Brexit risks harming African economies that trade with the UK

Peg Murray-Evans - Department of Politics, University of York

One way to preserve current levels of access to the UK market for all southern African countries is to negotiate a free trade agreement that replicates the existing EPA. However the dynamics of the southern African region mean that this is not a straightforward option. Because SACU is a customs union with a common external tariff it can only negotiate with the UK as a bloc. Levels of export dependence on the UK market vary significantly within the group – the UK’s share of Botswana’s global exports was 13.5 per cent between 2013 and 2016, whereas this figure was only 0.1 per cent for Lesotho. This means that some members of the group may feel a more urgent need to secure access to the UK market than others. Furthermore, different approaches to trade policy within the region have caused political tensions in previous negotiations.

The region is further complicated by the presence of South Africa, which is considered a developed country by the World Trade Organisation. As a result, South African exports to the EU including wine and fruit are subject to quotas under the existing EPA. These were a controversial part of the original negotiations and would have to be renegotiated in order to replicate the deal with the UK. Furthermore, if the UK wants to negotiate a more ambitious trade agreement with SACU – for example by including issues such as services and investment – it is likely to meet resistance from South Africa, whose government wishes to consolidate regional rules on these issues before discussing them with third parties.

African regional trade is made more complex still by the overlap between regional organizations with competing agendas. The membership of SACU overlaps with the larger Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA), both of which exist within ongoing efforts to conclude a Continental Free Trade Agreement that would include all 54 members of the African Union. Former Minister for Africa, James Duddridge MP, suggested at this month’s Department for International Trade questions that the UK could aim to use trade relations with Africa to help strengthen intra-continental African trade. An examination of the EU’s experiences negotiating the EPAs, however, suggests that using free trade negotiations to attempt to consolidate incomplete African regional projects is an extremely difficult task. On the other hand if the UK chooses not to take a continental approach and instead replicates the existing patchwork of EPAs and other EU trade arrangements across Africa, this is likely to add to existing barriers to intra-continental free trade.

An alternative to the current EU patchwork of arrangements has been mooted by a group of British international development NGOs. They argue that the UK should adopt a scheme similar to Everything but Arms, but expand its eligibility beyond LDCs to all ‘economically vulnerable countries’. The problem with this is that if such an arrangement included small middle-income African economies like Botswana, it could be open to legal challenge under WTO rules by larger economies at similar levels of development like India and Brazil. Meanwhile if the UK chose to extend unilateral preferences to all middle-income countries including agricultural market leaders like Brazil, then beef producers in Botswana and Namibia would lose their preferential margin and it is unlikely they would be able to compete in the UK market.

There are also more straightforward ways that the UK could improve market access for countries in southern Africa. Simplifying the rules of origin – criteria that govern the designated origin of a product – for manufactured goods like garments could help exporters from countries like Lesotho to access the UK market. The UK could also eliminate non-tariff barriers to trade in products like citrus fruits from South Africa by removing the EU’s strict controls in relation to the fungal infection citrus black spot, which have been seen as a controversial protectionist measure by South African citrus exporters. Changes to the UK food safety regime would, however, create new trade barriers with the EU.

A number of the complexities and dilemmas facing UK trade with southern Africa – varying levels of dependence on the UK market, uneven eligibility for unilateral preference schemes, complex regional configurations, vulnerability to competition from larger middle-income economies – exist across the African continent. These issues require urgent attention if the UK government is to ensure that Brexit does not adversely affect developing economies in Africa and elsewhere.

In particular, following on from the ministerial trip to southern Africa this week the UK government should urgently:

1.) engage with all developing countries that currently have preferential access to the EU market well in advance of the end of the Article 50 negotiating period;

2.) explore the legal options for alternatives to the current patchwork of EPAs and other preferential trade schemes as well as ways of addressing non-tariff barriers to trade with developing countries;

3.) acknowledge the complexities of African regional integration and investigate ways to minimize disruption caused by post-Brexit trade arrangements;

4.) carefully assess the impact of new trade arrangements with other developing countries on those that benefit from existing trade agreements and preferences.

If the UK now moves swiftly to take these four steps and acknowledges the complexities of African trade then they could avoid Brexit having damaging effects. Failure to do so could mean new barriers to trade from vulnerable African economies and disruption to African regional integration.

Peg Murray-Evans’ research on South Africa’s place in global politics is funded with a Leverhulme Early Career Fellowship