Friday, 13 April 2018

Rethinking aid and trade

Today's Twitter thread...

One of the first tangible benefits of Brexit I've seen is the emerging reform of DFID where it is becoming more of an arm of trade policy than a state owned humanitarian NGO. I would like that to go much further and rethink trade.

I do not think we should be wasting too much effort on free trade deals largely because they are of questionable value and encourage inefficient value chains. Any work on tariffs should really be reserved for multilateral activity.

Instead we need DfID as the spearhead of our trade policy. There is no reason why we cannot pursue humanitarian goals and enhance our trade while we are at it. For a start we can do a lot with medicines and pharmacy products.

Exports of pharmacy products have more than tripled over the past 15 years, with most of these gains obtained from extra-EU transactions. This is also the third largest industry in the UK, contributing 10 per cent of the country's GDP.

This is undermined by a massive global trade in counterfeit medicines and adulterated products. A recent World Customs Organisation raid netted some 113 million illicit and potentially dangerous medicines, with a total estimated value of €52 million.

Of the 243 maritime containers inspected, 150 contained illicit or counterfeit products. So there's a need for greater scrutiny of this type of fraud - which means firstly we need to assist developing countries with their customs controls. We're acquiring some expertise there.

We also need to look at the proliferation of standards and their harmonisation, while investing more in global surveillance networks. If you want an active trade policy then you have to spend some serious money.

The obvious benefit of this is that genuine medicines get to where they need to go instead of the poison currently in circulation. Works toward our development goals while improving the health of developing nations.

But more to the point, it increases the profitability of existing value chains on sectors most important to the UK. Especially if we're daft enough to leave the single market. We could well lose a lot of our pharmaceutical manufacturers unless we give them good reason to stay.

Improving the efficiency and security of supply chains is worth substantially more to the UK than tinkering with tariffs and in terms of improving distribution networks there is a lot to be done.

We could quite easily confine the activities of DfID to just a handful of pursuits and it will still enhance UK trade. As part of the development remit would be well advised to invest in the UNECE road Safety Trust Fund to help reduce traffic fatalities around the world.

Mundane as that sounds it has massive potential because it's a broad area of concern. Everything from child seats to traffic cones, road infrastructure and safety training services. Things the UK excels at.

We've heard a lot about growth in the far east and what we are seeing, in Malaysia especially, is a space race to improve standards of civic governance - driving tests, MOTs, instructor qualification, pedestrian road safety awareness, road maintenance, parking controls.

This are all things we take for granted but the road fatalities, very often 100% preventable continue to plague India and the far east. That right there is a market in goods and services - and a market for exporting UK governance ideas.

What we are starting to see, with a growing middle class and a wealthier consumer base is demands for better food safety, better road safety, trustworthy medicines and good governance.

These are all development goals shared by most of the global forums where we see UNECE, ISO and others coming together to make that a reality. There is no reason why DfID should not be an active player - especially since DfID is respected globally.

Some would rather we didn't spend on foreign aid, but it is an essential component of any trade policy and if we can meld our trade and development objectives then we kill two birds with one stone.

To do this we need to shift the debate beyond the dismal "free trade" dogma of Tories and the insular technocratic nonsense of trade wonks who prattle on about FTAs. FTAs are better suited to the EU approach but we need to do things differently.

The UK probably won't bother with something as dumb as a customs union agreement but we can be sure there will be a number of obligations and technical restrains that prevent us meddling with tariffs. We therefore need better strategies to make trade more profitable.

Meanwhile we can use our right of initiative in the global system to work on multilateral solutions for medicines. Ideally a global system of approvals, which for now may be pie in the sky but we can chip away at it sector by sector.

Leaving the single market will be a costly mistake and one which will badly dent our trade, but even then the UK is not a down and out. Plenty of mid-ranking powers make valuable contributions. Japan, Israel and Norway worth examining. There is life after Brexit.

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