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Vol 60 No 23

Published 21st November 2019


Brexit and a trade pipe-dream

Whatever happens in Britain's general election, the uncertainty over its trade policy, including ties with Africa, will continue next year

A win for the Conservatives in the election on 12 December would mean Britain's formal exit from the European Union early next year. That would be followed by years of trade negotiations between Britain and the rest of the world. But in the short-term there would be several interim arrangements, rolling over the terms of trade that Britain signed up to as a member of the EU.

Should some configuration of opposition parties win the election, Britain will try to reopen negotiations on a withdrawal deal from the EU or may decide to stay in the bloc. The only policy that would produce short-term clarity on Britain's trading relations would be a government decision to remain a member state of the EU.

Ever since Britain voted to leave the European Union in 2016, successive prime ministers – Theresa May and now Boris Johnson – have promised expansive new trade deals with Africa. In private, Whitehall officials have long conceded this won't happen (AC Vol 59 No 17, Europe discovers Africa, again).

In the medium term, astute African trade negotiators could extract concessions as Britain faces a weakened position in a bigger and more competitive market.

First, Britain's economy is now growing at its slowest pace for a decade, held back by the multifarious effects of the Brexit vote as well as the indirect effects of the trade war between China and the United States.

Secondly, such are the arguments around Britain's attempts to leave the EU, the terms of the withdrawal agreement or whether it will happen at all, there is no clear policy on trade with Africa – beyond Britain wanting a bigger share of the continent's market to compensate for potential losses in Europe and elsewhere.

Until now, the biggest concern for African exporters has been the threat of the Conservative government to walk out of the EU without an agreement and trade with the EU on World Trade Organisation terms. This 'cliff-edge' option, would cause chaos in the European trading system and reverberate in Africa.

Both African countries and British companies are still trying to mitigate the effects of a no-deal outcome. However, there seems to be less chance of Britain walking out without a deal following Prime Minister Johnson's acceptance of a slightly amended withdrawal agreement. Everything depends on who wins the election.

So long as Britain remains an EU member it is barred from negotiating new trade accords with third countries. Instead, has spent much of the last three years trying to cut and paste the EU's existing trade arrangements with African states and regional blocs into British law as a stop-gap solution.

So far, only the pacts with the Southern African Customs Union and Mozambique (SACU+M), and the Eastern and Southern African countries have been rolled over. On 26 October, British and Moroccan officials announced that the Association Agreement between Brussels and Rabat would be also rolled over.

Talks between Britain and Tunisia, Ghana, Kenya, Egypt, Côte d'Ivoire and Algeria are still ongoing, though Kenya's High Commissioner to London, Manoah Esipisu, says he expects a post-Brexit trade agreement to be finalised by the start of 2020.

'We have worked quite hard on ensuring there is no trade disruption,' said Botswana's Investment, Trade and Industry Minister Joy Kenewendo, who chaired talks on the SACU+M accord. 'We have tried to cover all the bases.'

Trade between Britain and sub-Saharan Africa has grown by over 7% in the past 18 months. African exports to the UK account for about 4.8% of African exports. SACU+M covers trade worth some £10 billion (US$13bn) a year.

If the Withdrawal Agreement is passed, Britain will enter a transition period during which it will stay in the EU single market until December 2020. Most officials in Brussels expect this deadline to be extended.

Talks on new UK-Africa trade pacts could start in this period but the UK's Department for International Trade is over-stretched. Making much progress on new trade agreements with African countries before the transition period ends is unlikely.

Next January, London is to host a UK-Africa Investment Summit after a succession of similar grandiose events in Russia, Japan and China, and ahead of an ambitious Franco-African summit. The absence of certainty over terms of trade with Africa could cast a shadow over the event but the organisers have already been awarded their marketing contracts.

There is also the ambitious pledge – made by Theresa May last year – that Britain plans to be the biggest single investor in Africa of the G-7 countries. Britain has promised to double the current export credit finance for trade and investment with South Africa to £3.5bn.

Post-Brexit trade policy is a blank canvas. Several African blocs and big economies such as those of South Africa, Kenya and Nigeria, criticise the EU's Economic Partnership Agreements (EPAs) with African regional blocs and expect Britain to offer better terms. But London remains in a holding pattern.

A White Paper published by the former Secretary for International Trade Liam Fox in late 2017 promised the UK will continue to offer 'duty-free-quota-free access to the UK market' for countries classified as 'least developed' alongside a 'unilateral trade preference scheme' that could outflank the EPAs (AC Vol 58 No 23, Trading on the fly).

However, the trade bill based on that White Paper was scrapped when Prime Minister Johnson prorogued parliament in September. The government's latest trade bill includes just the rolling-over of EU trade agreements.

But these talks on roll-over deals offer some pointers on future EU-Africa trade. The SACU+M roll-over deal also extends the tariff-free quotas for unrefined and refined sugar, canned fruits and wine.

We hear that Kenya wants higher quotas for its produce and cut flowers as part of the roll-over of the Britain's trade agreement with the six-nation East African Community.

Britain is said to favour removing rigid rules of origin on products; that would boost African exports to the UK in the future. The EU insists on a regime under which primary products are the major export, leaving little incentive for African exporters to process local commodities and minerals.

Like the European Commission, the UK has promised to provide technical assistance for the African Union team drawing up regulations for the African Continental Free Trade Area (AfCFTA).

Although British officials in Brussels talk of 'very close partnerships' with the EU on development and diplomacy in Africa, they have stayed away from the debate on the EU's next seven-year budget — known as the multi-annual financial framework – and the successor to the Cotonou Agreement between the EU and the African, Caribbean and Pacific community (AC Vol 59 No 21, Who speaks for Africa?).

'There's the sense from member states that Brexit changes the balance, in the role of the ACP and the EU's post-Cotonou relations,' says a Brussels insider. Others point out that Britain will join the likes of Russia, India and Japan in a crowded field of new and newish players in the African trade and investment market.

The prospect of Brexit being an opportunity to reinvigorate and rebrand Britain's relations with Africa, led by a Prime Minister who once suggested that the 'best fate for Africa would be if the old colonial powers, or their citizens, scrambled once again in her direction', is likely to be received with scepticism.

Yet Africa's bigger economies and regional blocs could exert their greatest leverage in trade talks over the next two years. 'This is a matter for the United Kingdom and all we can say is, "Get on with it". Business does not like uncertainty,' says Esipisu.

Yet even if the Conservatives win the election with their 'Get Brexit done' slogan, Britain's extrication from the EU will be slow and contentious.

Some Whitehall officials predict at least another five years of tough trade negotiations with Europe and the United States. As those play out, fresh trade deals with Africa are unlikely to be innovative or pulled together quickly.

 

The African Brexiteers 

The UK's 2010, 2015 and 2017 parliamentary intakes, saw a significant increase in the number of Conservative party MPs of African heritage. Most are staunch Eurosceptics, with the notable exception of Sam Gyimah, a British Ghanaian, who resigned as an Education secretary in Theresa May's government in November 2018 to campaign for a second referendum, and was expelled from the Tory party in September after voting to prevent a 'no-deal' Brexit. Gyimah is now standing as a Liberal Democrat in a central London seat. However, six of his former colleagues have quickly begun to climb the ministerial ranks. 

Priti Patel: Ugandan Asian.  Appointed as Home Secretary, Patel is now one of the most senior ministers in Boris Johnson's government. Patel was elected in 2010 as one of the A-list candidates established by then Prime Minister David Cameron, and quickly rose through the ranks despite being on the Thatcherite right of the party. Patel's career survived being sacked from May's cabinet as International Development Secretary in November 2017 after holding meetings with Israeli government officials, in which she allegedly mooted the possibility of giving UK aid funds to the Israel Defense Forces, without informing the Foreign Office. 

Kwasi Kwarteng: Ghana. Educated at  Eton College and Cambridge university, Kwarteng was a junior Brexit minister under May. Immediately promoted to Business Minister when Johnson took office, he has been earmarked as a future cabinet minister. 

Bim Afolami: Nigeria. Also an Eton and Oxford alumnus, Afolami, who voted Remain in the 2016 referendum, was elected to the ultra-safe Hitchin and Harpenden seat in 2017. A party loyalist who backed May's Brexit deal, Afolami, currently a ministerial aide, could be in line for a junior ministerial post following December's election.  

Kemi Badenoch: Nigeria. As a former banker and digital director of the Conservative-supporting Spectator magazine, Badenoch, who moved to the UK from Lagos at the age of 16, has impeccable high-Tory credentials. An MP since 2017, Johnson appointed her as a junior education minister in July. 

James Cleverly: Sierra Leone. An ally of Johnson from his days as London Mayor, when Cleverly was a member of the London Assembly, he has quickly become one of the ministers most frequently put in front of the media to defend government policy. The former junior Brexit minister was appointed Chairman of the Conservative party when Johnson took office in July.  

Suella Braverman: Kenya/Mauritius Indian.  An arch Eurosceptic, Braverman was a junior minister in the Department for Exiting the EU in the May government – resigning in November 2018 in protest at May's Brexit deal – and chaired the European Research Group of Eurosceptic Conservative MPs. She is likely to be offered a return to the ministerial ranks if Johnson wins a majority.

 

This story was first published on 12 November 2019 under the headline "How the UK election will affect trade". Since then it has been updated and more information about politicians of African descent in Britain has been added in the accompanying box.



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