UK to use £12bn aid budget to win post-Brexit trade friends

The United Kingdom is planning to use its international aid budget of £12 billion (€13.3 billion) to win friends among the world's poorest countries ahead of crucial trade talks, according to two senior government figures who are familiar with the matter.

Financial help will go to countries that Britain will need on its side as Europe's second-biggest economy seeks to re-establish trading rights at the World Trade Organisation (WTO) once it abandons the European Union, according to the officials speaking on condition of anonymity because the proposal is confidential.

Currently, the UK's negotiations at the WTO are conducted by the European Union. Prime minister Theresa May is seeking to shield British business outside Europe as she prepares to end four decades of trade privileges the UK enjoyed as part of the 28-nation bloc.

EU quotas

After Brexit, the UK will take up its place at the WTO as an independent country with its own negotiating powers, and will seek to re-sign deals with more than 50 countries that have accords with the EU, as well as claiming its share of the EU’s quotas for agriculture and other sectors.

Before the UK voted for Brexit in June, WTO director general Roberto Azevedo warned it could take years for the UK to complete these negotiations.

Decisions in the trade body are generally taken by consensus of the entire 164-strong membership. He said post-Brexit trade would take place on worse terms with UK exporters at risk of having to pay as much as £5.6 billion each year in duty on their exports.

In a plan to speed up the WTO talks and win support for British demands, May’s teams are now preparing to woo less-developed countries with aid money for development projects, according to the government officials.

They told Bloomberg the government would use aid spending in parts of Africa and other developing regions to prepare the ground for trade talks.

The aim is to ensure that these countries are more willing to back the UK’s demands when it comes to the WTO talks.

The talks are being led by Liam Fox’s department for international trade, which is working with the department for international development on using the so-called soft power of aid to win support ahead of the WTO negotiations. – (Bloomberg)