What sort of trade campaigns do we need around Brexit?

August 18, 2016 6 By Duncan Green

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