UK’s recent exit from the European Union (Brexit), should impact the economy of developing countries if their free-trade agreements are not maintained. “Developing countries could lose €378 million per year if existing trade agreements with the United Kingdom are not maintained in the event of Brexit,†the Overseas Development Institute (ODI) and the UK Trade Policy Observatory said.
Indeed, developing nations, African nations especially, the Caribbean and Pacific, benefit from a Generalized Scheme of Preferences established by the European Union (EU), which allows them to operate in the British market. The GPS offers poor countries free, unlimited access to all products, arms and ammunition excluded, and allows them to pay little or no duty on their exports to Europe.
According to Prof Leonard Alan Winters, director of the UK Trade Policy Observatory, “a failure by the UK to maintain preferential trade deals could have unfavourable consequences for both trade and foreign policyâ€. A number of developing countries – take Kenya, for example – have got serious export industries who sell to the UK,†Winters said. “If suddenly they ended up with some tax bill of an extra €2.4m in order to sell their current amount in the UK, they’d search out [sales] to other markets, he added.
UK’s exit from the UE has devalued the Pound. The ODI shows the consequences of this depreciation on developing countries explaining that remittances, estimated at €8.3 million in 2015 by the World Bank, do not have the same value as before the Brexit referendum.
London, in its new commercial strategy, must take into account the role of developing countries on its market, the ODI concluded.
Alain Okpeitcha
ODI says Brexit could cost developing nations about €400m
Rédigé le 15/09/2016