As long as a product states ‘Fair Trade’ on the label and promises to build new schools, nobody pauses to wonder why coffee beans grown in Africa are not being roasted and sold by Africa. In 2014 Africa made £1.6 billion selling raw coffee beans, tariff free, to countries like Germany, which made £2.6 billion as the second biggest exporter of roasted coffee in the world. Yet, Africa faces overwhelming tariffs of 30-60% to export their own roasted coffee, and so largely, they don’t. The unilateral abolition of tariffs could not only help developing countries, it could improve the standard of living in the UK. Food bills could fall by 20%, and help curb the tragic dependence on food banks. There are understandable questions about unilateral free trade and whether it would harm domestic producers. EU tariffs are largely designed to protect EU continental producers, not British business.
By Alexandra Phillips l November 8, 2017
Coffee Fellows is a German coffeeshop chain founded in 1999 in Munich, Bavaria. As of 2017, there are some 170 stores, most of them franchised, making Coffee Fellows #1 ahead of Starbucks with 160 stores. (Wikipedia)
LONDON-Liberalising trade by stripping tariffs could alleviate some of the world’s worst poverty. It could drastically cut prices in the UK too, and the tragic dependence on food banks.
There are many uplifting arguments for emancipating one of the world’s largest economies from fortress Europe to promote poverty-alleviating free trade. Yet, these are being eclipsed by the propagation of pessimistic perceptions of Brexit that are largely untrue.
The EU is disingenuous when it grandstands about free trade.
While it cuts tariffs on raw materials, it imposes tariffs and non-tariff barriers on processed goods, crippling the developing world’s manufacturing potential. This contributes to a lack of vital investment in the poorest countries and means they can’t make enough revenue to afford decent welfare for their people.
Big international companies collude in secretive EU working groups to co-author non-tariff barriers to block produced goods from the developing world that would compete with them, meanwhile tariff-stripping raw materials allows them to cheaply grab whatever they want from land and sea.
Genuine fair trade could bring new industries to the world’s poorest nations, helping them to train a modern workforce, pay decent wages and increase revenues to build hospitals and schools. Instead, millions are kept in crippling agrarian toil, itself becoming increasingly mechanised with no avenue into alternative employment.
The UN estimates that international trade tariffs generated almost a third of income for many Sub-Saharan countries. Without tariffs, they need another way to bring money into their economies. Not being able to sell manufactured goods abroad, while wealthy nations dump surplus in their markets, means they are trapped in a cycle of poverty.
The EU, with its benign and benevolent image, masks this shortfall with foreign aid. Yet, the same foreign aid is used to bribe nations into accepting injurious trade deals; deals that require them to continue relying on foreign aid. Oxfam calculated that if Africa could increase exports by even 1 per cent, this would equal $115 billion, three times more than all the aid put together.
The World Trade Organisation (WTO) recognises developing countries are different from developed countries through their rule of Special and Differential Treatment. But the EU drew up many of their European Partnership Agreements (EPAs) away from the WTO’s gaze.
What can make EPAs so toxic for African nations is the vital role agriculture plays.
It provides the livelihood of between 80 and 90% of the population and supports almost all other industries. It affects every aspect of economic growth. Many African countries had to reduce or eliminate subsidies to qualify for IMF loans and prepare the ground for trade. The UN estimates that this ‘levelling of the playing field’ forced 1.2 billion people to live on less than a dollar a day. Meanwhile, the EU massively subsidises farming, with the Common Agricultural Policy making up 40% of the entire budget, despite being only 2% of the combined economy.
While some progress has been made on tariffs, Brussels has placed many more obstacles in the way of free trade. The OECD calculated there were around 300 non-tariff barriers at the start of the decade. Within five years this increased to over 1200
As long as a product states ‘Fair Trade’ on the label and promises to build new schools, nobody pauses to wonder why coffee beans grown in Africa are not being roasted and sold by Africa. In 2014 Africa made £1.6 billion selling raw coffee beans, tariff free, to countries like Germany, which made £2.6 billion as the second biggest exporter of roasted coffee in the world. Yet, Africa faces overwhelming tariffs of 30-60% to export their own roasted coffee, and so largely, they don’t.
The unilateral abolition of tariffs could not only help developing countries, it could improve the standard of living in the UK. Food bills could fall by 20%, and help curb the tragic dependence on food banks. While Remainers in Shoreditch nosh on nutritious goji berries and avocados, such ‘superfoods’ are too expensive for a working-class family in Boston (Lincolnshire), who can only afford additive and sugar laden processed foods laced with dodgy donkey meat. In a country where obesity costs the NHS £19bn a year and accounts for 40% of their workload, looking at how to cut the prices of healthy food should surely be a priority.
There are understandable questions about unilateral free trade and whether it would harm domestic producers. EU tariffs are largely designed to protect EU continental producers, not British business. Very few tariffs concern UK producers and could be covered by other exemptions when we get to make our own rules. The UK is predominantly an importing country, but faces over 12,000 tariffs on goods from non-EU countries that cost UK shoppers £3 billion in 2015 alone, which we paid to Brussels as part of our Single Market membership.
Most analysts admit Unilateral Free Trade (UFT) would impact on tariff-protected sectors. But 90% of our employment is outside these sectors. Cutting the cost of imports should lower prices and boost employment and wages for the majority.
Believing that the world stops beyond Europe means the continuation of a status quo that exacerbates the most pressing problems the UK faces; blue collar wage depression from uncontrolled migration and rising food prices. It means turning our back on the rest of the world as it absorbs the majority of global growth, and remaining tied to the Euro as it splutters due to problems in its backyard.
I can’t remember the last time one of the world’s largest economies got to rewrite entire trade policy, while the world watches on. We must seize the opportunity to throw open our doors like Hong Kong and New Zealand, and use getting our WTO seat back to champion free and fair trade. But to do this, we must ensure politicians are not straitjacketed by false moralising from the Remain camp. Brexit must win the moral argument.
Alexandra Phillips is former Head of Media for the United Kingdom Independence Party (UKIP), the political party in Britain that successfully campaigned to leave the EU and was aide to its charismatic leader Nigel Farage. She left UKIP after the referendum victory and joined the Conservative Party in order to ensure other big political ambitions are met in the U.K. She is a political advisor and communications consultant in London. Ms. Phillips is also a contributor to SFPPR News & Analysis, of the conservative-online-journalism center at the Washington-based Selous Foundation for Public Policy Research.