Exports: Africa and the Commonwealth

Lord Chidgey Excerpts

Monday 27th November 2017 Lords Chamber

[Lord Chidgey (LD)]

My Lords, I, too, congratulate the noble Lord, Lord Popat, on securing this debate and giving us the opportunity to show our experiences in trade in goods and services in Africa. The noble Lord, Lord Bilimoria, has just given us a fine example of his take on it. But it is not just about Africa; it is also about the Commonwealth. I also congratulate the House of Lords Library on the excellent briefing paper for this debate, which I note that the noble Lord dipped into readily and frequently. It provides enough facts, figures and forecasts to support a full-scale debate in the Chamber in prime time on another day.

I also congratulate the Minister, the noble Baroness, Lady Fairhead, on joining us and bringing all her knowledge and experience from her illustrious career. I think I am right in saying that as well as her work in business and finance, she is also a qualified pilot and scuba diver. That is an ideal background for the ups and downs of high office.

The continent of Africa and the Commonwealth of Nations each contain more than 50 nation states. Africa as a continent offers massive potential to develop trade across a huge spectrum of activity. In southern and northern Africa, incomes are rising, the middle classes are developing and demand for consumer-durable goods and high-quality packaged food is escalating, along with demand for efficient and reliable public services. As the noble Lord, Lord Popat, noted, the Uganda airport project is a reminder that UK construction expertise is still sought after in Africa.

We know that the total export value of Commonwealth countries’ goods and services was $3.4 trillion in 2013, that intra-Commonwealth trade is forecast to be $1 trillion by 2020 and that Commonwealth countries’ share of total exports to developing countries is 46%. The eye-catching figure is that it is 19% cheaper for Commonwealth countries to trade between each other than with other country pairs.

According to the 2015 Commonwealth Trade Review, the growing significance of developing countries in the world economy presents vast trading opportunities for all Commonwealth members. Some 25% of Commonwealth developed countries’ merchandise exports goes to developing countries, up from over 16% a decade ago. UK goods exports to the Commonwealth rose from £13 billion in 1999 to £30 billion in 2013, but fell back to £25 billion in 2015, although UK services exports to the Commonwealth almost tripled to £22 billion in 2015.

Looking further at trade between the UK and Africa, apart from between 2009 and 2011, the UK has been in trade deficit with Africa since 2004, as the noble Lord, Lord Popat, pointed out. However, the noble Lord, Lord Howell, said, “Don’t look at the figures, look at the trends”. That is very important. Services exports are tripling. The noble Lord, Lord Risby, made the point that our network of trade envoys is beginning to prove its worth.

Anyone with a decade or more of experience in project management in Africa and at board level with a leading international engineering SME practice will be pretty familiar with the realities of winning trade in goods or services from contracts overseas, as the noble Lord, Lord Bilimoria, pointed out. Ministers can agree as many trade deals as they like, but that is just the start of the process. There is a high risk at the end of the ministerial international cocktail round that too many speculative export deals will never bear fruit.

Our SMEs are now expected to be in the vanguard of securing new exports and, as the noble Baroness will know only too well, SMEs do not have the comfort of multinationals’ capacity and resources—essential cushions to the costs of export business development. As I know, they need collective, committed, sustained and expert support from government agencies to break into the highly competitive export markets that we seek. SMEs do not need accusers’ unfounded accusations that they are growing fat and lazy, presumably in readiness for deflecting blame upon them, should policies prove ill-judged.

There are specific areas that the Government have to consider, which I would be grateful if the noble Baroness could address, either tonight or perhaps in writing. The Government have been a strong advocate of the economic partnership agreements—EPAs—developed by the EU with a number of regions in the developing world. Of course, the intention to work in partnership to strengthen developing economies, improving the quality of goods and services and broadening the access to EU products in a free trade regime, is admirable. However, field studies by the Africa All-Party Parliamentary Group in the Southern African Development Community, and the discussions I held as co-chair of that group with African Finance Ministers at the African Union in Addis Ababa, revealed some worrying experiences.

Apparently, EPA deals had been struck behind closed doors by professional and highly skilled negotiators from the EU, which the best efforts of their African counterparts just could not match. There was little or no input from the Parliaments they were dealing with, and no public debate. Apparently, the conditions imposed in the EPAs were not scrutinised, and there was no analysis of the long-term impact that their restrictions would have on the economies of the countries they were dealing with.

Can the noble Baroness provide an update on the Government’s assessment of the impact of the EPAs now in place in Africa and in the Commonwealth, and how this could affect the UK’s trading position post-Brexit, now and in the long term? Reflecting on trade policy with Africa and the Commonwealth, can the Minister respond to the following major issues, or write later, as appropriate?

What are the prospects for using the alignment of certain Commonwealth countries to spur on a number of global initiatives—for example, the roles of Australia, New Zealand, Canada and the UK in promoting services liberalisation in the WTO built-in agenda? If an independent trade policy can lead to more openness to the agricultural products of developing countries, what role should the Commonwealth developing countries play in helping their developing country colleagues to overcome preference erosion and transition to new trade terms?

The Commonwealth of Nations, as a multi-tiered networks, has the potential to greatly increase trade, investment and entrepreneurial opportunity among its citizens. The modern Commonwealth network operates on three levels: a collection of member states; a set of intergovernmental institutions; and 2.3 billion Commonwealth citizens capable of building on Commonwealth strands of identity, commonalities of language, legal systems and democracy—making connections at all three levels easier between them and, if I may say so, a natural home for the United Kingdom.