Brexit: Least Developed Countries

Earl of Sandwich Excerpts

Thursday 16th November 2017 Grand Committee

Asked by

[The Earl of Sandwich]

To ask Her Majesty’s Government what support they intend to provide to the least developed countries in relation to any adverse effects resulting from Brexit.

[The Earl of Sandwich (CB)]

My Lords, I am grateful to the Minister for answering this debate at a difficult time for DfID, and I can only wish the new Secretary of State well. I also look forward to hearing from old friends and campaigners today, including the noble Baroness, Lady Chalker, who is just off an aeroplane, who has wide and continuing experience, especially in Africa.

There are several levels of discussion when it comes to the LDCs and Brexit. I shall focus on trade because it is widely understood that trade can be an effective form of aid. Changes in UK trade policy as a result of Brexit will have profound effects on all developing countries. There are existing concessionary arrangements such as the Everything but Arms agreement, which specifically helps the LDCs. I know that the Minister will not rest his case on the EBA alone, but a fairly strong press release this summer reassured us that the EBA will stay in place. Will it really stay? How can it? It is an EU initiative and there can be no absolute guarantee about anything unless and until we actually leave the European Union.

However, the new White Paper on trade promises duty-free, quota-free access for 49 LDCs, presumably under another form of EBA. It provides for full or partial Generalised Scheme of Preferences for 13 other developing countries and GSP+ for nine countries that are committed to implementing human rights and good governance. So will the Government establish a new category of vulnerable least-developed countries, “VDCs”, and offer them non-reciprocal, tariff-free access with more flexible rules of origin?

EU concessions currently help only about one-third of imports from the poorest countries. I remain concerned about the possible direct effects of withdrawal on the ACP group—the African, Caribbean and Pacific countries—which derived from the Lomé Convention and the Cotonou agreement. We will have to sign new economic partnership agreements and FTAs with these countries. Some are cushioned by minerals and cash crops that help to inflate their national GDP while doing little for their population. Commodity prices can appear to make all the difference to a country that, while remaining poor, may not qualify for any concessions. Corruption, the power of elites, and of course conflict can and do distort the economic profile. Highly indebted LDCs are in a category of their own and even potentially wealthy ones like Mozambique are still in default. A country such as South Sudan, the newest of the LDCs, is hardly in a state to be measured at all, yet we must and do make every effort to support it. Zimbabwe will now become another priority.

Some of the poorest countries that are not technically LDCs may suffer from Brexit if they are currently benefiting from an EPA with the EU. Exports to the EU from some middle income developing countries can account for half of their total exports, such as 57% in the case of Seychelles and 47% for Cameroon. Through tariff elimination, young industries in these countries could be exposed to competition. I expect the Minister will say something about EPAs and how we can continue or improve on the present EU arrangements, which are far from ideal, when we are outside the EU. The word “partnership” is used increasingly by the Government as though there will still have to be close trading arrangements with Europe, which must mean with the EU as well. If we are to end up close offshore like Norway we will still be associated with the existing EPAs and other EU trading arrangements.

Then there is the uncertainty factor. No one can yet accurately forecast what Brexit will mean even to citizens of the UK and Europe, let alone to the rest of the world, so this debate may seem premature. Changes are unlikely to occur until the UK is effectively out of the EU and beyond transition, but the same dilemma affects all departments. People directly affected by our decisions, whether they are EU citizens here or small farmers in poorer countries, need to have the answers as soon as possible.

It seems that many who voted for Brexit are now seeing the downside, although it is unlikely they will have the chance to vote again, short of a general election. What we do know is that currency fluctuations have not spared the poorest countries. The 10% fall in the pound in the week post Brexit, for example, along with the UK’s lower GDP, would have led to lower exports from the LDCs. Sterling has suffered again this week. I do not deny there will be opportunities ahead, but we must admit that the present UK economic climate is discouraging.

What of aid? What relationship will the UK have with the EU’s aid programme in the future? Priti Patel said on 18 October:

“An important part of the UK’s future development strategy will be to continue working closely with our European partners”.


Will the Minister spell this out a little? Will he say whether there will be a relationship with the European Development Fund and ECHO, the humanitarian agency? Will the EU become our preferred or most favoured partner in aid and development, as will need to happen in the fields of justice, security and defence?

Returning to trade, I know that the Government are strong supporters of free and fair trade and of the concept of aid for trade. Priti Patel has also said:

“Britain will lead the world in free trade, but, importantly, we will also help the poorest countries to invest in skills, technical assistance and capacity building and create new markets”.—[Official Report, Commons, 18/10/17; cols. 825.]


We can all agree with that.

The CDC, for all its failings—it is still monitored in Private Eye—will need to adapt its own style of investment to join DfID in reaching the poorest communities, not from the top down but from the needs of those communities upwards. This is something it still has to learn and we may hear more about that later. We should encourage DfID, through the various watchdogs and committees, to continue this trend and show that CDC can create new jobs directly.

One pathway frequently talked about at the UN, and in particular by the noble Lord, Lord McConnell, who could not be here today, is the focus on sustainable development goals. The whole point of sustainability is that whatever scheme is involved, it has to belong to the community and be viable and sustainable or it will simply fail like so many aid programmes. Trade can and should be an essential means of achieving some of the SDGs—notably numbers 8, 9 and 10—and the primary goals of eradicating poverty and hunger. Fair trade is an example which has already proved its own success. Microcredit, when it is properly anchored in loan and credit schemes, is another effective way of reaching the poorest.

Climate change—SDG 13—presents a serious challenge for the LDCs because natural disasters, both sudden and insidious, can overturn years of economic development. Both aid and trade are important because of the need to prevent these disasters through aid and subsidised input, sometimes through large-scale infrastructure and the control of carbon emissions, and targeted action at the micro level. This subject, including the need to implement the Paris agreement, is under urgent discussion in Bonn at the moment.

A question arises about the Sahel and Francophone Africa. Are we saying goodbye to countries such as Mali and Niger, currently an aid and security concern of ours through the EU, simply by pursuing Brexit?

The Commonwealth is, I am glad to say, gaining a higher profile because of the CHOGM in London next April. The Commonwealth is increasingly being mentioned as an alternative for Brexit, a vision of the wider world we need to embrace, but I am not sure that this vision goes very far when you look at the data. The Financial Times recently pointed out that the EU and the Commonwealth are not comparable if you consider the supply chain, for example, in the car-making, aerospace and machinery industries, where the UK is embedded in the EU network. Even countries such as Canada and Australia cannot make up for the components currently being supplied to industries in the UK at competitive prices. Brexit requires radical changes and some of these will impact on all the UK’s present trading partners, including those in the Commonwealth that may enjoy preferences. I look forward to the Minister’s assessment.

In closing, I would briefly like to mention two good friends we have lost who made huge contributions to international development—Lord Joffe, who was well known to this House, a former chair of Oxfam and a hero of South Africa, whose memorial service took place yesterday, and Andrew Hutchinson, head of education at Save the Children, another person of great integrity and moral purpose, who died last week and whose funeral is taking place at this moment in Southwark Cathedral. They will be missed by many.