Without leaving the EU’s Customs Union our Aid will be wasted

Without leaving the EU’s Customs Union our Aid will be wasted

by Brian Monteith
article from Thursday 29, September, 2016

THE SUBJECT of the UK providing financial aid to developing nations is never far from controversy. Some see it as a necessary step to rebuilding nations that have suffered appalling natural catastrophes, murderous civil wars or the bloody pain of Marxism in action – or a combination of all three. Others believe that the best way for nations to come through such challenges is for them to be able to trade their way to success, becoming innovative and self-reliant.

Having worked in the developing world providing UK-funded advice on government reform that aims to reward prudence and probity while establishing a commitment to markets, light regulation and property rights – rather than accepting central government planning that is invariable accompanied by bribery – I believe there is a role for foreign aid if it is project driven, transparent and accountable.

That’s not to say intra-government aid does not fail; I have witnessed enough examples myself and know even more apocryphal tales (some of which are quite funny) – but I have also seen triumphs and successes in getting electricity to be generated and water to flow through taps. For instance I have watched health clinics and schools sprout up in the heart of the African jungle thanks to UK solar power projects that have literally saved lives and brought numeracy and literacy to children.

Nevertheless, when an aid project isn’t working or is being abused it should be halted, and I’ve worked on one UK aid contract where that quite correctly happened.

Likewise if trade is to succeed in lifting nations – and it is by far the best way of rewarding masses of people with improvements in their lives, their health and the opportunities for their families – then our doors have to be open to the produce, manufactured goods and services of emerging economies. We know that globalisation has been a general good, being the catalyst to rising living standards for millions of people and causing new problems as more humans, being fed, watered and inoculated, survive when twenty years ago they would have died.

It is self-evident that if we erect barriers we are denying the opportunity of trade and encouraging people to turn towards the dark side of corruption, violent crime and despotism. In trying to escape such terror and to seek a better life through their own endeavours, people then make huge sacrifices to travel thousands of miles to where trade, commerce and employment is normal. Aiding countries to work properly helps stem that flow, but no amount of foreign aid will work if those trade doors remain closed or are only slightly ajar.

Imagine then the worst case scenario where aid is actually counterproductive and is used merely to prop up lawless client states that practice torture, condone slavery and live of the proceeds of crime – but worse still, those countries have no prospect of enjoying trade because the largest single market in the world, the EU, has built a wall that intentionally discriminates against developing nations.

Sadly the European Union is that worst-case scenario; it runs an aid programme that is out of control, that its own auditors have condemned and was accused by MEPs of pouring EU money “down the toilet”. It funds some of the most appalling governments in the world (e.g. Burkina Faso, Central African Republic, Cote d’Ivoire, Guinea Bissau, Kyrgyzstan, Mauritania, Niger and Togo) by stuffing cash direct into their bank accounts for their politicians to spend at will rather than supporting measureable projects – and because of its EU membership the UK has been one of its largest contributors.

Now we have an opportunity to put right what the EU has done wrong. We can make the aid much more effective by making it accountable to our parliament and we can open our doors to trade where before they were often closed.

It is vital that in the Brexit negotiations the UK stops giving the EU some £1.35bn a year (2013) from the day we leave and puts such funding under the control of DFID so it can be monitored and measured against the benchmarks that will show its effectiveness. DFID is a world leader in project transparency and delivers its projects at less than a third of the cost of the EU.

That alone will not, however, be enough. 

The EU Single Market and its Customs Union is specifically designed to restrict trade from outside competitors – and especially the developing nations that might undercut the inefficient farmers of Southern Europe. To shore up the obscene CAP tariffs of 9.9% are placed on raw ingredients, with tariffs rising to 19.4 % for processed foods (such as canning). Agricultural produce faces tariffs between 18-28%.

This is why the Tomato producers of Ghana went bust; suffering the dumping of subsidised tinned Italian tomatoes but unable to make their own, the Ghanaian farmers ended up becoming illegal immigrants picking the tomatoes in Italy that had made them impoverished.

Likewise, the Customs Union tariffs ensure that without growing a single bean Germany is able to make more profits from processing coffee than the whole of Africa is able to make from growing it. These tariffs and quotas are why chocolate is processed in Belgium and not Africa and why subsidised north European sugar beet is killing off the Caribbean sugar cane producers.

To reverse our worst case scenario and turn it into a virtuous cycle where institutions begin to work and uphold the rule of law we also need to ensure our doors are fully open to the foods and goods that developing nations are keen to sell us. We in turn can sell our expertise to them about how to improve their production yields and compete in the real world.

The reality is that so long as we stayed in the European Union we were doing that with one arm tied behind our back, our legs bound and our mouths gagged. Brexit is the best thing that could ever have happened to the developing nations because we are now able to untie all those bindings and pursue a course of free trade that will offer genuine hope to those who want to do business with the fifth largest economy in the world.

If we help such countries trade with us they will soon be trading globally more too, raising standards of living for whole communities and creating new opportunities.

International Aid has its place, but without the UK leaving the Single Market AND the Customs Union designed to protect it – what can rightly be called fortress Europe – we might as well be pissing in the wind.

Thank God for Brexit, but having won the war we now must win the peace.

Brian Monteith is Director of Communications at Global Britain and has just published a paper “Making Aid work outside the EU” with details of the reforms that Brexit can deliver. You can find it here: http://www.globalbritain.co.uk/sites/default/files/publications/Global%20Britain%20Europe%20Aid%20paper%20LR.pdf


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