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Brexit ‘trade not aid’ to help world’s poorest

Chi Onwurah MP
October 26, 2017

The Brexit debate is consumed by an introspective analysis of its implications for the UK, but by extracting ourselves from protectionist trade agreements and delivering on the mantra of 'trade not aid' we can bolster economic prosperity right across the globe, says Chi Onwurah MP.

As a continent Africa should command our economic respect as well as our developmental interest. This is why as chair of the All-Party Parliamentary Group on Africa one of my first actions was choosing to focus our activities on trade. The APPG's report on 'Post Brexit UK-Africa Trade', released earlier this year, emphasises the critical importance of trade to emerging economies.

Whether it's in the form of stronger intra-regional trade, or trade with the rest of the world – it's very well understood that economic growth and greater prosperity in Africa, and the world in general, cannot happen without it.

And indeed, many in Africa recognise this.

Since the 1991 signing of the Abuja Treaty the continent has made significant improvements to bolster intra-regional trade. As a result, the country is now home to a number of regional trade arrangements, with the most important being the eight sub-regional bodies of the Regional Economic Communities. These regional communities have made it easier to do business across borders in the Sub-Saharan region, enabling greater industrialisation, export growth, and the creation of localised value chains.

Take the East African Community (EAC), for example, where intra EAC trade was valued at USD 5.63 billion in 2014. Similarly, at the launch of the Common Market for Eastern and Southern Africa (COMESA) FTA in 2000 trade stood at USD 2.3 billion and by 2014 it had accelerated to an impressive USD 22.3 billion.

This is not to say that intra-regional trade in Africa is without its flaws.

Africa still has the lowest levels of intra-regional trade of any continent at ten per cent. This is not helped by 'hard' barriers to trade such as poor transport and energy infrastructure, but regulatory problems also exist. Border procedures are time-consuming and opaque, and visa restrictions are high, preventing labour mobility. Trade is also stifled by the failure of many African countries to diversify from natural resources and the goods produced by neighbouring countries.

Added to this are the problems inherent in multiple and overlapping regional memberships, which further weakens integration. But African countries recognise this and are taking bold steps to respond within their own intra-regional trade agenda (as is evidenced by the 19 countries who have signed up to the Tripartite Free Trade Area).

The same approach cannot be said for trade with the rest of the world.

International trade is an area where Africa notoriously underperforms. In 2014 the share of global exports from sub-Saharan Africa was less than two per cent. In 2015, Africa as a whole accounted for nine percent of both EU imports and exports, and 4.3 per cent of the UK's trade deficit. These are very low figures when compared to Asia which accounted for 44.4 per cent of trade with the EU and 21.2 per cent with the UK.

There are many reasons for this, some of which mirror the reasons for slow intra-African trade. But one that plays a huge role is trade agreements with Western countries.

There are many arguments about current trade preference agreements and the way they have produced minimal impacts for sub-Saharan Africa's integration into the global economy. Sub-Saharan Africa's exports are still overwhelmingly unprocessed raw materials that make little contribution to value added and development. The region also remains poorly integrated into global supply chains where businesses can contribute inputs into the creation of final products. This type of thinking has no doubt influenced the EU's decision to gradually phase out non-reciprocal preferential trade schemes for the reciprocal Economic Partnership Agreement (EPA).

This line of thinking is flawed. African regional integration is still in the making. Therefore, to expect African countries to have to negotiate reciprocal trade agreements with larger, more developed Western countries will undo the development and transformation the continent has worked so hard to achieve.

I visited Namibia and South Africa last year as part of an Africa APPG delegation where I learnt more about these countries' experiences with negotiating EPAs.

After meeting with a variety of stakeholders, I got a better understanding of the various tariff and non-tariff barriers affecting the continent's ability to trade with the world under these schemes. Concerns were raised about the lack of scrutiny of, and transparency in, EPA negotiations as well as the way the agreements undermine regional value chains, distort regional groupings and hinder, rather than support, existing development goals. A lot of countries might have refused to sign the EPAs for these exact reasons, but even they know that they can't put off signing agreements forever and will need to create deals that grant them continued access to global markets. This is especially the case in light of the different mega regions being created. However, just because Africa needs to sign a deal does not mean that less thought should be put into the trade agreements offered to them. This is where the UK can make a difference.

Nearly five months after we began Brexit negotiations I continue to believe that Britain must use Brexit as an opportunity to rectify parts of previous agreements that negatively impact poverty reduction, sustainable development and regional integration. Agreements like the EPAs haven't met its aim to help African economies integrate into the global economy by continuing to place emphasis on tariff elimination and not market sophistication.

The UK can act as an example to the rest of the Western world by not rolling over existing EU agreements or plans. Instead we should work with African governments to understand what sort of agreements would truly benefit their development and also allow the development policy space for African countries to make their own decisions regarding their industrialisation policies. Only then can we work to create a model where Africa no longer relies on aid.



Chi Onwurah is the Labour MP for Newcastle upon Tyne Central and Shadow Minister for Science, Research and Innovation.

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