By Sunday Oghayei, Ph.D
While Nigeria is grappling with the decision to sign or not to sign the AfCFTA, another major trade issue that should be focussed upon is emerging and many ACP Countries are already positioning themselves as first movers. Nigeria should be interested in the BREXIT discussions particularly enthusiastic about what is anticipated to emerge as outcome of the disengagement of the UK from the EU also known as BREXIT, since Nigeria did not sign the EPA which placed some Nigerian products at disadvantage in the UK market.
In view of the critical juncture at which the discussion on BREXIT is at the moment, Nigeria should look forward to positive bilateral relations outcomes from the UK government. However, no visible deliberations have taken place, which may lead at best to uncertainty in our relations with the UK post BREXIT or at worst to loosing preference market with the UK. Neither is good for Nigeria’s economy and calls for constructive engagement immediately with the relevant UK Authorities.
The UK Government invoked Article 50 of the Lisbon Treaty by 31 March 2017, thereby initiating the process of withdrawal from the European Union (EU). The invocation of Article 50 coincide with its intended repeal of the 1972 European Communities Act, which will take effect once the UK has formally withdrawn from the EU.
Article 50 of the Lisbon Treaty provides for a two-year period, which may be extended, in which to conclude exit negotiations. Therefore, if the exit negotiations were to last for two (2) years, the present trade regime (status quo) would remain unchanged until 2019. However, post-2019 trade relations have to be determined early because it is not in Nigeria’s trade interest for uncertainty to govern our trade relation with UK.
Nigeria and the United Kingdom (UK) have maintained historic cordial trade and economic relationship dating back to colonial era. Since independence, our bilateral trade relations have expanded considerably over the years. Currently, Nigeria remains Britain’s major trading partner in Africa, both in export and import with the total bilateral trade value of about N663,556,785,909.56 billon (US$2,175,596,019.38) and N735,144,298,350.85 (US$2,410,309,174.92) in 2016 and 2017 respectively. The aggregate Nigeria-UK bilateral relationship is valued at about £3.8 billion per annum.
Nigeria’s most pressing issue in relation to external trading arrangements with the EU is the decision of the UK to withdraw from that body (Brexit). The UK has stated that it will not seek to remain in the EU single market and that any future arrangement with the EU will have to be in the form of a free trade agreement. This means that any trade agreement, such as the CARIFORUM-EU EPA, which the EU has concluded will no longer be binding on the UK after it leaves the Union.
The UK and the EU have, however, recently agreed that, following 29 March 2019, there will be a transition period, ending on 31 December 2020. During the transition period, the UK will remain bound to all international agreements to which it is party as a member of the EU. The UK also will be allowed to formally negotiate trade agreements with third countries during that period.
Nevertheless, CARICOM needs to ensure that the text of the rollover agreement is completed as early as possible and before the transition period commences.
With emerging scenario, the UK Government is carefully examining the possibility of negotiating trade agreements with non-EU members before formally exiting the EU. However, UK would not do anything to compromise its position in the EU. The exit of UK from EU would have trade implication for Nigeria. Nigeria therefore needs to commence discussions on the type of trading arrangements to be in place after BREXIT.
Some of the trade implications for Nigeria of the United Kingdom’s withdrawal from the European Union (EU), highlights the following:
- The main trading framework was the EPA which Nigeria did not sign. The United Kingdom (UK) could no longer be a party to the ECOWAS-EU Economic Partnership Agreement (EPA) in its present construct once it ceased to be a Member of the EU;
- Nigeria’s interest, post-Brexit, is to seek to secure, at a minimum, the level of preferential market access currently enjoyed with respect to trade in goods, services, investment, Development Assistance and temporary entry for business persons;
- The most secure legal basis under multilateral trade rules for preferential trade in goods and services between Nigeria and the UK would be a Free Trade Agreement (FTA) that is compatible with the WTO’s rules on regional trade agreements, namely, Article XXIV of the GATT 1994 and Article V of the GATS;
- In the absence of an FTA governing Nigeria-UK trade, a waiver from the relevant WTO obligations would be required for Nigeria and the UK to grant each other the preferential market access that they presently enjoy. Current discussions under BREXIT suggests that the UK would have little appetite for seeking a waiver in the WTO to provide cover for the continued grant of trade preferences to countries with existing trade agreements with the EU in the absence of successor preferential trading agreements with those countries.
- Nigeria should adopt the ‘’First mover advantage’’ by setting the terms of engagement and defining the parameters of the negotiations for a post-BREXIT agreement with the UK. It is important for Nigeria to be offensive.
- In view of the possible impact of BREXIT on Nigeria-UK trade relations, there is need for Nigeria to request for a high-level meeting between the Nigeria’s Ministers and the UK Ministers responsible for International Trade and Development Cooperation. The meeting will provide opportunity for further discussions on the matter. Some regions have already commenced discussions.
- Sensitize and consult with key stakeholders to consider and make recommendations pertaining to:
- the legal nature and scope of the prospective agreement with the UK;
- process issues relating thereto; and
- The structure and timing of discussions with the UK toward that agreement.