Thursday, 18 August 2016

Trade facilitation: Life after Brexit

In the modern age trade is as much about services and intellectual property as it is trade in goods but trade, still, more than anything, trade is about feeding the world. And in the modern age we in the West are intolerant of substandard and dangerous food imports. We have strict import standards and a bewildering array of inspections and processes to ensure the food that reaches supermarket shelves is safe. So much so that this is a major inhibitor for food exporters wanting to break into the European market. It is our regulation, not tariffs, that deters trade.

So if you wanted to invite more goods into the country, leading to cheaper food you might think that means a lowering of standards and a number of compromises. But why should it? Since the rules are now global and the experts in this are Codex Alimentarious, there is no reason why we should not demand that food exporters conform to these rules.

But as we found when adopting EU rules, implementation of regulations is not easy and it is not cheap. That is why a number of producers simply do not bother with the EU as a market. But Britain can change that. I have written on this subject a number of times now but there are a number of stories in the media that bring it home this week. Or at least the media that I read.

Japan is presently working on exporting its disease resistant rice harvesting technologies to Nigeria, but at the same time it is doing extensive work in helping rice production meet their own import standards. The harvesting machinery comes at a discount and as I understand it the conformity training, along with the systems of governance, come for free. But that is the essence of international development aid. This is purely a matter of trade facilitation.

Once you have established an overseas production line and a supply chain, that chain brings obvious domestic benefits in sourcing cheaper food but there are also financial services involved and as a major services economy, I don't need to sell you on why that is worthwhile. Moreover, there are GM improved stocks that can be sold and new farming methods that require western expertise. When it comes to creating new avenues for trade, trade facilitation is a no brainer.

Underpinning this though is a complex set of rules which must be adhered to and maintained. It only takes one fouled shipment for confidence to collapse in those exports. The recent horsemeat scandal reminds us why this is important. Food supply chains are vulnerable to food fraud which is why you need good surveillance systems and a mutually recognised system of standards and inspections. All of it comes under the bracket of food safety.

In these areas it requires WHO input on GM produce, FAO input on sustainable farming techniques and Codex input on safety techniques. In this, sustainability is not some mushy UN mantra. It's one thing to produce a crop of rice, another to farm in such a way that the land can be re-used and that irrigation systems do not cause transboundary conflicts. Water taken from aquifers can sometimes be a vital source of water for livestock. There are all manner of concerns including safeguarding soil quality. In this, the science of food production matters a great deal. Something Britain is a world leader in.

What seems a superficially simple transaction becomes a long process over many years in order to create lasting economic gains for lesser developed nations and it's much harder to do against a backdrop of political instability. Especially if the EU is causing it.

In this regard, we may find partner nations kicking back at unreasonable standards and requirements whereby they have to raise their own objections at the many global forums and negotiate waivers and exemptions. And of course, where you get deviations from standards you find that the free flow of goods is interrupted because rules of origin procedures then work their way into the supply chain. If a product is coming from a source with exemptions then the importer needs to check to see if what they are importing is actually legal (another source of bureaucracy we would like to be rid of). And so it seems that food safety is about to become increasingly political and in fact it will be the very essence of trade in terms of opening up new African markets.

For sure, we will be trading in services and other sectors but it will all revolve around trade in new agriculture. That's why Codex will become increasingly important to the UK as we depart from the EU and deal with the source of the regulations directly rather than passively accepting them from the EU middleman. We will for once have the right of initiative and a free vote. If we play our cards right, Brexit will mean we have all the tools to heavily invest in trade facilitation and make an impact where previously we would have to seek permission from the EU.

This, though, is not automatic. We first have to educate policy makers in what trade facilitation is and move the debate about trade beyond tariffs. And we really do need to have a major debate about the role of global regulators. This is not going to happen any time soon. It took several years just to get the media to examine issues beyond the UK borders and even acknowledge the EU. Now we have to go through the same process all over again.

Moreover, Brexit comes on the back of a wave of general hostility to foreign aid after it has been so badly squandered as we rode two foreign policy horses. We will also have to re-educate policymakers on aid and its uses as a trade tool and change attitudes toward it. We will have to move to a mode of effects based foreign policy where trade and foreign policy are as one. Again, this will be no small accomplishment. Feeding ideas into our glacial system is a major chore and new ideas are met with fierce resistance.

In this regard, it's not actually a bad thing that we won't be making any radical moves out of the EU's sphere of influence for a long time. After forty years of abandoning key policy areas like trade and regulation we lack the necessary institutional knowledge in the civil service. All that has to be rebuilt. Some would have it that this is a reason to remain in the EU. Personally I think it absolutely criminal that we ever allowed it to get to this stage in the first place.

The point, though, is that there there is life after Brexit. There is still much to be done in terms of enhancing and widening trade and underpinning it all is regulation. If you're not talking about regulation then you are not talking about trade. Now that Britain is leaving the EU we will have a full voice in the creation of the rules and a means to negotiate when they do not serve our needs. It is through that process that Britain enhances its role and its influence in world affairs - by being a real practitioner of internationalism rather than playing lip service to it with vanity gestures like signing climate accords.

This is a prospect I find appealing and to a point exciting. Insofar as one can be excited by food safety regulations, that is. Between that and my fixation with shipping containers, that might seem pretty sad - but then you guys watch the Olympics. I don't think I'm the one with the problem.

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