Saturday, 25 February 2017

There is plenty to do in a post-Brexit world

If we had a grown up media the ratification of the WTO Trade Facilitation Agreement would be major news. It's bigger than TTIP and CETA combined. Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives.

To put that in plain English; we could allow any old garbage over the borders and that would boost trade. But we don't want to allow any old shit for a number of really good reasons. You don't want us importing baby formula laced with floor cleaner.

In order to prevent this from happening we have standards, systems to supply proof of conformity and inspection facilities. With that goes a shit load of paperwork and with a mishmash of different regulatory codes and forms, this red tape translates into prohibitive delays where very often there is little point in trying to export.

If, however, we agreed a global standard on paperwork and mechanisms for conformity assessment, all processed through electronic systems then goods cross borders faster.

One of the benefits of this is that if you have the correct paperwork then you reduce the number of inspections which reduces the opportunities for corrupt officials to pilfer items from your container. We can even have it so that even lowly customs officials don't have the authority to break the customs seal on a container if the scanner says the box is kosher. It also reduces the scope for bribery. One of the big problems for African trades is corruption. The WTO Trade Facilitation Agreement goes a long way to eliminating the worst of it.

We can though, for our own purposes, expand the definition of trade facilitation. Supposing you have a field in the back hills of Kenya and you grow something. You can't really export it because you know that if you load it onto a truck then that truck is sat in a queue at the port for eight days and by the time it gets loaded onto to a ship it's already spoiled.

That is assuming it doesn't spoil while waiting in traffic. Gridlock in African cities means a total systemic jam. Nothing moves for hours. You miss your container loading window. Something as simple as a traffic light system is a game changer.

There's one innovation that really helps here. Containers with their own on board refrigeration units. Known as "Reefers". These however, are quite expensive to buy and expensive to run. We need to boost the economies of scale. One measure we can take is to ban live animal export. It's better for animal welfare and we increase demand for reefers thus bringing down the cost.

But then if all the customs documentation is going electronic, what use is that if you are producing goods out in the sticks? This obviously means that access to the internet has to be improved so we then need to look at erecting mobile masts across Africa.

And then what if a business succeeds in exporting and needs to expand? That's where Africa needs better access to credit and micro-financing. This is where we need better governance and a more effective means of registering traders and a reliable means of credit risk scoring.

So you can already see there are any number of measures we can take by investing aid money wisely instead of squandering it on humanitarian causes. For sure, we all want to see nations pitching in when there is a natural disaster but when it comes to things like famine, more often than not you are looking at a failure of government - and governance. Unless we are prepared to make measured incursions to improve governance then all we will do is count the dead, time after time.

And then we get to my favourite subject. Dredging. At low tide you can't get a ship into a port unless you dredge the channels. If you do that you can load and unload ships all day rather than waiting on the tide. Just a simple operation can double trade volumes and cut costs.

This is why the Trade Facilitation Agreement, along with a complete rethink of aid and trade is so vital. It doesn't matter if by some miracle the WTO succeeded in bringing all tariffs down to zero. There are still physical and bureaucratic barriers to trade that hold Africa back.

We could relax our standards to bring Africa into the fold but I don't want to see that happen. I view it as the racism of low expectations. What we need to do is to spend our aid budget on technical assistance to ensure that lesser developed nations can meet the standards we impose and in the process improve their own governance and quality of life.

As much as eliminating congestion is good for the profit margins, it is better for air quality, extends life, and dramatically reduces road traffic deaths.

What we also note is that more developed countries with a growing middle class are more likely to have fewer children as infant mortality collapses. If you subscribe to the notion that overpopulation is a problem then trade facilitation and development aid is part of the solution - not moralising and birth control initiatives.

According to UNCTAD and OECD estimates, the implementation of the WTO Trade Facilitation Agreement costs between $4 to $20 million per country, while the impact on exports, and hence jobs, would be many times greater. The WTO estimates it could boost developing country exports by up to $730 billion per year - and global GDP by $1.3 trillion.

It may seem implausible and entirely hypothetical but technical and regulatory harmonisation is massively more beneficial than agreements on tariffs. Says what you like about the EU, the ability to move goods freely across borders without compromising health and safety and the rule of law is something we should celebrate and expanding it beyond the confines of Europe is something that is in all of our interests, especially if we want to mitigate the global migration crisis. There is also that general rule of thumb that when goods cross borders, soldiers do not.

In recent months globalisation has been blamed for much. The globalist politicians are despised. I can understand the latter but globalisation is happening whether we want it or not. For our generation, the question is how we obtain the maximum benefit from it while preserving our own democracies. The WTO, to my mind represents our best hope lest we be back to beggar-thy-neighbour trade policies, trade wars and conflict.

Automation and technological progress have changed the way we live and work and eliminated mass employment. The game has changed. We must resist the urge to blame globalisation. What matters is how we harness that progress in the common good.

The rejection of globalists is understandable. Sweeping decisions are made with neither consultation or consent. Various treaty mechanisms have eroded sovereignty and change is happening faster than we can understand it. We have a ruling class of unelected technocrats eliminating jobs at the stroke of a pen in the greater good without us having the means to say no. That is what made Brexit necessary. What we have in the WTO though is a system designed for genuine multilateralism where members can refuse measures of their own volition provided there is just cause.

I believe that is what the EU should have been, and the fact that it was designed to be anything but is why I gladly support Brexit and hope to live to see the day when the EU is made redundant and European nations can take their place in a global community of equals. Brits may reject globalism if forced into it, but they might well say yes if we actually ask them. Something our ruling class never thought to do.

This may well be a rose tinted evaluation, but I am not, as some believe, a cynic. I think this can work and we will be better off if it does. It is far more ambitious and inclusive than the EU and I want to see the UK championing it and steering it. I detest the dismal obsolete rhetoric of Brexiteers but I despise equally the narrow eurocentric myopia of europhiles.

They said in 1975 that we must join the common market so that we have a say in the rules. If that logic was sound in 1975 then it is sound now. We must leave the EU so we can be a participant in a global single market and seek a genuine multilateral system.

This won't be easy. We will need to build coalitions and forge allies and we won't be able to dictate the agenda. We must also be cautious of those who want to turn global governance into global government - and we most definitely need to ensure that the system is made transparent. We need to shine a light on it and take the time to understand it. It has flaws and is equally prone to corruption as the EU, but I see no moves toward a common flag, currency and social policy. If anything can work, it is this. If not, then we are back to square one.

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