Navigating the Brexit Maze to Find Development Goodies

Love it or hate it, Brexit implies some of the biggest changes to European trade and development policy in a generation. Decisions made over the next three years will have important consequences for people living in developing countries, possibly for decades to come. That is why we are scaling up our work at CGD to assess the policy choices realistically and find new opportunities to improve development outcomes.

Shortly after the vote, Owen Barder pointed out that UK exit from the European Union creates both threats and opportunities for development. It is probably fair to say that most development thinkers found it easier to identify the threats at first blush—particularly where hard-won policies on aid, trade preferences, and climate change appeared to be at risk. Those risks are real. There will be more challenges in other policy areas: cross-border investment, pharmaceutical licensing, and mutual legal assistance, to name a few. At the same time, Brexit offers a chance for policy makers in the UK, in the EU, and in developing countries to think afresh about what could be done to mark real improvements, both quickly and over the longer term.

In our recent paper, we set out a handful of immediate policy opportunities for the UK government:  ideas that meet the triple test of being good for sustainable development, good for the UK national interest, and capable of implementation without damaging UK-EU negotiations on Brexit. We focused on four areas that meet the triple-win test:

• First, the UK could move quickly on trade preferences for development. It could unilaterally declare its intention to continue Duty Free Quota Free access for least developed country (LDC) exporters. At the same time, the UK could signal it intends to make that access more meaningful by introducing simplified rules of origin that would benefit LDC exporters and UK consumers, while sending a strong message that the UK is open for global trade.
   
• Second, the UK could use its independent voice to step up international action against slavery, leveraging its Modern Slavery Act to press for more effective legal sanctions and supply chain scrutiny on a global basis, to reduce organised crime in the UK and to protect vulnerable individuals everywhere. Since our report, Prime Minister May signalled a move in that direction in her maiden speech to the UN General Assembly.
   
• Third, the UK could press its leadership position on carbon pricing to push for new international coalitions for ambitious action on climate change. Setting a clear policy direction now would give businesses and consumers in the UK the confidence to plan, while enabling fresh cooperation unencumbered by EU climate laggards.
   
• Fourth, the UK could plan for new migration arrangements that work for mutual benefit. The UK will continue to need skills in key areas including health care. The ready supply of EU workers could be replaced by new Global Skills Partnerships—proposed by our colleague Michael Clemens—to meet UK needs while dramatically increasing the supply of high-quality skills in developing country partners. Prime Minister May has recently stated that she is opposed to points-based migration systems. While complex scoring systems therefore seem to be out, any new visa system could include a preference for individuals from developing countries when the endowments of two applicants are otherwise equal. This proposal would put an end to hidden forms of discrimination while encouraging high quality talent and remittances.
   
• The paper also identified other promising areas for UK policy innovation—reformed agricultural subsidies, new aid arrangements, a fresh approach to UK-based smart sanctions, and more cost-effective humanitarian assistance.  

CGD will do much more work over the coming months to elaborate some of these ideas, and to develop more as the path to Brexit becomes clearer. For the UK, while some policy opportunities arise immediately, others will depend on the choices made about membership of the European customs union and single market. The trade issues are complex, but in any scenario there will be room for concrete and actionable proposals.

What will Brexit mean for EU development policy? CGD will also be examining new opportunities arising in Brussels—where the UK has been a formidable influence on development cooperation policy—and where new arrangements for trade, climate change, migration, agriculture, tax, financial transparency, and security policy will create opportunities for fresh ideas.