UK can be leader or laggard on fair trade post Brexit

07-Mar-2017 - Last updated on 07-Mar-2017 at 12:57 GMT

©iStock

Fairtrade food could be in short supply if the UK government continues to ignore the need for preferential trade deals with developing countries, two new reports have warned.

Research published this week by the Fairtrade Foundation and Traidcraft shows that Brexit could “make or break” farmers from some of the poorest countries by creating fairer trade or leaving them with an additional €1.15bn (£1bn) tax bill. The authors of the new report – 'Brexit: Let’s change trade for good' – suggested that 116 countries stand to “lose out” if the UK doesn’t maintain EU rules that currently see developing countries receive preferential access to the UK market.

“If the UK leaves the EU customs union, as the prime minister has signalled, it must put in place equivalent provisions or an estimated £1bn in additional taxes could be added to imports from developing countries,” the campaigners warned. “This would significantly increase the costs of their products, potentially pushing farmers and workers into greater poverty, causing job losses and increasing pressure on labour rights, environmental protection and wages.”

Products like bananas, sugar and coffee are all at risk, the report suggests. The current tariff on roasted coffee, for example, is 0%, but this could rise to an estimated 7.5%. The price for bananas is also falling, thanks to supermarket price wars, whilst sugar producers are struggling against changes to the EU’s quota rules.

"Many farming communities are already living on the edge, struggling with the impact of exploitation brought on by low prices for their produce,” said Fairtarde Foundation CEO Michael Gidney. “Brexit could make or break the future for these farmers.”

Blinkered by bilateral deals

Those findings follow a study by the Overseas Development Institute (ODI), published last week, which showed the least developed countries stand to lose €372.2m (£323m) a year if the preferential trade terms are not secured. “The emerging new UK trade policy seems to be primarily based on bilateral agreements. Developing countries will be harmed, especially if their current trade arrangements are not secured or improved,” ODI noted.

Both reports warned that the UK is far too focused on striking swift trade deals with wealthy nations. “To date, the UK has paid no attention to its trade relationships with the poorest developing countries, which have been absent from the discussions, speeches and debates,” said ODI. “This has happened despite the risk that they could be significantly harmed by the UK’s departure from the EU, with a number of important win-win opportunities missed in the process.”

The Fairtrade Foundation and Traidcraft also said they wanted to see a duty-free, quota-free market access scheme for least developed countries and other economically vulnerable countries put in place “immediately”. This, they argued, “would not be time-intensive or require extensive negotiations or government resources. It would ensure continuity and stability for investors, developing country producers and UK businesses alike.”

However, Brexit also presents an opportunity for the UK to “do better than the EU”, the authors continued – for example, by expanding the countries that benefit from the preferential treatment on trade and scrapping additional changes for some processed goods.

“The government has an opportunity to give themselves a quick win by offering immediate one-way market access to imports from developing countries,” said Traidcraft CEO Robin Roth. “This would ensure uninterrupted supply for UK consumers, and jobs and income for producers in some of the world’s poorest countries.”

Figures published last week showed that UK sales of Fairtrade products were back in growth.