Brexit: Trade in Goods (EUC Report)

Earl of Sandwich Excerpts

Tuesday 18th July 2017 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, I am grateful to the noble Baroness, Lady Verma, and am delighted to rejoin, just for a moment, the committee of which I was a member until two years ago. The work of the various EU committees, mentioned by the noble Baroness, Lady Smith, has been critical during the past year in forming our judgment of the effects of Brexit, real and imagined, and I pay tribute to all the clerks and researchers as well as the members who have made this possible.

The noble Baroness, Lady Verma, spoke of “uncharted waters”. I am not a Brexit enthusiast, as the Minister knows—far from it—but, like her, I have had to bite the bullet and address the political realities. In my case, I anticipate that, since the EU has been so important to us, the UK under David Davis will continue to argue, paradoxically, for many of the same trading arrangements as we have already made with the EU to continue and that will prove very costly. It cannot be said strongly enough that half the people may have voted to leave, but even that half did not vote in the knowledge of the actual terms to be agreed. The metaphor for Brexit, at least in my mind, is the new “Britannia”, the ship of state, sailing energetically in a westerly direction to escape the rocks of Europe and then, perhaps too late, unable to navigate through the Atlantic winds and currents and finding her passage barred, she is slowly blown back on the shores where she began her journey.

I intend to concentrate on the consequences for developing countries. I have spoken previously about the possible effects of our withdrawal on the least developed countries, notably those described as the ACP group, the African, Caribbean and Pacific countries which originally came under the Lomé and Cotonou conventions. I have no particular interest to declare, but I first came to this subject when I joined the staff of Christian Aid in the early 1970s. If I could not understand any of the issues, which were always complicated—as we are discovering every day—I would go across to the Overseas Development Institute and consult its experts, including one Vince Cable, who I remember knew everything about the textile trade at that time. I still consult the ODI, especially its very thorough report on trade after Brexit, which I commend to others.

There is a strong public interest in trade in goods from the developing world, not least because of the success of the fair trade movement. Last week, a number of MPs, mainly young and female, signed up to the APPG for Fair Trade, reflecting a growing interest in international development and, specifically, the role of trade in raising the standard of living in the poorest communities.

I am happy to repeat the slogan of the Fairtrade Foundation, an organisation that had its roots in the aid agencies that are all now household names. The claim is that,

“you have the power to change the world every day”,

and I believe it. The story of cocoa and chocolate from Ghana, for example, is now widely known through the growing interest of leading supermarkets which have signed on to fair trade because it means additional business. Traidcraft claims that its producers receive more than one-third of the value of sales in the UK and I believe that to be an accurate claim. Brexit must not interfere with these arrangements. They directly benefit the poor and fulfil many of the sustainable development goals. What about our own Government’s new trade policy, if we know what it is? Will they uphold international standards and make fair trade a condition of their new trading agreements with developing countries? Can this Conservative Government, if they still support the concept of fair trade, ensure that UK businesses pay fair prices, uphold human rights and ensure environmental responsibility when buying from developing countries? I was encouraged by the press release of 24 June, which I have in my hand, from DfID, which quoted Dr Liam Fox as saying:

“Free and fair trade has been the greatest liberator of the world’s poor”.


That is a very good start. HMG reassure aid agencies that everything will be fine: the poorest will still benefit from the “Everything but Arms” agreement and the concessions that came through the ACP agreement with the EU I already mentioned.

The press release also says that we drink 34.9 billion cups of African tea. These are the sort of figures that the Government are now working on. That came as a bit of surprise. Africa has definitely got into the Government’s sights. The Government fully intend to continue to offer economic partnership agreements—or something very like them—to developing countries. However, many countries, particularly in Africa, had to submit unwillingly to these EPAs and the regional deals, which do not always work in their favour. There are also middle-income countries that need to sign EPAs to retain their preferential status. For example, exports to the EU account for 57% of the Seychelles’ exports, 47% of Cameroon’s and 42% of Cote d’Ivoire’s. The concern is that through tariff elimination young industries in these countries could be exposed to greater competition from European markets. The effects on revenue have been estimated at anything from 8% in the case of Tanzania and Rwanda to 50% in the case of Madagascar.

Much of the Brexit talk these days is of the Commonwealth as an alternative free trade route. We will hear from the noble Lord, Lord Howell, in a moment. Of course, such a route will favour the stronger members such as Canada, Australia and possibly India but these days it seems unlikely that the Commonwealth can offer anything better than the EU to African countries. If we lose all access to the EU, we will have to set up our own new arrangements with the ACP countries through the WTO, building on various versions of the generalised scheme of preferences. All these countries need reassurance and the Minister will not be able today to predict the outcome of negotiations. The Government will need to think of something to tell other countries. As this report makes clear, the UK will not be able to sign new free-trade agreements with third countries until we have left the EU and we will not, it seems, have access to existing EU free-trade agreements with third countries. Furthermore, negotiating all these individual bilateral agreements during what is now called the implementation phase and assessing whether the terms will be preferential or not will take many months if not years, as the noble Lord, Lord Livingston, clearly demonstrated.

There is little in what I have said that departs from official government policy, which largely reflects DfID’s own experience of trade—in which DfID is a major player. However, overseas development assistance now passes through many other departments, which must be convinced by such things as fair trade and better terms for poor countries. The Commonwealth Development Corporation, which is now a major ally of DfID, and the private sector cannot be the only answer. DfID will have to tread very carefully during Brexit through these uncertain waters. The Minister cannot look over Britannia’s horizon any more than we can, yet when it comes to developing countries, I hope she will at least tell us her own intentions and her wishes for her Government.