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August 18, 2016

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August 18, 2016

What sort of trade campaigns do we need around Brexit?

August 18, 2016
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Not all conference calls are as terrible as the one depicted in ‘a conference call in real life’. Had a really good one yesterday with Oxfam/Exfam trade wonks on the impact of Brexit on Britain’s trade relations. Here’s my take.

Around the early 2000s, I spent about 7 years as a trade wonk, first at CAFOD and then at DFID. Highlights includeCancun press room at collapsewandering through the tear gassed battle lines of Seattle, and experiencing a full scale summit collapse in Cancun (here’s a pic of the press room at that moment – it really has to be experienced). So now, are we just going to dig out all our old policy positions and do a kind of ‘Magnificent Seven Ride’ sequel, or should we do things differently this time around?

For trade campaigners the early noughties brought together two often competing narratives. The first was northern liberalization, epitomised by duty free access for poor countries to northern markets, and reform of Europe’s Common Agricultural Policy or US cotton subsidies. The argument there was that northern protectionism was both raising prices for its own consumers, and preventing developing country exporters from trading their way out of poverty. On these issues we had allies among liberal economists in the World Bank, DFID and elsewhere.

The second current of thought was about ‘policy space’. The work of Ha-Joon Chang and Dani Rodrik suggested economic take-off almost always occurs with a degree of protection of infant industries, yet many of those forms of protection were being banned under free trade agreements. The rich countries were either historically ignorant or, in Ha-Joon’s words, were actively ‘kicking away the ladder’ from poor countries. Our allies here were in the UN system, academia and among the developing countries themselves.

Since then, the northern liberalizing agenda has languished, caught up in the backlash against globalization, while the southern policy space argument has got stronger, both because the Washington Consensus has crumbled and because developing countries themselves have asserted themselves in global debates.

Trade policy debate, anyone?

Trade policy debate, anyone? Seattle WTO ministerial, 1999

So much for the global picture – what about Brexit? All the UK’s trade agreements currently fall under the aegis of the EU, and become void on the day we exit. That presents the new Department for International Trade, led by Liam Fox, with a vast negotiating task – not just agreeing Britain’s trade rules with the EU, but negotiating new agreements with a range of other partners, including the emerging economies (China, India) and the least developed countries. Let’s assume that China and India are perfectly capable of defending their interests in any talks; it’s the smaller players that aid agencies should mainly be thinking about. In particular Britain will be renegotiating the Economic Partnership Agreements signed by the EU with its former colonies, and may have to come up with an alternative to the EU’s Generalized System of Preferences for LDCs in general (see this excellent post from Emily Jones for more detail).

So much for policy and facts, how about politics? Couple of points to note here:

  • The academic debate may have moved on, but the mood music in the British Government is very much about using aid to promote British National Interest. When it comes to trade rules, they’re more likely to be interested in promoting UK exports and business strategy than allowing trading partners to safeguard policy space for development.
  • The Department of Trade is a newly created ministry, and so is both in a state of flux and likely to be horrendously overstretched. That provides opportunities if campaigners are smart enough to adapt their message to these realities. One is to ask them to sign up to some general principles, such as a development audit of draft trade agreements, that costs nothing now, but gives a good basis for debate in the future. Another might be to identify some easy wins for an overstretched department, such as ‘things that you shouldn’t change’ or ‘good ideas you can nick from elsewhere’ – eg the EU provides good access for LDCs which, like Norway, the UK could replicate post-Brexit

So here’s my top three suggestions for viable trade campaigns (not Oxfam’s – this was just an initial conversation.

Male only panel on horseback

Male only panel on horseback

There’s a fair chance we won’t agree our strategy until the trade negotiations are all finished and signed…..).

  • 10 easy trade wins for development: provide preferences equivalent or better than the EU’s, create an Africa-wide preference scheme like AGOA, etc
  • A Development Charter for the Department of Trade: general principles that prove that the UK still cares about the rest of the world
  • What are developing countries saying? Gather the views, fears and asks of developing country negotiators and civil society, and publish them regularly throughout the negotiations

Plus two other thoughts:

On policy space, we might be better off supporting civil society and governments in developing countries in the negotiations (eg with legal advice) than banging our heads against Whitehall’s rich selection of brick walls. Amplifying voices of businesses that serve the poorest can also be critical, especially as a handful of large businesses (or vested interests) often end up presenting themselves as speaking for ‘the national interest’. We tried to do that the last time around under the rather patronising name of ‘developing country assertiveness’, but institutional pressures (need for media coverage, or campaigns at home) always sucked resources away. Can we do it better this time?

And finally, a dilemma. There will be lots of pressure to include safeguards (labour, human rights, environment etc) in trade agreements. That seems perfectly reasonable at first glance, but I have mixed feelings. A bit like the US constitution, trade rules should be designed with bad guys in mind, not saints. If a safeguard can be abused for short-term protectionist purposes by a British politician, at some point it will be – we should remember that.

Thoughts?

And here’s that conference call in real life – enjoy

6 comments

  1. Why do you have mixed feelings about labour rights being included in trade agreements? Making export quota expansion conditional upon improving compliance with ILO standards would address “bad guys”, no?

    1. Thought experiment – you are an unscrupulous UK official or politician trying to curry favour with a party donor or otherwise influential lobbyist who wants protection from cheap imports from a developing country. Wouldn’t you use labour rights safeguards if they were available?

      1. Making export quota expansion conditional on improved labour standards, as monitored and enforced by a third party, has historically improved working conditions

        – much more so than contemporary alternatives.

        If you build capacity to meet these conditions then they can be met (as ILO shows), so aren’t a form of protectionism.

  2. Agriculture being part of any FTA, and Britain having left CAP, any agreement must await a national agricultural policy. I have yet to see any indication that there is some strategic thought in the matter.

  3. Much of this resonates with the thinking that Traidcraft has been doing since the referendum, although it’s by no means a given that the UK will renegotiate Economic Partnership Agreements. We certainly will be discouraging them from taking that route, they’ve never been in the interests of developing country partners.

    The better option, as this blog touches on, is for the UK to create a non-reciprocal market access scheme for the most economically vulnerable countries. This would address the two key concerns of ensuring continued market access and protecting policy space. It also has the added advantage of being politically pragmatic as it wouldn’t require resource intensive negotiations at a time when capacity is low and priorities lie elsewhere.

    It would need to improve on AGOA, EU GSP etc. for example, rules of origin could be revised to enable increased regional integration and value added production. The UK could then set the gold-standard for development friendly market access.

  4. I think you’re right about the top of British politics. However, the politics of the people, if properly galvanised by a good campaign, might not give the government the space to continue to direct aid towards the national interest and forget about development impact in the trade negotiations to come. I’ve seen analysis showing that fewer people agree with the national interest arguments which are being presented to the public (stops terrorism, creates markets etc) than agree with the age-old moral case for reducing poverty (poverty is unjust/ unfair/ wrong/ immoral). I’ve also seen data showing that most people want aid to be spent according to need, not according to who signs trade deals with the UK.

    One of the challenges which Make Trade Fair and other trade campaigning found (as I understand it) was that the issues were so big, the negotiations so complex and the timelines so long that it was difficult (impossible?) to maintain a campaign which was engaging to the public, media, politicians and civil servants. One way to tackle this in a new campaign would be to cover the big, long complicated stuff but also to tackle shorter term, less complex and more relateable policy proposals; your suggestion of a development charter for the Department of Trade would be one such idea. Another worth sharing was developed by my team and I when we were looking at a possible new campaign in a previous job. We were considering a focus on proposing policies which would improve the use of local content (workers, local produce and services…) in highly globalised markets such as agriculture, minerals, oil and gas; much of the detail would need to be local but there were international dimensions for the EU and WTO and I guess there would now be implications for the UK too. We felt it worked because there were ways to splice up the big issues into mini policy areas (and wins) by country, by sector, by bilateral negotiation partner, by negotiation session etc, it was also media worthy and relateable – there’s a legitimate role for protectionist policies to protect vulnerable workforces from unanticipated market conditions in some countries that might be a crash in demand for copper, in others (like Wales) it might be competition from cut-price Chinese steel, there’s also a legitimate place for protecting emerging national industries and ensuring the proceeds from those industries benefit local people – for example ensuring oil and gas off the coast of Tanzania and Kenya creates local employment and wider development benefit just like Silicon Roundabout in East London.

    The final angle I wanted to pick up on is the opportunity you identify for civil society to support negotiators from the Southern governments to ensure agreements are fair. My understanding is that there’s been some good work done by organisations such as Climate and Development Knowledge Network in this area during the climate negotiations of the last decade (Trade folks might want to take a look as I’m sure there’s some good learning there) and who knows maybe we can offer NGO terms and conditions to coax over some of the £5k a day consultants that HMG is supposedly hiring into the new Trade Department over to the civil society corner in order to help develop trade negotiation capacity in the LDCs – we knew of an example or two of this happening when we were developing our local content campaign.

    I really hope that your first conference calls leads to more conference calls, and perhaps even actual meetings; a good trade campaign is exactly what’s needed, if I can help or hand over more of the detail from my snippets above do get in touch.

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