international trade – Page 2

Brexit, the next trade deadlines

Brexit is not yet done, this, from the Institute of Govt., shows the upcoming deadlines for further agreement. most importantly in the short term, financial services equivalence and data adequacy. Slightly later in the year, is the new definition for food safety documentation required to export British food to the EU and Northern Ireland.

I might say more when I have studied it, but I have written recently about financial services, and extensively on the need for & likelihood of a data adequacy agreement. …

Finance in the City

I made a blog on linkedin; a lot of money left the City on the 4th Jan, the first day of trading after the end of the UK’s brexit transition period. The article has a bit of explanation and a bit of prediction; more could follow and some of the market infrastructure companies and lawyers may need to do so too. While non European finance will likely remain in London, and provide both volume and gravity, the death of LIFFE showed that things can change.

Bloomberg are not so equanimous, and express their views in an article behind a “please pay us” splash screen; it’s a review of the leading merchant bank’s economists talking about the investment opportunities in the UK now that we have an idea of the new framework defining the terms of Trade. Many are neutral, the headline quotes the ‘bear’.

I am not sure, I suspect that the gravitational effect of world trade in non-Euro shares and the trade in currencies will maintain a critical mass giving the skills and infrastructure the reason to stay in London. What’s gone is gone but we need the Government to get on top of the negotiations on “equivalence”, which will determine the banks’ ability to serve both the EU market and EU citizens in the UK. …

Happy Fish

Who’d have thought it? After threatening a no-deal Brexit to protect Britiain’s fishing industry, we discover that the goal would seem to have been to make Britain’s fish happy! FFS! The inconvenient truth is that most of the fish caught in British waters are sold in the EU and given the need for more paperwork at the border, the industry is having such severe difficulty in getting their fish to market that they are keeping the boats in port to save the quota until a time when they can sell what they catch. It seems, however, we still have time and resources to chase the Irish away from Rockall. It may not just be fishing, the LSE predicts that UK Exports to the EU will fall by ⅓, total trade by 13% and GNI by 6%.

There is a murmur of evidence that, what economists call, increased friction at the border is causing supply chain disruption for the super-markets and there are coming shortages in the shops, it could of course just be as people enter the new lockdown they stock up to minimise their visits to the shops but if it’s a customs check thing, then we should note that the UK imports half it’s food. In the words of Corporal Jones from Dad’s Army, “Don’t panic!”.

I am shocked at how fast it seems to be falling apart but can’t deny myself a bit of schadenfreude about the fish but any lost job is shame and will impact the workers and their families and I remember that offshore fishing is the most dangerous job in the country. I wonder when Richard Corbett and Seb Dance will be calling for us to rejoin and whether real industry will join them.

But Labour’s front bench have hitched their fortunes to making the Brexit deal work. Too late to do any good electorally, and too early to avoid the coming shit storm. We are telling our remaining core vote to once again, concede political and moral space to people who don’t support us; given a choice between blue labour and red clydeside, Starmer’s Labour has made its choice and we’ll have to see if it’s the right one. …

The danger of a false nostalgia

In the FT, “Britain will do a Brexit deal on Europe’s terms“, looks at the asymmetry of negotiating power and the role of khaki tinted nostalgia in shaping the Brexiteer’s negotiating position. I particularity like the line, “More broadly, Britain’s Leavers were guilty of swallowing their own propaganda.” and the article finishes with a skewering truth, that Britain “won” the second world war only with and solely because of the help of the USA and in this dispute, they will be on the side of the EU; whether all of this will make Johnson’s government agree a deal on Europe’s terms is another question. They might be too stupid and too proud and too frightened of the Tory party’s cleansed backbenches. …

Where’s Labour on the future deal with the EU.

While most attention is on the Govt’s response to the pandemic, and while expecting a reimposition of the lockdown, the second part of the the triple whammy is the looming end of the Brexit Transition agreement. What are Labour doing? Certainly not making so much noise. Here’s the FT on Kier Starmer’s response, which it headlines as “Getting Brexit Done!” on the basis of his speech to the TUC. Labour’s front bench spokesperson on Brexit is Rachel Reeves, who now it seems doesn’t really want to speak about it. While Starmer seems keen to ensure a visibly effective performance in Parliament, which seems to be paying off in the polls, as Labour draws even at 40%, it requires the acquiescence of the press to break through and both Reeves and Starmer were outshone by Ed Miliband in opposing the 2nd reading of the Internal Market Bill. Too much of Labour’s parliamentary attack position is based on competence, the failure of the Tories to meet their own goals without even addressing the issues of cronyism and accountability or more importantly of a vision of how things could be better.

But then the Remain campaign has disappeared, (or the Guardian’s view if you prefer), giving some on Labour’s Left, the evidence they always wanted that the Remain campaign was an anti-corbyn trojan horse. Not for me! But Parliament has voted to allow the Govt. to negotiate the trade deals without asking Parliament to agree, and the Govt. refused to ask for a transition extension despite the CV19 pandemic. These are both opportunities missed.

If we get a deal, it’s going to be pretty shit. …

The politics of MMT

I was prompted to remember some of my recent Macroeconomic reading as someone was asking about Modern Monetary Theory (MMT). I read Reclaiming the State (Gibson & Faizi) last year, and I picked it up again to re-read the section on International Trade. I have not yet finished it, but I remember thinking that while public finance may not be a constraint on the economy, the long term balance of trade may well be, even for a monetary sovereign.

Meanwhile this article “Brexit the slippery slope of left sovereigntism from modern monetary theory to spiked” at https://tendancecoatesy.wordpress.com explores the political inertia that MMT’s exponents may be riding. Much of it is based on an interview with James Meadway, once John McDonnell’s economics adviser which is available, at the link below/overleaf. For Coatsey’s regular readers they will be unsurprised at his pugnacious attacks on Faizi’s endorsement of the Full Brexit and Spiked. Meadway’s musing are interesting in that he emphasises that MMT, like Keynesianism says nothing about inequality and ownership of the means of production. The interview also addresses the moderation in Labour’s 2017 Manifesto. Below/Overleaf are links and excerpts for further reading of Meadway’s views … …

British Steel

Our minds have been distracted or mine has anyway, but British Steel became insolvent last week. Of course a huge blame game is started. Have the Chinese been ‘dumping’ steel on the rest of the world? Could the Govt. or the EU have protected it? Did the single market aid rules stop the Govt doing so?

Is China dumping? This article at the Conversation says “Yes”, big time!

This article at fullfact.org, “Is the UK calling for EU duties for Chinese steel?” deals with next three questions. The EU have raised duties but for many years the UK Government has been resisting more; they wished to avoid retaliation and for ideological reasons. There’s probably some “don’t give a shit” there too. It would seem that this is another policy area where New Labour failed to support its natural people.

The calls for renationalisation are now, rightly growing …

Creative Industry exports or not

Over 6 months ago, I decided to see how true the proposition that Creative Industries are foreign exchange earners for the economy as claimed by British Music and the Shadow Culture team. I asked my MP to ask a written question and the replies are linked to in a comment on the above article. I asked for a broader range of industry classifications as I was interested in broader questions than just the creative industry.

I think this is validly constructed.

EMI was sold to Sony & Universal in 2012 and so their balance of trade position was reversed at that time and they were a competitively large music publisher at the time. I last looked at the structure of the global music industry a long time ago, pre-streaming, pre-Apple and pre-Spotify (which is incorporated in Sweden).

Five years out of nine, the industry was in deficit. The final year surplus is extraordinarily large, it would be good to see 2017/2018 and/or understand the reasons for this number. It is not historically true to say that the Creative industries are a net contributor to the foreign exchange account.

I should add that the aggregate trade current account deficit is run as at about minus £2.5bn /month over the period in question.

ooOOOoo

I wrote about this last year, I have corrected a spelling mistake in the title, and so the SURL/permalink is now, https://wp.me/p9J8FV-1Nb …

Trade & Brexit

A friend posted a link to Larry Elliot’s article, “Ignore the free-trade evangelists. Brexit can create a fairer economy“, suggesting its critique of international trade implied some sunny upland in a post Brexit world. The article is sub titled “Free market economics created a world fit for multinationals. But we need less frictionless trade and more local control”., using a global context argument and yet diminishing the regulatory power which we share with the rest of the EU. The EU have sanctioned Microsoft, Intel, Apple & Google. The EU killed the ACTA & TTIP trade agreements. (Although not CETA, the Canadian version of TTIP). That is local control.

In no post-Brexit world, where we will take years to join the WTO and make new agreements with the 92 countries whose agreements we will have voided, will there be a vibrant British or Sterling economy, Elliot, and his fans are with Prof Minford in permitting if not encouraging the so-called legacy manufacturing industry to off-shore.

We should note that our Balance of Payments has been in deficit for, well forever really but is current running at £100bn p.a. about the same size as the crisis debt/deficit level that the Tories, supported by both the LibDems and rump New Labour used to justify austerity.

The UK will be poorer, and this misery will not be shared evenly and people will get angry. Anyone, with their hand dirty will be blamed. …

Positive balance

The BBC are very proud of their contribution to the balance of payments through the licensing of their content. I decided today to see if they do, in fact, contribute once the rights payments to 3rd party companies is taken into account. I have asked the DDCMS but the BBC is subject to FOI questions. I need to think about how I phrase the question, but Heather Brook’s book, should help, if I can find it. …