Liam Fox leaving Downing Street. Photo by Dan Kitwood/Getty Images
Putting all our eggs in Empire 2.0 – risking rights & living standards after #Brexit
Ahead of Commonwealth Day 2017, Commonwealth trade ministers were in London last week, hosted by the UK international trade minister and leading Leave supporter Liam Fox. The media claimed that several Commonwealth countries were ‘first in the queue’ to do a trade deal with the UK after we leave the EU, described by some as “Empire 2.0”.
And Liam Fox was at his vacuous best on Conservative Home, as befits a Minister who hasn’t actually got a job until we leave the EU and can start negotiating trade deals for real.
But there are risks with putting all our eggs in the Commonwealth trade basket: the two main ones being the impact of such trade deals on working people’s rights and our public services; and the haste that will be needed if such deals are to repair the economic damage that leaving the EU could do to the British economy, jobs and living standards.
Let’s take that last one first, because as I mentioned, everyone is going to be ‘first in the queue’, apparently. The Daily Express said it would be Australia and New Zealand, Global News said it would be Canada (yes, that’s a Canadian outlet. What a surprise!), while City AM showed some political correctness by mentioning some of the vast non-white majority of Commonwealth citizens, in the shape of Mozambique, Bangladesh, India, Brunei, Ghana and Sierra Leone. Can they all, really, be first in the queue?
They’re going to have to be, because expectations of increased trade with the rest of the world have to be sky high to compensate for any decline in trade with the rest of the European Union. Because the UK trades about half of our imports and exports with the rest of the EU – with whom we have one, all-important trade deal called membership of the single market – for every drop in trade with the EU, our trade with the rest of the world (the 135 members states of the World Trade Organisation who are not already EU members) needs to go up by the same amount.
If we don’t have trade deals in place with all those 135 countries (or at least, the biggest economies among them) by the time we leave the EU, we won’t be able to substitute that global trade for the trade lost with the EU, which would be deeply damaging to the UK economy. (This partly explains why business and unions are united in demanding a transitional arrangement between the conclusion of UK-EU Article 50 divorce proceedings in 2019 and the actual departure from the EU.)
So we need to do lots of trade deals very quickly, and Liam Fox is obviously hoping that ‘our friends’ in the Commonwealth will be gagging for such deals and not at all keen to use our desperation to do such deals that they take unfair advantage of that desperation and the lack of capacity we have to handle multiple negotiations at once.
So what sort of deals will we be able to do in that time frame, with so few experienced trade negotiators (spoiler: they’re likely to be bad ones, you know, the sort Theresa May says are worse than ‘no deal’ at all)?
First, we’re concerned that such deals will undermine workers’ rights both in Britain and in the countries we do deals with. The EU has trade deals with over 90 members of the WTO, many in the developing world, and all of them contain some form of protection for workers’ rights. Although this is a sweeping generalisation, the ones with poorer developing countries require their compliance with ILO core labour standards prohibiting child and forced labour, and protecting the right to join a union and the right to strike, with sanctions if the country concerned breaches those requirements. But those with richer countries (like Canada and Korea) contain much weaker provisions that simply involve a stiffly worded letter. Neither of these provisions is doing a lot for workers’ rights – especially not in the UK – so we will want something stronger in Liam Fox’s trade deals.
That would be in line with the spirit of the Commonwealth, which as well as being a relic of Empire is also, now, a community of values such as human rights (it’s one of the few international organisations to have suspended and expelled member states who have breached fundamental human rights like democracy, for instance.) So the TUC will be writing this week to the Commonwealth Secretary General urging her to make sure that when the Commonwealth discusses trade, it also discusses trade union and other human rights, and ensures that trade agreements don’t undermine either.
But that isn’t all. These days, so-called trade agreements usually contain protections for foreign investors, like the infamous Investor-State Dispute Settlement (ISDS) system, giving foreign investors access to special courts empowered to impose punitive financial judgments on governments, regardless of their democratic mandate. Despite their expansion over the past half century or more, there is no evidence that they actually increase foreign investment, as their supporters argue: they are simply a way of transferring the risk of investment overseas from the investor to the people. Yet they can undermine national sovereignty as well as undermining public services, minimum wages and environmental protection. They should play no part in future UK trade deals – we should follow Brazil in refusing to sign any trade deal containing such clauses.
So, there are all sorts of risks involved in doing quick and dirty trade deals after we leave the EU. Sensible trade policy would seek to retain as much access as possible to the EU single market (retaining membership of which would be the best deal of all), and a transitional period between the end of our EU divorce negotiations and finally leaving the EU altogether.