As discussions continue in Brussels over the UK leaving the European Union the Fairtrade Foundation has warned of the impact of a ‘no-deal’ scenario on producers in developing nations.
In a report the charity warned that a ‘no-deal’ could lead to an increase in the cost of trade with developing nations potentially leading to companies switching their sourcing arrangements, ending long-term relationships with suppliers.
The Fairtrade Foundation said the burden of increased tariffs and other costs could be pushed down onto producers and workers (lower purchasing prices, lower wages).
Currency devaluation could hit Fairtrade companies importing from developing countries; and companies could step back from Fairtrade commitments, resulting in smaller volumes being bought on Fairtrade terms, less Fairtrade influence on issues such as living wages, and less investment in programmes.
The report sets out how a number of different commodities from the iconic Fairtrade banana to cocoa and flowers could be impacted should the UK crash out of the EU with no deal, to trade solely on WTO terms. It also looks at the effect of exiting without guaranteeing developing countries the market access they currently have through the EU.
Fairtrade is calling on the UK Government and EU negotiators to step up efforts to avoid a ‘no-deal’ Brexit. In addition, the charity wants any agreement between the two sides to ensure that developing countries do not lose their market access, especially those with existing ‘Economic Partnership Agreements’ (EPAs) and ‘Free-Trade Agreements’ (FTAs).
It also wants to see a future UK-EU agreement support trade with developing countries and ensure that developing country producers are protected from any negative impacts of Brexit. Any future trade policy should have development objectives at its heart, it said.
The report notes that Brexit could bring future opportunities for Fairtrade farmers but only with the implementation of a transition period and careful consultation to develop and implement future policy, and to avoid an unnecessary economic shock.
Helen Dennis, Policy and Advocacy Manager at the Fairtrade Foundation and the report’s author said, “March 2019 is now looming, but without clarity on a Withdrawal Agreement and transition period, many Fairtrade producers still don’t have guaranteed access to the UK market after Brexit Day.
“Fairtrade producers around the world will be watching these negotiations with bated breath as what is decided will directly impact them. There could still be an opportunity to rethink UK trade policy with development at the heart, but without swift progress to secure a deal, good work that has been built up to support farmers in developing nations, including through Fairtrade, will be at risk.”
(photo: Neil Palmer, CIAT)