Brexit: UK ‘forcing poor nations into risky trade deals’
Ministers accused of pressure on developing nations to 'sign up blind’ – without knowing if rollover deals will prove to be second-rate
Liam Fox, the international trade secretary, is accused of piling pressure on developing nations to “sign up blind” – without knowing the value of the deals – with a warning they will otherwise be lost.
Just three of the 40 agreements the UK enjoys through EU membership, covering 71 countries, have been successfully “rolled over” – as the government promised – with Brexit day just seven weeks away.
Now the Department for International Trade is under fire for telling the countries concerned they risk punishing tariffs on crucial exports to the UK, unless they re-sign the deals in time.
Among them are Ghana, which relies on banana sales, Mauritius (tuna), Kenya (flowers), Cote d’Ivoire (cocoa), Namibia (grapes and beef), Swaziland (sugar), and scores of other developing countries in Africa, the Caribbean and Central America.
And, says the fair trade charity Traidcraft Exchange, they risk a legal challenge at the World Trade Organisation (WTO) under an extraordinary plan to treat EU parts as originating from the UK.
“The continuity agreements are being rushed because of the threat of no deal. Countries are being asked to sign up blind,” said Liz May, the charity’s head of policy.
“Without the full picture of how the EU and UK will trade in the future, it is impossible for countries to judge what these deals are really worth, how they will work in practice or even how some elements will be enforced.
“Instead of acknowledging this difficulty, the government is relying on developing countries being compelled to sign up at the last minute, rather than risk high tariffs being slapped on their key exports.
“This type of bad-faith negotiating – using implicit threats to get countries ‘over the line’ – is not a great way to start the UK’s independent trade policy.”
No developing country has gone public with criticism of the UK’s approach, but some are believed to have objected privately and displayed their unhappiness by refusing to re-sign the deals so far.
Crucially, food products, particularly bananas, sugar and beef, have among the highest tariffs if a country must trade on WTO rules, without a preferential deal.
Mr Fox himself acknowledged the risk to developing countries from Brexit after his own department floated a proposal to abolish all tariffs if the UK crashes out of the EU, to avoid soaring inflation.
He told a committee of MPs it would “erode preferences for developing countries, because they would lose the ability to take the advantage that is conferred by lower tariffs”.
The “threats” are the latest controversy to erupt over the failure to secure the deals – worth 12 per cent of the UK’s total trade – with the clock ticking down to Brexit day.
The focus has been on the danger of higher prices for British shoppers, and job losses in this country, but Traidcraft said the implications were potentially more severe for developing nations with deals.
Richer countries, including Canada, Switzerland, Norway, Japan and South Korea, have the power to withstand pressure – and even push for better terms than exist with the EU.
But, says Traidcraft, the poorest countries are vulnerable to the “sign up or lose it” approach from London.
A spokesperson for the Department for International Trade, said: “We take seriously our commitment to reduce poverty through trade and our top priority is providing continuity for our existing trading arrangements as we leave the European Union.
“All developing countries that have economic partnership agreements with the UK have said they want to maintain their existing arrangements after we leave the EU and we have already signed a continuity agreement with eastern and southern African countries. We also intend to introduce a trade preference scheme that will benefit around 70 developing countries.”
Ms May called for the UK to remove the pressure by offering one-way full-market access on a temporary basis until deals to help development could be agreed “in an orderly manner”.
The UK was also unable to say which organisations would regulate health and safety of products and standards “because some of this thinking simply hasn’t been done yet”, she added.
If the Commons eventually passes the Brexit deal, it includes a 21-month transition period during which existing terms would continue to apply – but a crash-out would tear up the deals on 29 March.