UK ignoring £323m annual impact of Brexit on poorest nations, report warns

Least developed countries including Malawi and Bangladesh stand to lose £323m annually if existing preferential trade terms are not secured by the UK.


Powered by Guardian.co.ukThis article titled “UK ignoring £323m annual impact of Brexit on poorest nations, report warns” was written by Ben Quinn, for theguardian.com on Sunday 5th March 2017 00.01 UTC

The British government has given little consideration to Brexit’s impact on poor countries that are reliant on the UK to create jobs and reduce poverty, according to a leading thinktank.

Least developed countries including Malawi and Bangladesh stand to lose £323m annually if existing preferential trade terms are not secured by the UK, a report by the London-based Overseas Development Institute (ODI) warns.

Although UK trade policy will be primarily designed to seize opportunities and address challenges faced by the UK, the ODI states that there is a moral duty to avoid harming people living in developing countries.

“In this sense, the UK may have a responsibility to secure the continuation of preference regimes that favour developing countries,” said the report, entitled Post-Brexit Trade Policy and Development.

“The UK should therefore, at a minimum, avoid removing the existing benefits and current market access received by the world’s poorest.”

Poorer countries have been largely absent from the discussions, speeches and debates around Britain’s departure from the EU, according to the ODI, which published the paper in advance of the inaugural Commonwealth trade ministers meeting in London this week.

In contrast, the report said that rich competitors like Brazil, India and China may have better market access to the UK as a result of free trade agreements.

While the UK has lost a share in the exports of developing countries over recent years, it remains a vital export destination for some. For Belize, for example, the UK accounts for 30% of total export value (pdf).

Among larger countries, 9% of Bangladesh’s total overall exports are to the UK and the country is heavily reliant on garment exports, which are duty-free under the EU’s Everything But Arms (EBA) initiative, designed to help developing countries.

The UK accounts for 6% of Malawi’s total exports. Duty-free under the EBA regime, products such as tobacco could be hit by tariffs of up to 18.4% after Brexit, with sugar even higher.

A Department for International Trade spokeswoman said: “We are a strong believer in the principle that free and fair trade has been the greatest liberator of the world’s poor, harnessing the forces of globalisation to spread prosperity and lift millions from poverty.

“The UK has always been a leading voice in support of free trade as a tool for economic development. That is why we are seeking to achieve continuity in our trade and investment relationships with developing countries.”

The report comes as a new approach to development assistance by the UK government is emerging. In December, MPs on the parliamentary watchdog tasked with scrutinising the use of British aid noted “a more overt link between the UK’s aid and trade policies” through a £1.3bn prosperity fund. They said this could lead to more development assistance being directed to middle-income countries, such as Mexico, India and China.

The development secretary, Priti Patel, had unveiled plans to “turbo charge” her department’s work on trade, welcoming what she called “an opportunity to forge a new role for ourselves in the world, embedding development within UK trade policy”.

Maximiliano Mendez-Parra, senior research fellow at the ODI, said: “Our research shows that while trade with the UK is vitally important for many of the world’s poorest countries, it also brings major benefits to the UK economy, for example through cheaper clothing or agricultural products. The UK should pursue these ‘win-win’ opportunities in its new trade policy.

“As the UK now attempts to become a leader in the global economy post-Brexit, it is important that it does not harm the poorest countries in the process. In fact, any new trade agreements should go much further by extending the measures in place which already support trade between the UK and developing country partners.”

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