The Brexit Opportunity: How Brexit Can Re-Energize UK Development Policy
Brexit, the United Kingdom’s (UK’s) departure from the European Union (EU), is a revolutionary change for UK foreign policy. Although the precise nature of future UK-EU relations is yet to be determined, decades of integration will be reversed with significant powers returning to the UK.
For example, the UK will leave the European External Action Service with full diplomatic policy and representation returning to its Foreign and Commonwealth Office. The UK will also leave the customs union, regaining an independent trade and commercial policy, including the right to sign bilateral trade and investment treaties. By leaving the common agricultural policy and withdrawing from EU aid programs, the UK will regain autonomy over policy areas with significant impact for developing countries.
This newly acquired autonomy has many implications for the UK’s relations with the rest of the world. This includes an exciting opportunity for the UK to develop an integrated trade and development policy predicated on the pre-existing credibility of its Department for International Development (DfID). Established in 1997, DfID’s strong reputation in emerging markets makes it a major UK asset post-Brexit, rather than a burden.
DfID can play a major role in:
- Challenging the isolationist narrative surrounding Brexit by demonstrating the UK’s positive internationalism, deploying both a more generous and more effective development approach than comparable
- Formulating a progressive trade policy for developing countries, a trade policy that can support developing countries to grow their export base while giving UK consumers access to cheaper products
The UK’s strong development record and openness to trade allows it to develop creative synergies between development and trade policy. An independent UK can improve upon the EU’s economic partnership agreements with developing countries by offering greater access to agricultural imports and processed products.
The integration of trade and development policy will alter the current “donor-recipient” relationship between the UK and developing countries to one of “partnership.” Such a change should be formalized post-Brexit by re-launching the DfID as the Department for International Partnerships (DfIP).
The DfIP should seek economic partnerships with developing countries. These partnerships will reduce trade barriers and utilize UK technical assistance to support the conditions for growth in these countries. Providing technical assistance has been a vital part of DfID’s success and a major comparative advantage for the UK in the development sector.
The demand in developing countries for sophisticated finance, legal, and insurance markets, alongside government and economic reform, suits the UK’s first-class services and consultancy sector. The DfIP should significantly expand its use of such services in place of budget support and funding from multilateral institutions. Such technical assistance will support developing countries to overcome obstacles to development while providing a subtle and strategic approach to supporting UK service exports.
DfIP’s raison d’etre should be the matching of needs between developing countries and the UK’s service industries, access to services and technical assistance for the former and the expansion of overseas markets for the latter. This can be done directly via UK-funded technical assistance as well as indirectly from tailored trade deals covering service access in return for goods and agricultural products.
The concept of partnerships can be extended to partnerships between DfIP and the private sector. Their interest in investing in, exporting to, and importing from emerging markets overlaps with poverty reduction objectives. Furthermore, London possesses a greater ecosystem of international consultancy firms and international investors than any other city. This is an ecosystem that DfIP should capitalize on to maximize the effectiveness of UK development support. The new DfIP should be the epicentre of such public-private partnerships for development, initiating a new and exciting epoch in the UK’s trade and development agenda.
Such public-private partnerships should seek to inspire transformational economic growth by removing barriers to investment, such as political instability, regulatory risks, and trade barriers. UK private companies, including City investors, food, and clothes importers have a large incentive to remove such barriers. The DfIP should, therefore, strategically partner with such companies to fund technical assistance aimed at removing such barriers.
Twenty-two years after the creation of DfID, the UK finds itself in a position to exploit the post-Brexit opportunities afforded to it by repatriating trade, development, and agricultural policy. This is surely an exciting and advantageous time for UK development policy.
Steve Macey is the author of a recently published eBook “DfID 2.0: UK development policy post-Brexit,” which sets out a creative agenda for the UK to integrate trade and development policy after Brexit, available at Amazon.