Rabat – A recent report published by the UN Conference on Trade and Development (UNCTAD) shows that Morocco, among other African countries like Ghana and Tunisia, will be the real losers in a no-deal Brexit scenario.
With an extension until October 31, 2019, British Prime Minister Theresa May has six more months to successfully pass her Brexit Bill through the British Parliament or again face the prospect of a no-deal Brexit.
However, the report by UNCTAD shows that Morocco also needs to ensure it has a bilateral agreement with the UK if Morocco is to avoid big export losses.
At present, due to the European Union’s unilateral preferential schemes, Morocco enjoys favorable market access across the UK. In order to keep this, the two countries must reach an agreement before Brexit.
With the future of the Brexit deal as unsure as it was 12 months ago, there is a chance the UK will crash out of the EU without bilateral deals, and smaller economies like Morocco’s will be the biggest losers.
Should the UK leave the EU without a deal, imports to the UK could end up being on “most favored nation” terms, a World Trade Organization trading principle that means the same tariffs must be applied to all partners unless there is an exception written in an agreement.
The British government has been working on rolling over all trade deals they currently have, through the EU, with other countries. This applies to economies of all ranges, from the large economies of Canada and Japan to the smaller economics of the Faroe Islands and small African states.
As of last month, the UK has completed and signed 26 continuity agreements with countries such as Chile, Switzerland, and Israel.
The process has faltered with Morocco, however, with the report by UNCTAD stressing that if countries like Morocco want to keep the market access they have now, they must act quickly.
According to Pamela Coke-Hamilton, the director of the division on international trade and commodities at UNCTAD, “In many cases United Kingdom-third countries agreements, or continuity agreements, have not been signed, and there is substantial uncertainty as to whether many of these agreements will be concluded any time soon.”
At the moment, UK and Moroccan businesses can trade with each other at low tariffs, but if the agreement is not rolled over in time, they will be forced to trade at significantly higher tariffs set by the WTO, meaning a dramatic increases in costs for businesses in both countries. According to UNCTAD, the total export losses estimated from 20 African countries may be as much as $420 million.
As trade agreements are not easy to replicate and negotiations between countries take significant time, Morocco must move quickly to avoid losing a trading partner and a significant blow to its economy.