade links with the Commonwealth’s African nations, but there is a danger of grossly overestimating the simplicity of such an endeavour. The challenges that it will bring and the hard work required over the long term cannot be stressed enough.
Here again we risk running into archaic thinking on tariffs. Increasing our trade with African nations isn’t merely about signing a simple deal to reduce tariffs; the issue is the myriad of technical barriers to trade hindering economic development across the continent. Deficient infrastructure, ports and customs procedures lead to delays in the supply chain that cause huge financial waste, waste of perishable goods, delayed construction projects and a thriving black market.
Foreign investment, especially from China, has improved infrastructure in the East and West particularly, improving manufacturing output and increasing exports, but there is a long way to go if Africa is to fulfil its economic potential. If the UK wants to develop trade links with tangible benefits, we should be looking to aid the economic development of the Continent. This must come in the form of targeted foreign aid as well as investment from the private sector. The WTO provides the perfect forum from which to execute this strategy.
WTO members finalised a major multilateral deal in 2014, the Trade Facilitation Agreement (TFA), which was finally activated on the 22nd February having been ratified by 112 of the WTO’s 164 members. The Agreement obliges WTO members to address barriers to trade by reducing red tape and improving customs procedures; the aim is to make trade simpler and less expensive across the globe.
The WTO’s analysis, from its 2015 World Trade Report, estimates increases in global exports from $750bn to $3.6 trillion, reductions in trading cost of up to 14.3% and up to half a per cent added to world GDP annually. The numbers thrown around are dizzying and the potential benefits for the global economy exciting, but realising that potential is going to take a concerted effort from both developing and developed countries.
Developing counties stand to gain the most but complying with the Trade Facilitation Agreement means upfront costs, which is why it contains provisions for them to make implementation of reforms conditional upon receiving support in covering the costs. This, and not some nonsense about a Commonwealth trade area, should form the basis of our trade strategy in Africa.
On the TFA, Dr. Liam Fox, said:
“We have fully supported this historic agreement which will remove some of the barriers to cross-border trade and could benefit the UK economy by up to ÂŁ1 billion. We will now work with other WTO members to ensure economies, both developed and developing, fully realise the benefits it will bring to their citizens.”
The seed of a coherent trade strategy is there, gestating. No country is going to be in a fit state to increase its exports and open itself up for trade with decrepit ports and an inadequate road, rail, air and communications infrastructure. Increasing trade with Africa is all well and good, but only if we’re willing to put the work in and invest in ways that will pay dividends in the future.
By championing the global trading system and helping to drive compliance with the TFA via targeted projects, Britain can help developing countries in meaningful, long term ways, which would be a vast improvement to our current muddled and wasteful approach to aid.
The Department for International Trade, working in step with the Department for International Development, can be a real force for good in the world. By helping to integrate developing economies into the global system, we can work towards mutually beneficial trade relationships; increasing prosperity at home and abroad. That’s what a forward looking, globalist, Brexit Britain looks like.
Ben Kelly is an Executive Director of Conservatives for Liberty.
