Friday, 21 April 2017

Aid is essential to a global Britain

Theresa May has moved to quash speculation that the government could drop its pledge to spend 0.7% of national income a year on foreign aid, saying the commitment “remains and will remain”.
After days of speculation that the policy would be watered down, the prime minister said Britain should be proud of meeting the UN-backed target, but stressed the need to spend the money more effectively.

Many on the right would call this "virtue signalling" and gesture politics. I probably wouldn't disagree in ordinary times. I did oppose an arbitrary target when it was announced. That said, what is done is done. Right now the UK is committed to possibly one of the most radical foreign policy moves ever - to leave a peacetime alliance. More than ever political gestures and signals count.

To Mrs May's credit and in defiance of her back-benchers she has been keen to talk up the global rules based trade system and has resisted sweeping moves to disengage from various climate accords. While I remain a climate sceptic this is good politics. Underpinning the Paris agreement is an unspoken economic accord carefully hammered out over time and whether it be good or bad is neither here nor there. Maintaining some degree of order when we have Brexit on our plate is a smart move. We do not want to position ourselves as the global pariah.

What needs to follow now is a debate about how we use that aid spending to our advantage. There have been some suggestions that some of the budget be diverted to defence which is not entirely our of order. Since our navy is committed very often to humanitarian efforts there is no reason by the defence budget should take the hit. Moreover, in terms of global operations a Royal Fleet Auxiliary ship is a far more useful base of operations than a frigate and given the functions they can perform we could easily justify expanding the RFA fleet from our aid budget.

As it happens the UK is exploring selling of HMS Ocean, a helicopter landing amphibious assault ship. It performs a particular function which cannot be adequately replicated by the new QE carriers and there is no better platform for humanitarian relief efforts. I see no reason why some of the aid budget could not go toward plugging the capability gap.

As to our other aid endeavours, this week the WHO reminds us of the humanitarian and economic value in seeking cured for neglected tropical diseases in which the UK is a leading contributor. Britain being a world leader in medical research is never going to be a bad thing.

Meanwhile I learn that the Department for International Development (DFID) and the Government of Kenya signed a USD 30 Million agreement to support the dualling and improvement of the existing Port Reitz and Moi International Airport access roads. This will reduce time to enter/exit Mombasa port by two hours. This is exactly the sort of spending this blog has argued for more of. All the bureaucrats in the world hammering out paper agreements is of no use of there are physical barriers to trade.

The right wing are most vocal in denouncing foreign aid as wasteful and corrupt. It is certainly true that much is lost to waste and corruption and we will never know precisely how much. We can't even be sure of the value of our more successful ventures. That said it would be a mistake to draw down on our foreign aid spending. It has certain propaganda and soft power uses and it should not be forgotten that much of our spending is experimental. We take risks that the private sector likely would not.

In this, a degree of waste is to be expected. It goes with the territory. We could say the same of UK aerospace which has a long and proud history of waste and failure - the legacy of which is the UK as a knowledge centre for aviation. The value of this cannot be understated. Moving forward one would hope that Brexit will lead to greater accountability as we will eventually be spending directly rather than via the EU and subsequently NGOs.

As to future spending I see no reason why we should not meet or even surpass the aid spending target. By leaving the EU and the single market UK trade is certain to take a hit and we will likely lose some of the trade we enjoy via EU third party agreements. Not all of these will be carried over as before. The UK will need a substantial budget to commit to trade facilitation. There isn't much standing in the way of getting agreements on paper but if we want agreements to be properly utilised then we need to ensure physical and bureaucratic barriers are removed.

The justification for this should be obvious. The UK is keen to curb immigration and that means removing a number of push factors. Boosting trade and connecting more customers to the internet has obvious value. If we remove a number of push factors that then justifies the UK in taking a harder line on illegal immigration.

A crucial part of this is running projects to assist in meeting global and European export standards. This is something the WTO Standards and Trade Development Facility is geared toward. The STDF is a global partnership that supports developing countries in building their capacity to implement international sanitary and phytosanitary (SPS) standards, guidelines and recommendations as a means to improve their human, animal, and plant health status and ability to gain or maintain access to markets.

So far as I can see it does some incredibly good work but not nearly enough of it. If Britain wants to fly the flag for multilateralism then that is where the investment must go. STDF is underfunded and a hugely overlooked aspect of trade policy. If Britain wants to boost trade then trade facilitation via the STDF and DfID is absolutely critical.

Further to this more research is required in terms of standardisation on any number of things from food colouring to e-commerce. All of this is geared toward reducing barriers to trade. The WTO is presently geared toward making trade work for SMEs and increasing access to the internet.

For a long time now the debate around aid has stagnated with those on the left seeing aid as a slush fund to advance the climate change agenda while those on the right see virtually no value in it at all and would rather it be spent on domestic concerns. To reshape the debate we have to get past the idea that aid is a charitable endeavour. It is and should be a central pillar of our foreign and trade policy. We are committed to spending to a target but nowhere does it say we cannot spend it in the direct national interest.

One of the main criticism of aid is that it undermines good governance and creates a culture of dependency. There is strong evidence even from the NGO community that confirms this. Humanitarian aid very often is counter productive. It is long past the time to answer those critics and ensure that we spend the money on eliminating the causes of poverty. Trade is central to that.

Further to this one of the bigger barriers to trade is corruption and counterfeiting eating into value chains. This is where economic assistance along with technical assistance with the uptake of new tracking technologies can enhance and streamline trade. This along with port automation removes many of the opportunities for corruption. There is nothing preventing us investing in exactly that kind of work.

Right now Britain is vulnerable. Our reputation as a global player in on the line. UK aid spending is more critical than ever. What we need though are ideas on how to turn it to our advantage. Aid policy has been rudderless in recent years, in part thanks to being in the EU and outsourcing our trade policy. We are beginners at this. That should make this an exciting time as the UK is geared toward trade innovations.

What we will likely find is that the "bumper deals" as promised by the leave campaign are non-existent. Central to all modern trade agreements now is a commitment to regulatory harmonisation. In this, India is already working toward the implementation of Codex standards and the EU as a global regulatory superpower dictates much of the direction. There isn't the wiggle room for trading off standards and regulations as described by prominent Brexiteers.

What we can do though is enhance the utilisation of existing trade agreements by spending on trade facilitation. That more than anything will put the UK at the front of the queue by way of being the most visible and the most committed.

It is often said that the UK is not big enough to wield "clout" in the global arena. This is a misnomer. At the top end of international relations influence is proportionate to the expertise and commitment that nations bring to the table. Norway chairs a number of committees on everything from human rights to fishing. It is that level of commitment that puts is in an advantageous position to exploit emerging markets and steer their development.

Much of the post-Brexit debate on trade is still bogged down in partisan referendum era bickering. Remainers are keen to point out that UK efforts to obtain free trade deals will likely be of little avail. This comes as no surprise. The EU model works if you have a size advantage which we obviously do not. Consequently we have to play the game a different way. In this, without having to seek prior approval from other EU member states we are free to launch our own initiatives. We can be more agile. If we carry over the same old thinking then we cannot expect different results.

To this end we should be looking at making DfID central to our trade efforts rather than it being a fringe department functioning only as a means to meet an arbitrary target. We need to be funding research on trade enhancing technologies and looking for multilateral solutions to streamline customs worldwide. There is still much to be done in terms of data sharing, market surveillance, e-commerce and customs processes.

I take the view that we should not have signed up for a target on aid spending but now that we have there is little to be gained diplomatically by rowing back on that. It's one of those hypocritical international games we play in the arena of global politics. Much of it is narcissism and political vanity but the gestures and signals still have political utility. The challenge for the rest of us is how to make good on it and to do something useful with it.

When we look at the more egregious failings of aid it is tempting to retreat from aid entirely. This is something Britain cannot afford to do. An active and independent trade and foreign policy to my mind was one of the key incentives to leave the EU. For as long as euroscepticism has existed we have spoken of a "global Britain" and now that we are leaving it has become a core government policy and a political slogan. We have to ensure that our actions speak to that rhetoric.

The very last thing we want to see is a race to the bottom in standards and regulations. There can be no bonfire of regulations. Our aim should be to lift up standards for everybody and use our aid policy to increase participation in global trade. Adopting a hostile footing and turning our backs on aid would make us everything we said we wouldn't be when we campaigned to leave the EU; inward looking, protectionist and isolated.

Global Britain as a concept, if it means anything at all, means taking a full and active role in all of the global bodies working toward the elimination of poverty worldwide, if not out of charity then out of enlightened self-interest.

Despite the relentless negativity of remainers, the UK is not without friends and being a prosperous, first world independent state is not beyond our grasp. We can still be a respected and influential country if we tap into those same instincts that shaped the EU into what it is today. There are obvious advantages to economic integration as we have demonstrated and so now we must deliver that to the rest of the world. We cannot do that if we cave in to right wing populists and certainly not if we listen to the "remoaners" who think the UK is finished. There is life beyond the European Union and we can still show the world a thing or two.

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