Covid-19 has swept the world in a way we had never seen or imagined in our lifetimes. While we are all affected, it has brutally impacted those who are reliant upon economies of physical labor -making it difficult for them to purchase even daily rations.
The World Trade Organisation (WTO) has warned that global trade can fall by a gigantic 30% – this will inevitably have a drastic impact all across the world. Developing countries that are so heavily dependent upon trade with developed economies in Europe and North America will be hard hit.
Demand will extinguish, export earning will stagnate, prices of essential products in developing world will rise and their currencies will fall, against the USD making it difficult for people maintain their standard of living.
Marshall Plan for Developing world is needed
Maintaining effective trade will be thus be a saving grace for the world. This has to be the goal for fiscal and monetary policies – especially in the developed world. Keeping markets open and predictable, and fostering a more generally favourable business environment, will be critical to spur the renewed investments we will need, and if countries work together, we will see a much faster recovery than if each country acts alone.
In 1948, immediately after the Second World War, United States Congress passed the Marshall Plan to support the war ravaged, collapsed economies of the western Europe. Within the next few years, in 1950’s, Washington transferred more than US $12 billion to stoke and stimulate the economies of the UK, France, Germany and other countries.
Translate $12 billion of 1950’s into today’s value and imagine the impact. Vision was to help Europe stand on its feet and restructure itself as America’s able trading partner. Now is the time for Europe and the United States to do the same for developing world – to resuscitate countries like Pakistan and Bangladesh to become part of the global trade.
Read more: Brexit can Open up Trade & Employment Opportunities for Pakistan: Ambassador Nafees Zakaria
Brexit offers new trade opportunities for expanding UK-Pakistan Trade
Pakistan is an emerging market with a young and growing population of around 200 million. According to the World Bank, Pakistan is the second-largest economy in South Asia after India. With a growing middle class, and an affinity for UK expertise, products and brands.
Queen Elizabeth II’s first visit to Pakistan in 1961 initiated the current special relationship between Great Britain and Pakistan. This relationship had a part to play in the 1960’s and 1970s emigration of thousands of Pakistani families moving to the U.K – to support the post-war struggling British textile and manufacturing industry.
Great Britain, since then, has continued to strengthen its relationship with Pakistan despite changing nature of the global economy. UK-Pakistan bilateral trade in 2017 was £2.9 billion. The UK exported £1.1 billion of goods and services to Pakistan – however trade remains in Pakistan’s favour. The UK is currently Pakistan’s third-largest source of foreign direct investment (FDI) after China and the Netherlands. However with Brexit these opportunities can expand.
We at ‘Muslims for Britain’ are a Government engagement and grass-root campaign organisation providing the intellectual debate on issues of British National importance. ‘Muslims for Britain’ was established in 2015, to engage grassroots communities in the Brexit debate. I am an active supporter of this initiative.
I see it as our duty to build relationships with developed-world governments and institutions to leverage their expertise to better health care systems, legal systems, social and economic systems of the developing world
In a government report (Brexit, The Border And The Union) written by Lord Ashcroft, it was revealed that over 800,000 British Muslims voted to leave the EU. One of the main issue for Muslims like was a fairer immigration system and work visa system for the people across the world; and the ability to negotiate our trade deals on our own terms.
Pakistan should get a Free Trade Agreement (FTA) with UK
Being of British Nationality and Pakistani heritage, a key issue for me, personally, was the fact that we were not able to have full control of free trade agreements with our ancestral countries. For example, we did not have a free trade agreement with Pakistan, which I believe hindered Pakistan’s ability to maximise on the importing or exporting goods potential given the taxes imposed.
There are opportunities for British businesses to benefit by integrating Pakistani firms into their supply chains. Pakistan is keen to expand and diversify its export base and is already competitive in products such as textiles, garments, surgical instruments, steel, and sporting goods. More new lines can emerge with value additions.
The EU award of the Generalised System of Preferences Plus (GSP+) status came into effect on 1 January 2014. Pakistan currently receives preferential market access on goods to the EU under GSP+, eliminating tariffs on two-thirds of its product lines. This has supported an increase in trade and foreign investment with the EU.
Read more: Sweeten the China-Pakistan free trade agreement
From 1 January 2021, the UK government aims to maintain the levels of access Pakistan receives to UK markets under the EU GSP+ scheme. The UK government also wants to explore options to expand the UK’s trade relationship with Pakistan in the future.
Having a free trade deal in place, can lift Pakistan’s economy to an unthinkable level – even on more humble terms it will provide significant gains. In just three decades the world has developed in such a manner that only 8 per cent are living in extreme poverty. There is no reason that this will not continue for those who will make conscious goals and plans to benefit from this uptick.
Post-Brexit, as the UK renews their relationship with the world, it is critical that Britons with heritages from the developing world, develop our relationships with countries we have historic ties with. And these are the countries we have also provided significant development funds to develop institutions and skill sets. These are the countries where many of us have second homes or where we spend our summers. Majority of Britons still have extended families in these countries and we regularly send personal, family and business funds. This relationship can be further expanded – if there is a FTA between the UK and Pakistan.
Many will agree that one of the biggest hindrances for developing countries in their bid to grow is lack of support from the developed world. I see it as our duty, in “Muslims for Britain” to build relationships with developed-world governments and institutions to leverage their expertise to better health care systems, legal systems, social and economic systems of the developing world.
Read more: World economy shrinking amid coronavirus
If the sole purpose of free trade should be to work with developing countries to expand their economies and for them to be able to trade with the world – just like Marshall Plan had done for Western Europe 70 years ago – then surely there cannot be a better reason to push for countries to trade freely, to eradicate poverty.
Zak Khan is a legal expert. He practices in the United Kingdom as a Solicitor and an active member of “Muslims for Britain”.The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.