A fair and global Britain: How the UK's post-Brexit FTAs can support development
September 2020
The UK is prioritising Free Trade Agreements with richer countries as a central part of its post-Brexit trade policy. These agreements must deliver for international development and the environment.
This paper lays out some crucial steps for UK trade policy, starting with the introduction of a democratic and accountable process for negotiating trade deals.
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A Fair and Global Britain: How the UK’s post-Brexit Free Trade Agreements can support development
Summary
The UK is prioritising the negotiation of Free Trade Agreements (FTAs) with richer nations as the central feature of its post-Brexit trade policy.
This paper provides a non-exhaustive list of ways that the UK’s FTAs should be designed to support its vital international commitments to tackling global poverty and climate change.
The crucial first step is to introduce a transparent and democratic process for negotiating and agreeing trade deals that invites input from parliamentarians and civil society, supported by independent impact assessments.
Introduction: the risks and opportunities of a free-trading nation
The United Kingdom, having left the European Union in January 2020, is in sole charge of its own trading arrangementsfor the first time in more than 40 years. This offers Boris Johnson’s government an opportunity to design afresh approach to global trade, one that creates economic opportunity while supporting the UK’s internationalcommitments to tackle global poverty and climate change.
Done fairly, international trade can be a vehicle for spreading wealth, creating international solidarity, andrealising mutual benefit. However, modern trade agreements are typically focused on one thing: increasing the volumeand value of trade. They do this by removing barriers to trade such as tariffs, meaning that goods and services canflow more freely between countries.
At present, the UK government’s number one priority is striking Free Trade Agreements (FTAs) with rich tradingpartners such as the EU and the USA. This paper does not focus on the FTAs that the UK might seek to strike withpoorer countries, since this seems to be a secondary consideration for UK trade policy at present.
It is likely that these new FTAs, if they come to pass, will lead to a small increase in trade between the UK and itstrading partners. However, it is equally possible that new trade agreements, agreed in a rush without adequatescrutiny or transparency, will undermine the UK’s efforts to achieve the UN Sustainable Development Goals andthe Paris Climate Agreement.
Instead of focusing energies on bilateral free trade agreements, which are typically of little economic benefitanyway[1], the UK should seek to participate fully in theglobal multilateral trading system, supporting the reform of the World Trade Organisation to become a body that actsin accordance with international commitments on poverty and the climate. This is unlikely to be the UK’sapproach, the promise of new trade deals having dominated the narrative around Britain’s role in the worldpost-Brexit.
Despite the likely dominance of FTAs in UK trade policy, there are opportunities for a more progressive approach. TheConservative Party’s 2019 manifesto commits that “our trade deals will not only be free but fair –in particular towards the developing nations whose economies could be transformed by access to the UK’smarkets and expertise.”[2] This is a welcomecommitment, and to achieve it will require the UK government to understand that trade deals with richer countrieshave an impact on trade with poorer countries, and to design deals that support development. Equally, new tradedeals should be designed to strengthen commitments to climate action.
This paper presents proposals that would ensure that the UK’s post-Brexit FTAs are driven by more than just thegoal of ever-increasing trade and serve to establish the UK as a responsible global citizen.
A note on terms: this paper refers to ‘richer’ and ‘poorer’countries. Richer countries should be taken to mean the countries with which UK is currently prioritising tradedeals: USA, EU, Australia and New Zealand. Poorer countries is used as an umbrella term to refer to lesseconomically developed countries which may currently qualify for trade preferences on objective developmentcriteria, and which are likely to be disproportionately affected by climate change.
1. A transparent and democratic process
The United Kingdom should negotiate trade deals based upon a transparent and democratic process.
Before making recommendations for the specific features that might be included in trade agreements, it is necessaryto focus on how those agreements are negotiated.
Agreements are far more likely to make a positive difference to poverty and the climate if, in the process ofnegotiating and signing trade agreements, the government seeks input from a wide range of stakeholders, whoscrutinise proposals based on high quality impact assessments.
The current process for negotiating and approving a trade deal does not allow for a meaningful national conversation.There is no requirement to consult parliament during negotiations; the only obligation on government is to lay afinal deal before parliament for 21 days.[3] There is noguarantee of a debate or a vote, and no scope for MPs to propose amendments. Opportunities for input from the publicand civil society are extremely limited.
An inclusive discussion about how and why we trade with the world is urgently needed. This is the underpinning ofgood international trade policy; a coherent national approach, with broad support, would allow for the UK to come tothe negotiating table with clear objectives and would project confidence to prospective trading partners. Tofacilitate this discussion, the Trade Bill that is currently going through parliament should ensure thatnegotiations are transparent and should provide for the involvement of parliament and civil society.
Transparency: Any proposed deal should be independently assessed by a panel of experts to makeabsolutely sure that it contributes to the achievement of international commitments, including the SustainableDevelopment Goals, the Paris Climate Agreement and the UN Guiding Principles on Business and Human Rights. Thatassessment should be made publicly available before any deal is signed.
Involvement from parliament: The USA and the EU both consult their legislatures on tradepolicy, with Members of Congress and MEPs given a vote on proposed trade deals.
Any deal that is agreed should be voted on by the UK Parliament, with a full debate and with provision for proposingamendments to the deal’s text. At present, MPs have just 21 days to consider a proposed deal – thisshould be extended to become more in line with US or EU counterparts.[4] Inaddition, a parliamentary committee (the International Trade Committee, or a newly-formed Trade Scrutiny Committee)should be given privileged access to the details of negotiations and invited to review impact assessments.
Involvement from civil society: Civil society groups bring expertise and are able to representthe interests and concerns of important stakeholders, including consumers, workers and developing countries. TheTrades Union Congress, the Confederation of British Industry, the Federation of Small Businesses and others havesuggested that stakeholder representatives could actively work alongside negotiators, feeding into the processvia consultative committees.[5] The USA and Canadahave both developed a structure of committees that, while not perfect, offer enhanced opportunity for civilsociety to shape the trade negotiations.[6]
At present, the Department for International Trade runs 11 sector-specific advisory groups, as a means through whichto consult industry on trade policy, plus two ‘thematic working groups’. The exact status of thesegroups, and their role in scrutinising negotiations, is unclear. Members are required to sign non-disclosureagreements, therefore limiting the opportunity for public debate. Trade unions, civil society organisations andacademics are members of the thematic working groups only, which at the time of writing appear to have a lesserstatus to that of the advisory groups. The UK should bring forward proposals for how civil society views will beactively sought as new FTAs are negotiated.
2. Trade agreements that strengthen international commitments
The UK should use Free Trade Agreements as a way of bolstering international commitments to human rights,poverty alleviation and tackling climate change.
The logic of modern trade agreements is that they aim above all else to increase the volume of trade betweensignatories. Considerations such as human rights and the environment are at best secondary, and provisions relatingto these issues in trade agreements tend to be unenforceable. This must change: trade should be a means to an end,rather than an end in itself. Trade with the UK should be contingent on partner countries demonstrating commitmentto global priorities, such as ratifying core ILO conventions and the Paris Climate Agreement.
In practice, this could be done in two complementary ways:
The UK should make the ratification of basic ILO conventions and the Paris Climate Agreement apre-requisite to the opening of trade negotiations. The UK is the world’s sixth largesteconomy, which gives it a degree of leverage. This should be used to incentivise potential trade partners tocommit to tackling common challenges. In addition, such an approach would demonstrate to the world that the UKis showing leadership, taking a strong stance on issues of global importance as well as domestic economicconcerns.
FTAs should include binding commitments to international norms. The text of FTAs should involvecommitting parties to ratify and make progress against vital international conventions and agreements.[7] Failure to make progress against thoseagreements, or withdrawal from those agreements, would result in sanctions such as the removal of tradeprivileges. Some FTAs already contain these kinds of provisions. For example, the EU-Mercosur Agreement commitsthat “each Party shall…effectively implement the UNFCCC and the Paris Agreement establishedthereunder’”.[8]
However, this commitment is included only in the Trade and Sustainable Development chapter, meaning that thereare no effective means of enforcing compliance.[9]
3. Assessing and monitoring the impact of trade deals
The UK should assess and monitor the impact of trade deals on important international commitments.
The global economy is fundamentally interconnected. Before the COVID-19 pandemic, the volume and value of globaltrade was higher than ever before. And many manufactured products are the result of complex international supplychains, with inputs and labour coming from many different countries. Therefore, when new bilateral FTAs are struck,the impact on other trading partners can be significant. Something as simple as lowering tariffs on beef fromAustralia could have profound consequences for other countries for which the UK is a valuable beef export market,such as Namibia or South Africa.[10] The UK shouldensure that the effect of a proposed FTA is fully understood before it is signed. Assessments should becomprehensive, looking beyond GDP to provide a view on the potential impact of a deal on poverty, labour rights, theclimate and gender equality in partner and third countries.
This is not a new concept; many countries have a process for trying to understand the impact of trade proposals. TheEU completes Sustainability Impact Assessments (SIAs) prior to signing new trade agreements, and these have includedan explicit focus on human rights since 2014. The EU’s approach has been criticised for lacking rigour, andfor being too cursory in its engagement with development issues. Emily Jones and Conrad Copeland suggest that“the UK could pioneer a new approach to SIAs that reflects the aspiration to support developing countries tointegrate into global and regional value chains”.[11] Box 1 contains proposals for what a UK SIA could include.
Box 1: What could be included in a UK Sustainability Impact Assessment?
Assessments should be made in advance and on an ongoing basis by a panel of independent experts drawnfrom civil society and academia: It is extremely difficult to accurately model the economic andsocial impact of a complex trade agreement before it is in operation. Therefore, advance assessments, while theymay identify many issues of concern, should be complemented by ongoing assessments that are made throughout thelife span of an FTA. These would give policy makers a clear understanding of the impact of a given tradeagreement, which could be used to mitigate unwanted outcomes and could inform the negotiation of futureagreements.
Assessments should lead to action: If impact assessments are going to have any value at all,they should have a clear link to action. Identifying that a trade deal is worsening poverty or leading tounsustainable levels of carbon emissions should mean that parties are required in the terms of the agreement totake action to mitigate that impact. Possible mitigation measures could include the suspension of certain tradepreferences, or commitment to aid spending in affected countries. It is vital that the obligation to act on thefindings of an impact assessment is included within the text of the FTA, rather than simply left to thediscretion of signatories.
A possible model for this can be found in the safeguarding measures that the EU currently inserts into tradeagreements, which provide for the suspension of certain tariff preferences if analysis shows that the deal isdamaging to domestic industries.[1] Applying the same approach when a deal is shown to be worsening internationalpoverty would be a wise and proportionate measure.
Improved Domestic Advisory Groups: Some elements of EU trade agreements are monitored byDomestic Advisory Groups (DAGs), comprised of civil society experts from the EU and the partner country. Thesehave the potential to play a valuable role in monitoring all aspects of human, environmental and labour rightsassociated with a trade deal, although to do so members require a clear mandate, along with the support andresources to allow for their meaningful contribution.
4. Designing FTAs to support development
A transparent and democratic process for negotiating and agreeing trade deals, backed up with independentassessments, should lead to deals that are designed to have a positive impact, with potential negative consequencesidentified and mitigated.
The circumstances of each deal will be different, however pro-development FTAs might include some of thefollowing features:
Binding Trade and Sustainable Development chapters
Tariffs designed to preserve the value of preferences extended to poorer countries
Rules of Origin designed to include poorer countries in global supply chains
Avoid introducing problematic new trading norms via bilateral FTAs
Trade and Sustainable Development chapters
Increasingly, trade deals include sections that specifically commit the signatories to sustainable development. TheseTrade and Sustainable Development (TSD) chapters feature in recent EU trade agreements as well as in USMCA andCPTPP. However, the value of such chapters relies heavily on how closely compliance is monitored and whatconsequences are attached to non-compliance.
As Sam Lowe at the Centre for European Reform has written:
“EU TSD chapters are not subject to enforceable dispute settlement procedures and there are no financialpenalties for non-compliance. The lack of sanctions has led to claims by MEPs and civil society groups that EU TSDchapters are toothless in practice. European civil society groups also point out that there is an imbalance in howtheir concerns and those of investors are treated: under the investment protection mechanisms contained in many EUtrade agreements, foreign investors are able to sue for financial compensation in the event that government actionis adjudged to have harmed their investment; groups concerned about labour abuses and environmental degradation, onthe other hand, have limited recourse.”[12]
In the UK’s post-Brexit trade policy is going to be used to support international development in any meaningfulway, UK FTAs should include TSD chapters that are enforced with sanctions that are equivalent to those used ininvestment-related disputes.
Design tariffs to avoid preference erosion
The EU extends tariff preferences to various countries on objective development grounds, via the Generalised Schemeof Preferences. By cutting or abolishing the tariffs that firms in poorer countries incur when exporting to the UK,trade policy can support industrial development in those countries. Without such tariff preferences, adeveloping-country firm is likely to struggle to compete with other countries that are able to provide a greaterlevel of support to their domestic industry (such as sector subsidies or export finance). The UK has recognised thatpreferential schemes are crucial if trade is to be an engine for economic development in the Global South and hascommitted to roll-over the EU’s market access schemes.
Free Trade Agreements aim to increase trade between countries, and one of the key ways that they can do this is tolower tariffs between the signatories. However, this should be avoided where lowering tariffs would erode thepreferences offered to developing countries. This shouldn’t be too difficult an issue, as there are relativelyfew overlapping export interests between developing countries and the richer countries with which the UK iscurrently negotiating. This can be understood by looking at Kenyan horticulture (see Box 2).
Box 2: Kenyan horticulture and the danger of preference erosion
The Kenyan horticulture sector employs more than 8 million workers and farmers, and green beans are the most commonly-exported vegetable. 59% of Kenyan green beans end up in the UK. Because Kenya is a poorer country, the UK does not apply any tariffs to these beans.
Green beans from the USA, with its heavily industrialised and subsidised agricultural sector, are currently subject to a tariff of 8% when they arrive in the UK.
A UK-US deal that abolishes tariffs on green beans traded between the two countries would have little overall impact on the economies of either country. However, it would mean that Kenyan exporters would be placed in direct competition with their US counterparts, which would lead to lost business for Kenyan suppliers, lost jobs for the workers and lost incomes for smallholder farmers.
The underlying logic of trade agreements is that signatories will have privileged access to one another’smarkets. Trade officials are keen to avoid ‘trade deflection’, where countries without privileged accesssimply sell a product via an agent in an FTA signatory, therefore qualifying for lower tariffs. However, the natureof globalised supply chains poses a challenge – how can the origin of a product be calculated if itincorporates materials and inputs from different countries? Rules of origin have evolved within trade agreements asa way of defining the true origin of a product, and therefore applying tariff preferences accordingly.
Typically, rules of origin are based upon one of three criteria:
Did a product undergo transformation in a country that led to the changing of the Harmonized System code?
Did the product undergo ‘substantial processing’ in a country?
What % of the value of the product is derived from a country?
If rules of origin in bilateral FTAs between richer countries are too strict, or too complex, they will incentivisefirms in those countries to source only from domestic suppliers, denying opportunities to suppliers in poorercountries, or else lock poorer countries into supplying only low-value inputs. This will hinder the role thatinternational trade can play in spreading wealth and creating opportunity in poorer countries.
Rules of origin in FTAs should offer equal tariff preference to products whether they are wholly produced in the FTApartner country, or whether they incorporate inputs, however valuable, from poorer countries.
This can be illustrated through a theoretical example of a UK-EU FTA in which German car manufacturers are selling tothe UK. Restrictive rules of origin that grant tariff preferences to a product based on the % of its value derivedwithin the EU might incentivise a German car-maker to source cheaper inputs (such as unprocessed metals) from apoorer supplier country (for instance, Zambia). This arrangement locks Zambia into ‘producer’ status.Removing restrictive rules of origin would create more of a market for Zambian processed metals (pressed steelsheets, or axels) and therefore support Zambia’s economic and industrial development.
Something of a model for this can be found in the African Growth and Opportunity Act (AGOA), the USA’s tradepreference scheme for African countries, which maintains relaxed rules of origin for goods where multiple Africancountries have provided inputs. This has a higher utilization rate than the EU’s Generalised System ofPreferences, suggesting that the minimization of border checks and bureaucracy serves to incentivise trade.[13]
Avoid using bilateral FTAs to establish problematic new trade norms
One of the major development concerns with FTAs between richer countries is not that they will directly stymie theeconomic development of poorer countries. Rather, it is that new bilateral agreements could set problematic newnorms that would then manifest in future trade agreements, such as those struck with poorer countries.
The increased trend towards bilateral FTAs is partly born of frustration with the inefficiencies and challenges ofthe multilateral system. The World Trade Organisation has been slow to reform and respond to the trade challenges ofthe 21st century. Richer countries have therefore looked to FTAs as a means through which to break newground in areas such as e-commerce and investment.
Trade deals are not negotiated in a vacuum. Previous deals become the blueprint for future deals.[14] Countries are unwilling to give ground on features of tradedeals that have already become an accepted norm elsewhere. And whereas at the WTO poorer countries can jointlyadvocate for their interests, it is more difficult to do this in a bilateral FTA negotiation. The Ugandan tradeactivist Africa Kiiza summarises the issue by saying:
“Rich economies like the EU are using FTAs to win concessions that they are unable to obtain at the WTO, wheredeveloping countries continue to band together and hold out for more favourable rules.”[15]
For the same reason, care should be given when deciding what approach the UK will take to agreeing shared standardswithin FTAs. Regulatory cooperation is one of the new innovations introduced by rich countries that brings both therisk of provoking a race to the bottom, and the possibility that the bar is set too high for developing countries.Deregulation of standards (for instance, pesticide or food standards) in an FTA between significant economies suchas the UK and the USA could serve to depress standards elsewhere and start a ‘race to the bottom’.Equally, standards should not be too complex or exacting, with Christophe Bellman raising the concern that“deep integration initiatives among large trading partners might set rules that become de facto templates forglobal standards, and ultimately raise the bar too high for low-income countries to comply”.[16]
Clearly, this is a difficult balance to achieve. Countries should be able to retain policy space in the crucial areaof regulation and standards. A reasonable conclusion is that trade agreements are not the most appropriate way toenshrine cooperation on these issues. A new forum, outside of FTAs and the WTO, with a remit to increase standardsin an inclusive way, would be more appropriate.
Another concern with the bilateral FTA approach that the UK has opted to pursue is that it risks undermining regionaltrade in the Global South. Regional trade between poorer countries is a vital tool for economic development and theachievement of the SDGs. This is especially the case in Africa, where regional supply chains tend to be particularlyunder-developed. Currently, intra-Africa trade only accounts for 10% to 12% of trade on the continent. This is incomparison to the high levels of intra-regional trade in Europe (60%) and Asia (40%).[17] Various regional trading blocs, as well as the recently-agreedAfrican Continental Free Trade Area, aim to change this by abolishing tariffs and non-tariff barriers betweencountries.
If the UK seeks to strike a liberalising individual agreement with one part of a trading bloc (for example, withKenya), but not others (Tanzania and Uganda), that would undermine the common external tariff applied by the CustomsUnion of the East African Community. This would lead to border checks, to ensure that goods exported into Kenya bythe UK did not find their way into neighbouring countries that impose a higher tariff. Additional border checks arebarriers to intra-regional trade that would undermine the efforts of African countries to become more closelyintegrated.
The African Union sees trade between its members as a vital to its future economic development, writing that“all analyses and studies confirm that the AfCFTA represents Africa’s best insurance policy and strategyto recover from the Covid-19 pandemic”.[18]
Undermining regional trade in Africa would also run counter to the UK’s own development spending, with multipleUK aid programmes explicitly focusing on supporting the establishment of regional trading networks in Africa.[19]
Use FTAs to strengthen action on business and human rights
Trade deals that encourage a greater level of investment between countries can be an engine for economic development.However, many international companies, including those linked to the UK, have been found to have acted with impunityin their overseas operations and supply chains. For example, TraidcraftExchange have visited communities in Liberia who had their land grabbed by the UK company Equatorial PalmOil. The company promised compensation payments, which did not materialise, and villagers were pushed into deeperpoverty, left without livelihoods or self-sufficiency.
FTAs seek to increase the volume and value of international investment; this should be balanced by makingrequirements on business to conduct due diligence on the human rights and environmental risks of their operationsand supply chains, and by holding companies to account in the UK courts when violations do occur.
The UK should legislate domestically to ensure that investors uphold human rights and protect the UK’sreputation for fair play overseas. However, it should also explore options for using FTAs to drive similarcommitments from trading partners.[20] The EU is considering a similarapproach, with the European Parliament’s International Development Committee recommending that trade policyincludes “enforcing due diligence obligations within FTA Trade and Sustainable Development chapters”.[21]
5. Designing FTAs that support climate action
Successfully achieving the SDGs, with their vital emphasis on tackling global poverty, requires urgent internationalaction on climate change. The effects of climate changes are felt disproportionately by poorer countries, such assmall island nations and those positioned near the equator. Any efforts to solve poverty will be for nothing iftackling climate change is not given equal or greater emphasis. The UK has recognised this by committing to theParis Climate Agreement. This is ambitious, difficult and vital; it will require all parts of UK public policy towork in concert, and trade policy is no different. As President of COP26, it is particularly appropriate that the UKshows global leadership on tackling climate change in 2020/21.
However, international trade and investment agreements have a poor record of supporting climate action. Tradeagreements are typically designed to maximise the volume and value of trade. Sustainability considerations may be indirect conflict with this over-riding aim. However, a number of ideas are being developed that must form part of theUK’s FTAs. Given that the UK is starting from scratch in developing its post-Brexit trade policy, it isuniquely well-placed to incorporate progressive climate commitments into future trade policy.
As previously discussed, this should include using trade agreements to reinforce international commitments tomultilateral environmental agreements such as the Paris Agreement and the Convention on Biological Diversity. Inaddition, trade deals should contain guarantees that parties will have the freedom to develop and implement law andpolicy which will enhance environmental protection, even if they have the effect of restricting international trade.
Beyond these vital first steps, there are a number of other areas where the UK should focus as it designs trade dealsthat will help to protect the planet:
Greater focus on climate issues in TSD chapters
Rejecting ISDS
Using the WTO to support cooperative climate action
Reform subsidies to encourage green products and technologies
Strengthen the climate dimensions of TSD chapters
The UK is committed by law to achieving net zero carbon emissions by 2050. This requires trade policy to play itspart. The TSD chapters of FTAs should be strengthened, with binding enforcement. And their scope should be extendedto incorporate stronger commitments to the Paris Climate Agreement. France and the Netherlands have called forstronger TSD chapters in the EU’s FTAs.[22] TheUK’s Aldersgate Group is in agreement, adding that future UK FTAs should include binding non-regressionclauses to prevent signatories from reneging on their climate commitments.[23]
Reject ISDS clauses
Investor protection clauses, such as Investor-State Dispute Settlement (ISDS) clauses, are a common feature of manymodern FTAs. These give disproportionate rights to international investors, allowing them to sue host countrygovernments for decisions that might damage the value of their investment. For example, the UK gas companyRockhopper is suing Italy for not granting them a concession to drill oil off the Italian coast.[24]
The impact of ISDS clauses is not limited to cases that have been brought through the courts. The mere threat of aprotracted and expensive court battle is enough to discourage countries from regulating to protect the environment– as seen when the Canadian fossil fuel giant Vermilion threatened the reformist French Environment Ministerwith a billion dollar lawsuit when he proposed laws to end fossil fuel extraction. The plans were quietly scrapped,and France agreed to continue to grant extraction rights to companies until 2040.[25]
The existence of ISDS clauses in FTAs is democratically outrageous and obstructs nations taking action to tackleclimate change. They must not be part of the UK’s future FTAs.
The Agreement on Climate Change, Trade and Sustainability (ACCTS)
ACCTS is an initiative that New Zealand, Fiji, Iceland, Norway and Costa Rica have been negotiating since September2019.[26] In January 2020, Switzerland announced thatthey were also participating in the negotiations.
The initial scope of ACCTS is to cover the following areas:
Liberalising trade in environmental goods and services
Environmental goods and services are defined as ‘activities which produce goods and services to measure,prevent, limit, minimise or correct environmental damage to water, air and soil, as well as problems related towaste, noise and eco-systems.’[27]Thebarriers to trade in these goods include import tariffs, while barriers to trade in services are obstacles toforeign investment and hindrances to rapid entry. The concessions made by ACCTS signatories on environmental goodsand services would be extended to all WTO members on an MFN basis.
Disciplines to eliminate harmful fossil fuel subsidies
Subsidies of the production and consumption of fossil fuels is worth $500 billion globally each year.
Jacinda Ardern said: ‘If trade rules can require subsidies to be removed from things like agriculture, thenit is only consistent that they also require subsidies to come off polluting fossil fuels.’[28]
Guidelines for voluntary eco-labelling programmes
Signatories are committing to work together to develop a common methodology (or even label) for displaying theecological impact of consumer goods.
The UK should demonstrate the seriousness with which it takes its climate commitments by joining ACCTS; this wouldsend a clear message about the UK’s position, and elevate the profile of ACCTS itself within the internationalcommunity.
Reform subsidies to encourage green products and technologies
The commitment in the ACCTS to tackle the harmful practice on subsidising domestic fossil fuel production is not theonly area where subsidy reform is sorely needed, and could be supported through Free Trade Agreements. FTAs oftenspecify where a party is permitted to provide subsidies to domestic industries, and therefore provide a valuableopportunity to allow countries to support the development of green technologies and products.
6. Conclusion
The UK’s decision to leave the European Union means that it is a relatively unique example of a country formingits trade policy from scratch. This is a risky position to be in, but one that affords opportunities. After December2020, the UK has the chance to showcase a new, modern trade policy, that is fit for the challenges of the21st century.
The UK plays a leading role in tackling complex global challenges, from poverty and inequality to climate change.It’s no longer sufficient for trade policy to focus just on trade goals, particularly if doing so underminesprogress on these global challenges.
The vital foundation of a modern trade policy is a transparent and democratic process for negotiating and signingtrade deals that involves parliament and civil society, informed by ongoing impact assessments. Upon thisfoundation, there are a number of features that the UK could pioneer that would contribute to a pro-development,pro-climate action trade policy. The opportunity to introduce rules of origin into trade deals that enhanceopportunities for manufacturers in poorer countries, or the chance to break new ground by signing up to ACCTS,should excite UK officials.
As of September 2020, the UK is simultaneously attempting to negotiate FTAs with the EU, the USA, Australia and NewZealand. This provides the Trade Secretary Liz Truss with ample opportunity to demonstrate how her Department cansupport the UK’s vital international commitments. This paper constitutes a set of recommendations to ensurethat the UK’s trade deals are consistent with the imperative that urgent progress is made towards the SDGs andthe Paris Climate Agreement.
Tom Wills, Senior Policy Advisor, tom.wills@traidcraft.org
Endnotes
[1] For example, the UK government’s own estimates are that a comprehensive trade deal with the USA willprovide only a 0.16% boost to the economy over 15 years: https://www.bbc.co.uk/news/uk-politics-51706802
[2]https://assets-global.website-files.com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf
[3] The limited ability of MPs to have a say on UK trade deals comes from thePonsonby Rule, a parliamentary convention dating from 1924.
[4] The US and EU give lawmakers 60 and 90 daysrespectively to consider trade deals
[5]https://www.tjm.org.uk/documents/briefings/2018-06-28-A-Trade-Model-that-Works-for-Everyone-Final-02.pdf
[6] The USA has 28 advisory committees (https://ustr.gov/about-us/advisory-committees) whileCanada has a structure of Sectoral Advisory Groups on International Trade (SAGIT sub-committees).
[7] These should include, as a minimum, the Sustainable Development Goals, theParis Climate Agreement, the eight ILO fundamental conventions, the Convention on Biological Diversity and the UNGuiding Principles on Business and Human Rights.
[8]https://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_158166.%20Trade%20and%20Sustainable%20Development.pdf
[9] Poorer countries, which may not have the resources to make progress againstinternational agreements, could be offered differential arrangements in recognition of their development status
[10] Namibia currently exports 26% of its beef to the UK: https://www.namibian.com.na/188456/archive-read/Nam-to-keep-tariff-free-beef-to-UK
[11] Dr Emily Jones & Conrad Copeland, https://www.geg.ox.ac.uk/sites/geg.bsg.ox.ac.uk/files/Making%20UK%20trade%20work%20for%20development%20post-brexit.pdf
[12]https://www.cer.eu/insights/eu-should-reconsider-its-approach-trade-and-sustainable-development
[13]https://www.kommerskollegium.se/globalassets/publikationer/rapporter/2016-och-aldre/publication-the-eus-and-the-us-preferential-arrangements.pdf
[14]https://www.wsj.com/articles/new-north-america-trade-deal-seen-as-template-for-deals-to-come-11576319401
[15] Africa Kiiza, ‘A Trade Policy to Serve the People’: https://www.linkedin.com/posts/africa-kiiza-47545367_an-fta-to-serve-the-people-lessons-from-activity-6639211390236147712-6FUa/
[16] p16, https://www.geg.ox.ac.uk/sites/geg.bsg.ox.ac.uk/files/Making%20UK%20trade%20work%20for%20development%20post-brexit.pdf
[17]https://www.tralac.org/news/article/9749-intra-regional-trade-is-the-key-to-boosting-economic-growth-in-africa-says-maersk-executive.html
[18]https://au.int/en/pressreleases/20200814/covid-19-african-union-keep-afcfta-track-digital-technology
[19] See, for example, the Africa Food Trade and Resilience Programme (https://devtracker.dfid.gov.uk/projects/GB-GOV-1-300489)and Trade Mark East Africa (https://www.trademarkea.com/trade-policy/)
[20] ‘Human Rights Due Diligence’ laws, creating a corporate dutyto prevent human rights abuses, are under discussion in a range of jurisdictions https://corporatejustice.org/news/16783-eccj-publishes-comparative-legal-analysis-of-hrdd-and-corporate-liability-laws-in-europe
[21] September 2020, https://www.europarl.europa.eu/doceo/document/INTA-PA-655776_EN.pdf
[22]https://uk.reuters.com/article/us-eu-trade-france-netherlands/french-dutch-join-forces-to-urge-eu-to-show-teeth-on-trade-idUKKBN22M0CH
[23]https://www.aldersgategroup.org.uk/latest/detail:uk-trade-policy-must-be-aligned-with-environmental-and-climate-goals
[24]https://10isdsstories.org/cases/case9/
[25]https://10isdsstories.org/cases/case5/
[26]https://www.beehive.govt.nz/sites/default/files/2019-09/ACCTS%20joint%20leaders%20statement.pdf
[27] Definition from OECD, https://www.oecd-ilibrary.org/industry-and-services/the-environmental-goods-and-services-industry_9789264173651-en
[28]https://www.beehive.govt.nz/release/new-zealand-leading-trade-agreement-driving-action-climate-change-and-environment
About Traidcraft Exchange
Traidcraft Exchange is an international development charity which uses the power of trade to bring about lastingsolutions to poverty. It runs development programmes in South Asia and Africa, works directly with businesses toimprove their supply chains, and does advocacy and campaigning in the UK to promote justice and fairness ininternational trade. It works closely with specialist fair trade company Traidcraft Plc.
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