Trade Review of UK-Africa Summit 2020
Prime Minister Boris Johnson delivered his administration’s first major statement on Africa today, when he hosted African presidents for the UK-Africa Investment Summit 2020.
He spoke mainly about existing private sector initiatives, pushing the idea that the UK is an ‘obvious partner of choice’ for Africa, highlighting financial services in London, tech innovation, security co-operation and the UK’s higher education sector.
The Summit’s pre-publicity described the UK’s desire to take advantage of leaving the EU to secure trade and investment opportunities in Africa, making London a centre for ‘development financing’ for a rapidly growing continent, perhaps even, rather fancifully, the largest source for foreign direct investment (FDI) for Africa.
Only about 2% of current UK trade is with Africa. While Africa attracts less than 2% of all FDI in the world, returns on that investment are on average higher than for FDI to any other region of the world. In that sense, there is huge scope for mutually beneficial trade and investment links.
One of the most significant things that the UK could do to increase investment in Africa is to improve the terms of trade for African countries trying to export into the UK market.
British trade policy towards Africa has been dominated since the 1970s by Europe. Two years after the UK joined the EEC in 1973, the bloc signed the Lome Convention with former colonies of France, Britain, and other European countries in Africa, the Caribbean and Pacific (ACP). Reforms to the trade regime in the early 2000s have focused on both welcome market access for African producers selling into Europe and, much less welcome, opening up African markets to competition with European agricultural exporters – most worryingly, those subsidised by the Common Agricultural Policy.
The policy-making process has been dominated by impenetrable, anti-democratic negotiations led by the European Commission through which African states (with the connivance of British administrations) have been divided and conquered, split up into regional sub-groupings that suited a European agenda, rather than African regional integration agenda. The general pattern of trade negotiations, in which relatively poor African states have been bribed with aid to agree to trade deals not in their interest, must not be replicated by the UK.
More developed countries, like South Africa and Nigeria, that would provide stiff competition for French and Spanish agricultural produce, have been pressed to open their markets to European exports while facing continuing barriers to the European market. For example, refined sugar from Nigeria faces high tariffs when exported to the EU.
Nigerian President Buhari, who will meet the Duke and Duchess of Cambridge as well as the Prime Minister, has been arguing ahead of the Summit: ‘in recent years, our relationship – particularly economically – has become increasingly defined by Britain’s membership of the European Union. A new free trade agreement would reconfigure this, presenting new opportunities for both… visa restrictions and customs barriers must be reduced to fulfil the potential these connections could bring to the nations where they today reside. As an African leader, I have an obligation to speak of the fact that while many in the African Diaspora enjoy considerable benefits from life in the West, they do not always feel at the heart of the community. A renewed sense that there are ties that bind us through the Commonwealth, and a concerted effort to grow those links through trade, could act as a spur to encourage togetherness and the certainty of belonging.’
After Brexit, Britain will no longer be tied into the terms of the EU’s Economic Partnership Agreements. It is free to offer much more generous terms, and the implication of the ‘buccaneering Britain’ idea pushed by some Brexiteers suggests they might want to lower barriers to entry for Commonwealth or African producers to the UK market. During Theresa May’s 2018 trip to South Africa and Kenya, the Government confirmed their first trade deal for the post Brexit era and tried to spin it as a win for Africa. The irony was that they literally cut and pasted the EU’s Economic Partnership Agreement with SACU and Mozambique. The ‘continuity EPA’ deal, a Brexit emergency measure, missed the chance to improve South Africa’s terms. South Africa does not, for example, have full duty-free quota free access to the UK market. For certain products, tariff rate quotas apply. Any continuation of this approach would suggest a paucity of ambition, the inability to think seriously about what could be done differently after Brexit.
The questions African states will ask Boris Johnson will firstly be about whether his administration can rethink this ‘reciprocal liberalisation’ system, secondly about what terms other countries might negotiate with the UK that might further weaken African states’ position – especially countries with a similar export profile (Chile and the US both export citrus products and juice, for example), and thirdly about migration and visa regimes.