Is Language a Non-Tariff Barrier to Trade?

With the coming into force of the WTO Trade Facilitation Agreement last year an increased focus has been apparent on tackling the non-tariff barriers to international trade. To some, particularly in the UK this may seem like light relief – possibly easier than addressing free and preferential trade agreements, customs unions, anti-dumping duties and the like! This focus is important but attention is currently limited to non-tariff barriers in relation to regulatory procedures, processes and controls. There are several others – for example access to trade finance, logistics and shipping constraints and, possibly, language.

Of course we, in the UK, are spoilt in this respect. English is, by default, the language of international business and, in practice, this works reasonably well. However, this is not always the case. The author clearly remembers attending UKTI trade missions to West Africa, each trip involved time in Nigeria, Ghana and Cote D’Ivoire. In the post-mission debriefing sessions a theme emerged – Ghana was open for business, Nigeria was a really interesting, huge, market but risky whilst Cote D’Ivoire looked good but there was a problem – it is Francophone not Anglophone – they don’t widely speak English! Thus, Cote D’Ivoire was of least interest to the mission participants and, I believe, subsequent missions stopped going there. Market opportunities were lost. It is well known that, in UK schools, languages did not have the same emphasis as was the case for our European neighbours. Although this situation has improved a little it is very noticeable that, in international conferences and other trade events, we Brits still seem very limited in our language capabilities – fortunately for us such gatherings are generally conducted in English and, of course, simultaneous translations are generally used.

So, in accepting that English is reasonably widely understood, is business being lost due to language constraints and, more widely, is lack of language capability a more general constraint to cross border trade on a global basis?  The British Council reported that, according to a survey published by the European Commission, 62% of Brits surveyed cannot speak any other language apart from English and that 38% speak at least one foreign language, 18% speak two and only 6% speak three or more. The European Union averages evidenced that 56% speak at least one language, 28% at least two and 11% three or more. A Brexit implication, identified by the Financial Times, was that There is one thing many companies are sure of: they cannot manage without their EU staff. It is not just the numbers of EU nationals working in many industries. Some companies are also desperate to hold on to the languages those citizens speak’. In the same article the head of training at a UK fashion company stated ‘…   it is not true that all business is now done in English. Some retailers and distributors in Spain, France and Italy did not speak English well enough to do business in it, and some probably did not see why they should’. Successive Governments have recognised the issue and it is true that almost all English primary schools were doing at least some foreign language teaching in 2015/16 when this was surveyed.  However, attitudes do appear to be changing, Mandarin Chinese is predicted to become the second most popular foreign language to be learned in UK schools. Currently, French and Spanish are more popular but Chinese leads over German and Russian.

The pinch points in relation to language in the international trade environment tend to be in relation to contracting and operational processes. Contracting usually involves elements of negotiation and much can be lost in translation. Sometimes it can become just too difficult to negotiate across the language divide and business may be lost. An example at the other end of the process is with payments. Most Letters of Credit, but not all, tend to be in English and International Standard Banking Practice provides prescriptive and clear rules about what is acceptable, and what is not, in relation to the language of documents presented. However, practice suggests that presentation of documents in a different language to the L/C language is extremely problematical.   

 The concept of a ‘global language’, some readers will recall Esperanto described as a Global Auxiliary Language, is probably unrealistic. Esperanto is the most famous of its type but even so can only field about 2 million speakers globally.  So, in conclusion, it must be true to say that language is, indeed, a barrier to trade but a barrier which is largely surmountable where there is goodwill between trading partners. In the future, technology – but not the more dubious internet translation platforms – may provide part of the solution. Passing trade related information through data pipelines rather than paper documents may help, to some extent, at an operational level but the reality is, that when negotiating an export contract, the ability to understand and be understood is paramount – and for many of us this may mean ‘back to school’ !  The great news is that the next generation of British exporters are likely to be far more language capable and diverse when they leave education than the current cohort. Whilst, to some extent, language will always remain a non-tariff barrier to trade it is clear that education is the solution to limiting the negative impacts in the medium to long terms.

Article written by Jon Walden - Associate of Strong & Herd LLP

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