“Gender-sensitive trade”: buzzword or basic principle of post-Brexit trade policy?

Erin Hannah - Associate Professor and Chair of the Department of Political Science King’s University College, the University of Western Ontario

Adrienne Roberts - Senior Lecturer in Politics, the University of Manchester

Silke Trommer - Lecturer in Politics, the University of Manchester

Indeed, the UK post-Brexit trade strategy commits the government to “harness[ing] trade’s potential to boost economic prosperity, create jobs, support greater participation by women and under-represented groups in the economy” (HM Government 2018). Theresa May has emphasized the government’s commitment to supporting female entrepreneurs and eliminating barriers that prevent women from accessing the benefits of trade which, she argues, could increase global GDP by trillions of pounds. International Trade Secretary Liam Fox also highlighted government commitments to ‘gender-responsive trade’ in a speech delivered to the Commonwealth Business Forum in April when he promised that “[a]s we establish an independent trade policy, we will ensure that we create a framework that delivers for female exporters and upholds gender equality”.

These pledges have been made in the context of a flurry of activity around the issue of gender and trade within international trade institutions such as the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD) (Hannah and Trommer 2017). Countries such as Canada, which has been identified as a key UK trading partner post-Brexit, also appear keen to push forward the gender and trade agenda internationally, adding gender chapters to bilateral trade agreements with Chile and Israel.

Yet, if the UK government wants to do more than pay lip service to the idea that trade can be used as a lever for gender equality, its work on gender and trade policy needs to begin well before  trade policy autonomy will have returned to Whitehall. At the time of writing, all plans for the future EU-UK trading relationship are mute on gender and trade. This is a missed opportunity as far as setting a precedent for post-Brexit trade negotiations are concerned. It also means that all of the gendered impacts of existing trade relations between the UK and other EU member-states will likely be replicated within the new cross-Channel trade framework, independently of whether that entails a Chequers-type agreement or a ‘no deal’ scenario whereby the UK will trade under WTO rules.

One major obstacle to creating a more gender equitable trading system relates to the lack of data. While there is a sparse literature on the gendered effects of trade agreements, most of it focuses on the employment effects of trade in goods, overlooking the gendered effects of agreements on consumption patterns, the provisioning of services, and the distribution of unpaid labour and care work. Further, almost none of it focuses on trade relations between developed countries.

Nonetheless, findings based on previous agreements point to the need for caution in at least three areas:

(1) Trade in goods: Manufacturing and agriculture stand out as key economic sectors that UK negotiators are concerned with when crafting the UK’s post-Brexit integration into the global trade regime. Yet both areas of the economy are deeply gendered and therefore any set of trade rules in these fields has gendered effects. Large cross-country studies have shown that trade liberalization can work to widen wage inequalities between men and women in manufacturing sectors, often because trade competition dislocates the existing labour force while the availability of low-paid female labour may constitute a comparative advantage. While trade agreements may work to draw more and more women into the labour force as workers and/or entrepreneurs, the extent to which this represents an opportunity depends on a number of factors. For example, in the absence of affordable services such as elder care, healthcare and childcare, the ability of women to provide care and essential services on a daily basis may decline, leading to falls in the level of care overall.

Of course, the gender effects of trade liberalization varies between countries and across sectors, which is why gender-based impact assessments need to be done before making new trade policy. It is of crucial importance to consider, for instance, how post-Brexit trade arrangements will impact different groups of people as agricultural producers (an overwhelming majority of whom are men) and consumers. According to a recent report by the Fawcett Society and The Women’s Budget Group, continued access to tariff-free goods, especially food, from the EU benefits the poorest households, which spend more than twice as much of their total expenditure on food than the richest households. According to their projections, a no deal ‘hard Brexit’ would have a dramatic impact on household food costs since the UK would have to apply the same tariffs for food from the EU as other countries do (under WTO rules), which means increased costs for the 70% of gross food imports that come from the EU. This has important gendered effects as women are more likely to be poor and existing gender norms mean that they tend to be the primary persons responsible for food purchase and preparation.

(2) Trade in services: Most proposals for UK post-Brexit trade commitments stress the need for regulatory flexibility in services, given the UK’s strategic interests in the area. From a gender standpoint, this begs the question of whether and how the government intends to salvage the relatively solid carve outs for public services of general interest that currently exist in EU law within a Free Trade Agreement (FTA). This matters from a gender perspective because the poorest families are most likely to rely on these services, and female-headed households, as well as black and minority ethnic households, are overrepresented amongst this group. Thus, as has been documented in the case of other free trade agreements such as NAFTA, the liberalization and privatization of public services is likely to have a particularly negative impact on women and on certain racialized minorities. Women also do a disproportionate amount of social reproductive labour within households, which means that they are more likely to bear the increased costs (including time commitments) that accompany the loss of essential public services such as health care under service privatisation.

In addition to being key users of public services, large numbers of women are also employed in these sectors. Insofar as the further deepening of trade in services may open some opportunities for women’s employment, there are also risks that they may lose jobs in the face of competition. In addition, any loss of government revenue that comes from changes to trade arrangements (such as through a reduction of tariffs) may ultimately impact workers and consumers of public services, as they are often the first things to be scaled back in times of fiscal contraction.

From a feminist perspective, it is extremely worrying that in its approach to services negotiations under existing FTAs and the Trade in Services Agreement (TiSA), the EU has moved away from the WTO practice of listing all services sectors that are to be liberalised. Instead, the EU privileges a so-called “negative list” approach, where all services sectors are automatically liberalised that have not been explicitly named as excluded. Furthermore, the EU subscribes to standstill and ratchet clauses in service liberalisation, making it illegal to backtrack on privatisation even if no explicit commitments have been entered into in an international agreement. This means that the future UK-EU service agreement has the potential to unleash a host of privatisations. As such, at a very minimum, a gender-sensitive approach to UK-EU trade relations needs to provide for ex-ante assessment of the gender-based impacts of service trade liberalisation and to include guarantees for public services and a ‘do-no-harm’ principle as far as essential services are concerned.

(3) Investment protection:

Crucially, the aforementioned precautions on service liberalisation chapters can only be effective if they also cover the increasingly popular investment protection clauses. Under investment protection, foreign investors can bring states to commercial arbitration in cases where policy measures put the investor’s expected profits at risk. The practice originated in Bilateral Investment Treaties (BITs) and FTAs among developed and developing countries, in order to protect global North investors from the risks of investing in countries that do not have effective and/or independent domestic legal systems. But, over the past decade, investment protection has become a staple across all BITs and FTAs, and attempts have been made to introduce the topic into the WTO. UN experts at the Office of the High Commissioner for Human Rights warn that investment protection clauses produce a chilling effect on the government’s ability to regulate areas ranging from public health and consumer laws to environmental and social protection.

These concerns are compounded because there is no minimum threshold of economic activity between two jurisdictions for multinational corporations to launch an investment case. Corporations can, and have, applied venue-shopping strategies, whereby they identify a jurisdiction that has a BIT or FTA with another jurisdiction whose government they would like to bring to investment arbitration and then use a letter-box company for the purpose of bringing the case. Concretely, investment protection clauses in a future agreement with the EU or any other trading partner may make it costly for the UK government to bring privatised aspects of essential service delivery back under government control, which would fuel the sorts of gendered outcomes noted in the discussion of privatization above. This also seriously undermines the possibilities for democratic decision-making as future governments would be prevented from making changes that could have important distributional effects.

Furthermore, gender discrimination against a foreign investor is explicitly listed in many existing investment protection clauses as an objectionable state practice that provides grounds for an investor to move towards arbitration. In many ways, this could be seen as a welcome inclusion that offers the potential to challenge states that discriminate against women and other groups. Yet, it begs the question of where this leaves positive discrimination policies that favour the most vulnerable. One example of how positive discrimination has been attacked under investment arbitration is provided by the two Italian granite companies Finstone S.a.r.l. group and RED Graniti Spa. In 2007 these companies took South Africa to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), arguing that the South African mining charter discriminated against the Italian investors because it required a certain percentage of local mines to be sold to black investors. The South African mining charter had been adopted under black empowerment and affirmative action policies with which the South African government had attempted to redress the racial inequalities persisting after the end of apartheid. The investors based their case on fair and equitable treatment provisions in international investment treaties that required that foreign investors are not discriminated against on racial grounds. It is often within the same article of the agreement that discrimination based on gender grounds is listed, and at the very least, wording would need to be included in an investment protection chapter that protects policy space for positive discrimination in legally binding ways.

Civil society groups also fear that the forms of investment protection currently being negotiated by the UK and others will help to fuel corporate tax avoidance. Though it is rarely recognized as such, this is a feminist issue because when those at the top of the socio-economic hierarchy find ways to avoid paying tax, the impact is felt hardest by those at the bottom who are most heavily reliant on public services, a disproportionate number of whom are women and girls.

The short analysis provided here makes clear that the gendered implications of the UK’s post-Brexit trade arrangements are complex and not well understood. That is why, if the government is sincere in its commitment to leverage trade to work for gender equality, several things need to happen. On the one hand, a sustained effort needs to be made to analyze the gendered impacts of existing and potential future trade agreements. On the other, the government needs to use the new found independence outside of the EU to do trade differently than it has been done to date. The idea of gendering trade policy has the potential to be a truly progressive one. But, without immediate and potentially radical action, gender-responsive trade risks turning into another buzzword that is popular among the policy community but fails to deliver genuine economic and social change.