Exports: Africa and the Commonwealth

Lord Mendelsohn Excerpts

Monday 27th November 2017 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I declare an interest as the president of the Commonwealth Jewish Council, with commercial interests in Africa and the Commonwealth in gaming, natural resources, agriculture and technology. I thank the noble Lord, Lord Popat, for his excellent tour d’horizon at the start of this debate and for initiating it. He is a great advocate of the expansion of UK trade and a doughty campaigner on issues relating to Uganda. This has been an excellent debate and at one point I even thought we were going to hear the noble Lord, Lord Taylor, break into song to add melody to the words.

This debate is also notable for the Minister’s maiden speech. The noble Baroness is the first woman to hold the post of Minister in the Department for International Trade. This is a singular honour for someone with such a distinguished business career as a consultant in aerospace and in some of the UK’s great industrial champions, ICI and Pearson. Like the noble Lord, Lord Chidgey, I was interested to find that the noble Baroness is a qualified pilot and scuba diver. It came as some comfort to me to realise that her interest in “Blue Planet” owes more to David Attenborough than to travelling the world on behalf of the Conservative Party. We wish the noble Baroness very well in her task. As the noble Viscount, Lord Waverley, said, there are many here who wish only to help.

We have a new reality and are looking to significantly boost trade relations between the UK, Africa and the Commonwealth in the long term. We have to recognise that, in the short to medium term, there are as many problems as opportunities. The UK is held in high esteem across Africa and the Commonwealth for the British model of doing business: an open and dynamic method, underpinned by UK law. However, the Brexit process will take its toll and create obstacles to trade deals. The noble Lord, Lord Bilimoria, made very careful note of many of the challenges that we face. Africa is very close to us; there is an advantage in its location. For example, our country is still responsible for 40% of exports to Botswana and the Seychelles and for 20% to Gambia, Equatorial Guinea, Mauritius, Kenya and South Africa. However, our overall trade performance has not been excellent. Among the seven Commonwealth countries which the UK exports most to, we are the largest EU exporter to none. Germany exports more goods than the UK to Australia, Canada, Singapore, India, South Africa and Malaysia. Switzerland, Germany and Belgium all export more goods to India.

We have many great opportunities here. The noble Lord, Lord Risby, raised a number that were available in Algeria, not just in hydrocarbons but in financial services—a matter also raised by the noble Lord, Lord Sheikh, with the opportunities in Islamic finance. We have drifted behind and the UK’s export of goods to the Commonwealth has fallen by 16%—or £4.8 billion—compared to falls in exports to the EU of 11%. Since 2012, UK exports to African countries have fallen by 24%. Our services to the Commonwealth have plateaued since 2010. It is very important that we use this as an opportunity to redouble our efforts, because things have changed.

As the noble Lord, Lord Howell, said, the issue of China looms large. The EU in general has declined in significance as a trading partner because of the interest of China in Africa as well as much greater intra-African trade. We face remarkable competition with China’s belt and road approach. African development relies on the right infrastructure—electricity and transport—and on expansion of the internet, as penetration in Africa is quite low. Nigeria’s internet penetration is 97%, but Egypt’s is the next largest at 48% and Kenya’s is under 35%. Feature phones are common across Africa and we face a huge challenge with the Chinese devotion to getting their equipment and platforms—Alibaba, Baidu, Weibo and the others—there, as well as the China Bank. The noble Lord, Lord Howell, might be better directed to creating a triangular partnership with India into Africa than with China.

It is very important that we do what we can. SME trade is extremely important—a point also made by the noble Viscount, Lord Waverley, and the noble Lord, Lord Chidgey. We have to use the advantages that we have. This is why it has been so enormously tragic that our relationship with the Commonwealth has, in many ways, been allowed to go to rack and ruin when we had such a great opportunity. I pay tribute to the vision of the noble Lord, Lord Taylor, to the doughty campaigning on this by the noble Lord, Lord Howell, and even to the vision of the noble Lord, Lord Risby, who said that Algeria will be seeking to gain some status with the Commonwealth. It should be understood that there are many countries seeking to join the Commonwealth, because it is a different beast from what it was before. It is a free association of nations, very different from the way many people in this country conceive of it, as something to which the UK has certain rights. We do not. We have to deal with it in a very modern way. In fact, that relationship has been pioneered by the noble Lord, Lord Marland. I think that we will see some very positive developments at the Commonwealth summit as it has been approached on a reasonably surefooted basis. There are massive benefits to be gained from working with the Commonwealth, such as that of language. There is also an economically measurable advantage as there is a boost to trade and FDI for countries in the Commonwealth. However, a Commonwealth-wide agreement might be difficult. Malta and Cyprus are still in the EU and we have to handle this extremely well.

A huge number of complexities is involved in trading with Africa. The noble Lord, Lord Chidgey, raised some of those in regard to the EPA and some of the experiences which the all-party group has had, whose report I read with great interest. There is much that we can do to try to find new ways to establish our relationships there. We can look to build on our existing strengths rather than reinvent the wheel. We should take advantage of aspects of trade agreements that we are working on which are working well for African countries and their partners. A particular opportunity for us arises from the generalised system of preferences. We should try to keep this to enable African products to compete with UK and EU goods.

We should look more at how we can harmonise standards as part of our general approach to harmonising standards with the EU and the US. We should look at how we can project our soft power, how we can add to the voices developing rather interesting and useful regional trade models, and at how we can make sure that we maintain a real sense of understanding development priorities and regional integration. We should also look at other areas in which we have not been particularly successful in trade agreements, such as rules of origin and issues around transfer pricing to ensure support for regional supply chains, given that the velocity of increasing trade creates its own virtuous circle. Indeed, we should also make sure that future trade agreements are subject to democratic debate and consultation with civil society. That is important not just for development but because many of these people have a lot of valuable experience that can be of great advantage to us.

I ask the Minister to give us a sense of how we will look at these trade agreements in important priority markets. I would be very interested to hear her comments on the approach that we plan to take when dealing with South Africa. Are we looking to modify slightly the recently signed economic partnership agreement to cover a transitionary period or are we going to accept the existing EPA agreement in full? Have we taken the view that the EU negotiators have properly taken into account the interests of the UK or are we looking to negotiate a new South African/UK agreement? Would this not lead to another round of protracted negotiations which may be more complex and difficult, but does that present the greatest opportunity? Are we looking to accept the EPA but try to renegotiate agricultural access to the UK market because we might move out of the CAP regime?

It will be essential for us to understand all these things in comprehending how we are going to approach this opportunity. I would be very grateful if the Minister could give us her thoughts on that. We on these Benches feel that there is so much for us to try to achieve in a short period of time. We hope that we have the necessary resources and expertise to do so. We certainly have the good will but perhaps much more resource should be applied to our export opportunities not just around the world but in our areas of priority opportunities—namely, Africa and the Commonwealth.