Tariffs and other trade barriers

image of the alaskan highway

Last night I watched a video about Canada raising a large toll on lorries travelling from the Lower 48 to Alaska, and it documents and forecast the impact on the fragile Alaskan economy. It reminded me of the trade barriers that the UK has put in place due to Brexit. This is potentially disastrous for Alaska, and is clearly so for the UK where today the FT reports that according to the ONS, the UK economy shrank for the second quarter in a row.

The trade to GDP rate in the UK is 63%, which seems enormous to me, but it seems to be merely above average and yet it illustrates the UK’s dependency on the rest of the world to feed itself and keep itself warm and sheltered. The US rate is 25% which is low by international comparison and may be one of the reasons that Trump can afford to be as foolish as he is with his tariff policies, noting that it’s the US consumers who ultimately pay his tariffs. Source: World Bank.

The EU flag, before castor and pollux,

But for the UK, this is another piece of evidence that the UK needs to rejoin the EU’s single market, but even if this common sense actually strikes this Labour government, I doubt that the Eire/Holland/France traffic will return to the UK. …

Brexit, reset or stall?

the staircase at Lancaster House

Last week, the UK and the EU met at the most senior levels in what the labour government has described as a reset of EU relations. As usual, the conclusions are best documented on the EU website where they published a joint communique. Certainly the results of the negotiations have changed few minds. While I consider that the best result would be if both sides walked out thinking they’d won, my feeling is that this was a draw, although no major breakthroughs occurred and a huge opportunity wasted, primarily due to the lack of vision and ambition on the part of the Labour government.

The words on defence co-operation are the most concrete, although further negotiations are required and while UK companies will be able to bid for work from the EU, HMG will have to contribute to the budget.

The relegation of words by recasting youth mobility as youth experience, illustrates the stubborn recidivism of the labour government and the fact is, that there has been no movement by the EU on creative workers’ freedom of movement.

The two sides have agreed to continue to talk about an agricultural deal, and greater cooperation in the electricity, carbon and energy markets. The agricultural deal is crucial so reducing paperwork checks both between Great Britain and the European Union and also between Great Britain and Northern Ireland.

There are several paragraphs on internal security and judicial co-operation which mention Europol but not the issue of the Charter of Fundamental Rights. The UK has for decades, under both Tory and Labour governments been reluctant to engage with the Charter and it seems remains so; the children of fascist and Stalinist societies put more faith in a basic law than parliamentary sovereignty. I am unclear that these paragraphs are anything more than aspirational.

The press release/communique makes clear that its consequential programmes and agreements build on the Withdrawal Agreement, including the Windsor Framework, and the Trade and Cooperation Agreement and require their “full, timely, and faithful implementation”. The UK still has some work to do there as the Commission are pursuing eight infringements by the UK government of the existing agreements. This is a critical red-line for the EU.

I am interested how the closer to reality and the single market the proposals are the stronger the UK commitments to dynamic alignment, the CJEU and financial contribution are; it would seem we really are joining one agency/pillar at a time.

As many commentators, not least the UK Government observe, Starmer’s redlines have not been breached but little more progress could have been expected without some compromise and £140bn worth of GDP is at stake.

If we are to consider this as a football match, it’s probably a draw. The EU have ensured the current treaties are confirmed and that any entrance to the single market includes dynamic alignment, CJEU judicial authority and financial contributions, in exchange, the UK have obtained agreement that the Commission will engage in pre-legislative consultation. This is an important breakthrough. The defence agreement is necessary, but as noted the British government will need to contribute to the European Union’s defence budget to bid for arms contracts. The rest of the agreement are statements of ambition. The section on borders and judicial cooperation, I need to read again as I am unclear of the direction all future negotiations. Any agreement satisfactory to the UK Home Office and the European Union equivalent is not likely to be satisfactory for those of us who believe that racism fuels much of the immigration control debate.

The Tories and reform claim the agreement is a betrayal of the nine year old mandate, rejoin campaigners close to the Labour leadership such as Best for Britain, the European Movement, the LME and Sadiq Khan claim it’s a step in the right direction, the FT say and I agree that,

Labour arguably wasted some of the post-election goodwill it enjoyed last year in Brussels, through the paucity of its own ambition and its manifesto red lines insisting on no return to the EU single market, customs union or freedom of movement. Its new reset at least attempts to push up to the limits of some of those red lines.

The FT EB

The Economist also state that more is needed. [Also at archive.ph.]

It’s a better result than last time when the EU told the UK to do better.

The problem is that the UK wants a Swiss style deal where they can focus on those areas of maximum benefit to the UK economy. The EU want commitment to the full acquis. Squaring this circle is probably impossible just as fixing Brexit is.

Does it make rejoining more or less likely? I suggest neither, but the problem is the current Labour leadership and its stubborn and failed pursuit of the dying Brexit voter. …

Best for Britain on Trumps trade war

Best for Britain logo

I subscribe to Best for Britain’s news letter and they sent me the following. I can’t find it on their web site and so I have posted it here. Their front page has a comprehensive response to Trump’s trade war and is worth a look. Unlike me they are not focusing on the need for the single market to access the protection of the EU’s Digital Services Act and in fact are fundamentally in the “Fix Brexit” campaign, but what they say is interesting.

quote

As you’ll no doubt have seen, the UK joins Brazil, Australia, and the uninhabited Heard Island – along with almost every other country in the world – in being slapped with a 10% tariff on all imports to the US. The EU has fared even worse, as they stare down the prospect of a 20% tariff. Unaddressed, this unprovoked and punitive move by Trump could wipe out all efforts to grow our economies, both here in the UK and in the EU.

We knew this was coming. Which is why we asked Frontier Economics to model how a better UK-EU trade deal could minimise the impact of Trump tariffs. The results should spur a simultaneous sigh of relief across Whitehall.

Not only would a common sense deal between the EU and UK cancel out the economic hit to the UK from Trump’s tariffs, it could also grow our economy by up to 1.5%. And those areas hit hardest by tariffs – manufacturing hubs like the Midlands and North East England – would see the greatest benefit. A deal that includes deep alignment between the UK and EU on goods and services would also shield the EU, reducing the impact of tariffs on the bloc by around a third

Those sighs of relief should ripple around the Cabinet table too when you add in the results of our latest polling. Three times as many people think we should increase trade with the EU in response to Trump’s tariffs, compared to just 14% who say we should be sucking up to Trump in the hope of an exemption.

If there was any doubt, Trump is no friend of the UK. His unprovoked trade war will be felt by ordinary people across the country, in our pockets and in cuts to public spending. Anyone seeking to spin this slap in the face as a ‘Brexit win’ should remember the thousands now at risk of losing their jobs, and that Brexit itself has caused far more economic damage than Trump’s tariffs ever could.

But if we tear down barriers to UK-EU trade, we can gain significantly more from our largest trading partner than we stand to lose as a result of back-of-the-envelope calculations made in Washington.

In these choppy geopolitical waters, we’ll keep pushing the government to make the right decision and seek stability for us, and for our EU neighbours. Thank you for your support in helping us do it. …

Regulating Social Media

blind justice

A note on the US regulation of its domestic media and internationally. I say, "Despite the US claiming the strongest free press rights in the world, rights granted in the US constitution belong to its citizens alone and are only enforceable within the United States. The US’s historic regulation of foreign media, much of which remains in place today, includes the licencing of foreign journalists and the statutory requirements the significant media organisations are owned by U.S. citizens. In fact, U.S. politics confuses the freedom of the press, with the right to platform. For more press the button ...