Britain’s tumbling currency has cost developing countries including Kenya millions of dollars because remittances are now worth less, while post-Brexit trade has already suffered to the tune of over $500 million.
This is according to UK-based think tank Overseas Development Institute (ODI) which is also predicting huge problems in the future due to Britain’s decision to leave the European Union (EU).
It is feared that trade deals with African countries in particular may suffer because the UK is either unable or unwilling to deal with the complexity of making new arrangements.
In a series of essays published by the ODI, the authors agree that emerging markets in Africa, the Caribbean and the Pacific are particularly at risk, to the tune of £172 million ($193,000) annually, if their existing trade agreements with the UK market are not maintained once Britain leaves the EU.
This is because most developing countries currently benefit from preferential access to the British market through the EU’s trade policy.
Under the EU’s generalised scheme of preferences (GSP), developing countries pay little or no duty on their exports to Europe as they have duty- and quota-free access to all products except arms and ammunitions.
The director of the UK Trade Policy Observatory, Professor Leonard Alan Winters, who authored one of the essays, told The Guardian that failure by the UK to maintain preferential trade deals could have unfavourable consequences for both trade and foreign policy.
“A number of developing countries – take Kenya, for example – have got serious export industries who sell to the UK,” Mr Winters said.
“If suddenly they ended up with some tax bill of an extra £2 million ($2.2 million) in order to sell their current amount in the UK, they’d search out [sales] to other markets.”
ODI says the potential to define a new trade strategy, agree on new trade agreements and use new aid and trade tools constitutes a major opportunity for the UK to continue championing the cause of trade and development.