What would Brexit mean for UK aid and trade?

By Kevin Watkins 15 June 2016

U.K. Prime Minister David Cameron meets with European Parliament President Martin Schulz to seek support for the reform of the U.K.’s EU membership. What are the trade and foreign policy implications for Britain's aid strategy in the event the United Kingdom leaves the European Union? Photo by: © European Union 2016 - European Parliament / CC BY-NC-ND

What are the implications of Britain's referendum on EU membership for international development? Kevin Watkins, Director of the Overseas Development Institute and newly appointed head of Save the Children UK, addresses that question in this second installment of a two-part contribution to Devex. Today, we publish Part 2, which looks at wider issues, including trade and foreign policy.

The European Union referendum campaign has seen appeals to national sovereignty confronted by warnings about the economic consequences of Brexit. While there are many different threads on both sides, one of the weaknesses of the Remain camp’s case has been a failure to take on the sovereignty argument — and to highlight the potential for engagement with the EU to generate twin-benefits for the U.K., and for Britain’s leadership in international development.

This is the central theme in an important contribution to the EU debate by former Prime Minister Gordon Brown. In his recent book “Britain: Leading Not Leaving,” he makes the case that a mix of national autonomy and deeper cooperation with the EU could play a vital role in addressing global challenges such as job creation, infrastructure investment, tax evasion, security and the protection of basic rights.

In many of these areas, U.K. engagement with Europe could help drive a broader global development agenda. Take the case of tax evasion. Like other countries across the EU, national revenue authorities in Britain are grappling with limited success to combat tax evasion and money laundering through offshore centers. As the former U.N. Secretary-General Kofi Annan has argued, tax evasion through offshore centres has devastating effects on development prospects for sub-Saharan Africa. Collective action through the EU could help the U.K. tackle a national problem while supporting the efforts of African governments to mobilize additional revenue.

What would a Brexit mean for EU development assistance?

What are the implications of the United Kingdom's referendum on EU membership for international development? Kevin Watkins, executive director of the Overseas Development Institute, addresses that question in a two-part contribution to Devex. Today, we publish Part I, which looks at development assistance.

Climate change is another area where engagement with the EU could deliver results. The EU played a positive role in securing the 2015 Paris climate agreement. Looking ahead, the development of an EU renewable energy grid, linked to the development of low carbon finance, could help the UK achieve the ambitious targets set for reducing carbon dioxide emissions, while creating jobs in the low carbon energy sector.

None of which is to suggest that deeper engagement with Europe is an automatic route to enhanced U.K. leadership on development. Outcomes will depend on the future direction of the EU itself. As highlighted in a recent poll from the Pew Research Center, the backdrop to the U.K. referendum campaign is a profound loss of trust and confidence in European institutions. If the Remain camp wins the referendum, fundamental reforms of the EU will be required to change this picture.

The migration crisis and Europe

Migration is one of the areas in which a failure to develop credible policy responses is damaging to both the EU’s standing and some of the world’s most vulnerable people.

Over 200,000 migrants have arrived in the EU by sea since the start of 2016, and this is before the summer spike. Almost half of these people have been driven out of their homes by the conflict in Syria. Others are escaping violence, persecution and poverty. Many are moving because they aspire to a better life. In interviews with Syrian refugees, researchers at the Overseas Development Institute found that a concern to get children an education was one of the strongest magnets pulling people to Europe.

Whatever the drivers of migration, we have learnt — or we should have done — that razor wire, barricades, and EU strictures will not insulate Europe from the migration crisis. What it will do is add to the body count in the Mediterranean and Aegean. When 1,000 migrants drown in a single week, it is time for the EU to remember the values on which it is founded — and for leaders to provide collective leadership.

The U.K. cannot afford to stand on the sidelines. It should be pushing Europe to lead in proposing a global resettlement plan for Syrian refugees, while acting more generously in accepting refugees in the U.K. More broadly, a credible EU strategy for dealing with the migrant crisis has to include a massively scaled-up search and rescue operation, safer and more efficient transit arrangements, and a fundamental overhaul of the EU’s arcane asylum system.

Engagement with the EU could help both to address U.K. security concerns and to shape a broader global agenda. While EU foreign policy has achieved some notable successes (the Iran nuclear deal is an example), the failure to develop a credible and joined-up external strategy has left Europe acting out the role of a bit-part player in the Syria crisis.

Trade and development

The EU is not just the world’s largest trading bloc. It imports more from developing countries than the United States, Japan and Canada combined. How Europe negotiates entry to the Transatlantic Trade and Investment Partnership, will have potentially far-reaching consequences for its trade partners in Africa and South Asia.

Putting to one side the far-fetched claim that the U.K. will negotiate its own fast-track trade deals with the U.S. and others, there are compelling development grounds for rejecting disengagement from the EU. Arrangements such as the TTIP are skewing trade agreements toward the interests of transnational companies, overriding social, environmental and development concerns in the process, with potentially damaging consequences for the world’s poorest countries. Acting alone, the U.K. will not change this picture.

Remaining in the EU is not an automatic route to strengthening Britain’s role as a global champion for international development, any more than it is an automatic route to growth, jobs creation and reduced inequality. However, the danger posed by Brexit is that it would weaken Britain’s ability to strengthen Europe’s role in addressing the global development, security and environmental challenges that threaten to derail the Sustainable Development Goals. That would be bad for the world’s poor. And it would be bad for Britain.

For more U.K. news, views and analysis visit the Future of DfID series page, follow @devex on Twitter and tweet using the hashtag #FutureofDfID.

About the author

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Kevin Watkins

Kevin Watkins is the chief executive of Save the Children UK. He joined the Overseas Development Institute as executive director in June 2013. He is a former nonresident senior fellow with the Center for Universal Education at the Brookings Institution, and was previously director and lead author of the U.N.'s Human Development Report And the Education for All Global Monitoring Report. Before joining the U.N., he worked for 13 years at Oxfam. He is a visiting professor of international development at the London School of Economics and senior visiting fellow at Oxford University's Global Economic Governance Program.


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