Liz May's speech to the All Party Parliamentary Groups on Fairtrade and the Sustainable Development Goals

14 November 2017

Speech by Liz May, Director of Policy and Advocacy at Traidcraft Exchange

Thank you Lord McConnell and to the APPGs on SDGs and Fairtrade for hosting this important event.

I want to speak briefly about what the long term vision of trade with developing countries could be and then to focus on what needs to happen in the short term to make that possible, looking particularly at the role for parliamentarians.

There is no question that UK businesses, including retailers and manufacturers, as well as the final UK consumer has come to rely on goods from around the world. Traidcraft and other fair trade companies exist to make sure that those goods are produced and traded under fair conditions and that all within the supply chain receive fair rewards for their inputs.

So maintaining and improving market access for developing countries is critical for achieving the SDGs.

The Government’s early commitment to maintaining duty free and quota free access with no strings for the very poorest countries in the world was both welcome and timely. They didn't have to do this and the fact that they did shows the cross party commitment that there is to development in this parliament.

In the long term the UK has made it clear that it will be seeking FTAs with partners such as Australia and United States, but also clearly the larger developing world economies such as India, China and Brazil will be in the mix. As this process unfolds, the UK has a remarkable opportunity to re-think both the content and process for delivering a completely new breed of trade agreement. These agreements could be developed through consultation with stakeholders including consumers, workers and their wider impacts on human rights could be fully understood. In this new breed of agreements investors will not be granted excessive rights to sue Governments through ISDS, but instead there will be rights and responsibilities on both governments and investors. And the potential impacts of these agreements on smaller economies - some of whom are very dependent on the UK market  - will be properly assessed and any negative impacts mitigated. e.g. of NZ and Namibia.

But there are many developing countries where the FTA approach is either not a priority or not desirable. For these countries and regions we propose – as both David and Alan have also proposed - that the UK use the opportunity to design a simple, generous and pro-development preference scheme. This can learn from and improve on what other countries such as Norway, Canada, Australia and Norway already have in place.  It can include improved product and country coverage, as well as improved rules of origin to support more value addition in country and it could be built as the trade pillar in wider trade and development partnerships that include support for the building of productive capacity, infrastructure etc…I would urge parliamentarians to press for this option to be made a reality urgently,

Which brings me on to the short term. The Trade Bill published by the Government a week ago outlines the first steps in the Government’s plan which is essentially to replicate the EU trade regime with developing countries in its entirety and with all its flaws. It is claimed there is no time to do anything else and that agreements inked now could be revisited and improved at a later date. But the problem that we see is once agreements are in place - unless review or break clauses are inserted - there will be no ‘right time’ to revisit them and instead countries will be rushed and then locked into unhelpful agreements. And a further concern is that the Bill proposes that these deals which will form the basis for the UK’s trade and development regime will be passed with no parliamentary scrutiny.

And here I want to be clear that the Government is proposing to replicate the EU FTAs with a range of developed countries as we know eg. South Korean and Switzerland, but also with a range of developing countries. These deals - called Economic Partnership Agreements, or EPAs and have been contentious from the very beginning. David has mentioned some of the concerns the AU has and why they are calling for a standstill. The German Chancellor’s special representative in Africa recently took a public stand against the deals, describing them as ‘neither partnerships nor agreements’. It really doesn't make sense for the UK to replicate these difficulties and neither will that replication be as easy as some are proposing. Partner countries are going to want to seek better terms and this could delay signing and leave a dangerous market access gap.

There are a number of concerns with the EPAs, for example the fact that they go beyond issues agreed at the WTO to include liberalization of investment. But also that they require of a deep level of trade liberalization from the very poorest countries in the world - such as Benin, Uganda, Niger, Tanzania. African Governments are concerned that European goods will undercut and undermine their fledgling industries, affecting their ability to create jobs and value addition, instead consigning them to the role of suppliers of raw materials for ever more. Now you may ask why would LDCs have to sign an EPA if they already have DFQF access to the UK market? and the reason brings me on to a second issue with these deals and with the EU’s approach to trade with developing countries. By not including the slightly less poor countries such as Ghana and Kenya in the preference scheme the EU, or now the UK forces them to go down the EPA route, and because they are in regional customs unions with their poorer neighbours those other countries are forced join that EPA too. This has led to real tensions within African region - particularly in East and West Africa. But more importantly it runs completely counter to the vision of African regional and continental integration we have heard about this morning.

For example the East African Community is a customs union with a common external tariff. 5 out of the 6 EAC countries are least developed and so get the DFQF offer, but Kenya is not part of this offer, so it needs an EPA. But it can’t sign an EPA alone – that would be like Germany signing individual FTAs – so Kenya has to press its neighbours into a deal they don’t want.

So what should the UK Government do and what should parliamentarians be pushing for instead? There are three urgent things, which are my final message this morning:

-    1. Challenge, question, limit this replication of the Economic Partnership Agreements. Particularly those stepping stone agreements which single individual countries out from their neighbours.

-    2. press for alternatives to be on the table for those countries that do not want to go down that route. And here the simplest option is to ensure that the UK’s DFQF market access offer is extended to a wider group of vulnerable economies. This is perfectly possible and WTO compatible and in effect simply offers the same level of market access to countries through a different mechanism, one that supports and facilitates regional integration rather than undermining it.

-    3. and finally press for amendments to the proposed Trade Bill to make sure that all trade deals and arrangements are subject to full parliamentary scrutiny. The trade bill proposes that these roll over deals will happen by statutory instrument so no role of proposed for you as parliamentarian. Yet these deal will form the basis of the UK’s future trade policy, which I’m sure you’ll agree should be a matter for full parliamentary debate and approval because this is the way we design and deliver better policies which ultimately will support the SDGs.