Wednesday, October 18, 2017

Xi Jinping's 33 year plan for China's future

In a speech that ran for more than three hours China's President Xi Jinping has said the country has entered a "new era" where it should "take centre stage in the world" [BBC].

In a wide ranging speech, Xi declared victory over "many difficult, long overdue problems" since he took power in 2012 and that China would continue opening its doors to foreign businesses, defend against systemic risks, deepen state-run enterprise reform, strengthen financial sector regulation and better coordinate fiscal and monetary policy.

Communist Party Congress conferences take place every five years and are known for their long speeches, declarations of future plans for the country and a platform to set out party priorities. And this party conference was no different. 

Xi Jinping spoke for 3 hours and 20 minutes, reading from a tome entitled, "Secure a decisive victory in building a moderately prosperous society in all respects and strive for the great success of socialism with Chinese characteristics for a new era"

He spoke of a China dream and a "new era" for China, a phrase repeated no less than 36 times. This was also a platform to declare Xi Jinping's success in tackling corruption and of preparing the way to make China great.

Indeed some media commentators were likening many messages coming from the 19th CPC as being very similar to those of Donald Trump.

At the Tory party conference Theresa May borrowed from America as she talked about a "British Dream". And Xi appeared also appeared to be using similar language with references to a "Chinese Dream" [Bloomberg]. 

Unlike Theresa May, the Chinese president managed to get through his 210 minute address without coughing, being accosted by pranksters or having the props disintegrating about him.

After all, this was, as Xi declared, a "great modern socialist country" which within the next 30 years would become a "beautiful China". In short Xi seemed to be flying the banner espousing the slogan "Make China Great Again" [Guardian].

But this conference was also seen as one which helps to lay the groundwork to secure power for much longer than the usual 10 year period.

After five years defeating political rivals, silencing critics and developing public support built on rejuvenation and fighting graft, Mr Xi is on firm ground to oversee a major reshuffle of China's leadership stacked with those loyal to him [Telegraph].

As recently as April 2016 western commentators were already discussing the so-called 'Cult of Xi' and suggesting he was attempting to establish himself as the the next Mao Zedong [Economist].

State controlled media is often filled with fawning over "Uncle Xi" and his wife, Peng Liyuan, a folk-singer whom flatterers call "Mama Peng".

Xi Jinping has accumulated more authority than any of his predecessors since Mao Zedong, the founder of the communist People's Republic of China. Xi has taken personal control of policy making on everything from the economy, national security and foreign affairs to the Internet, the environment and maritime disputes. Now the 62-year-old scion of Chinese Communist Party [CCP] royalty stands at the centre of a personality cult not seen in the People's Republic since the days when frenzied Red Guards cheered Chairman Mao's launch of the Cultural Revolution.

Xi repeats the mantra of Mao and rails against "hostile foreign forces" which he and hard liners within the party believe are intent on weakening a resurgent China.

"Like Mao, Xi thinks if China succumbs to Western values, these forces will destroy not only China's exceptionalism but also the stability of the Chinese Communist Party," says Roderick MacFarquhar, a Harvard expert on Chinese politics [Time].

Whilst Xi certainly appears to be establishing himself as an autocratic ruler, he does nonetheless appear far more stable than his western counterparts.

Xi has sought to portray himself as a strong and stable international statesman. And he is far stronger and clearly more stable than a certain British prime minister who ran her election campaign under that very slogan [Guardian].

Since last year's election of Donald Trump. Xi has also painted China as a far more responsible global power that is committed to tackling shared dangers such as climate change.

Indeed, whilst Trump seems intent on turning the clock back half a century and restart the American coal industry, Xi's China it accelerating towards a green future with significant plans to be more reliant on renewable energy [Guardian / CNN / Washington Post].

Xi certainly isn't popular with everyone in his home country. Xi's crackdowns have divided opinion and his firm grip on power brings retorts of 'fascist' from some who are brave enough to express their views. Most of his critics come from the ranks of liberal intellectuals and human rights activists who claim Xi's first term has proved calamitous.

Some had hoped he would prove a political reformer. Instead China's authoritarian leader has waged war on dissent with unexpected ferocity, throwing some opponents in jail and forcing others overseas. Some even refer to him as "Xitler" [Guardian].

However, some experts say that many of China's 1.4 billion citizens see Xi Jinping in a far more favourable light.

"Whatever people may have to say about Xi Jinping, he has actually been a popular leader," said Steve Tsang, head of the China Institute at the School of Oriental and African Studies in London. "The economy remains strong … corruption has been contained … China is internationally much more accepted as being in the top league and is calling the shots … In Trumpian terms, he's managed to make China look great again." [Bloomberg]

Most western media reports have focused on Xi's plans for the economy, energy and the  environment. However, China is also trying to improve its military standing.

It is "time to take centre stage" Xi declared. And his vision is one where China can defend itself against military threats.

"We must build a powerful and modernised army, navy, air force, rocket force, and strategic support force; develop strong and efficient joint operations commanding institutions for theatre commands; and create a modern combat system with distinctive Chinese characteristics," Xi told the hundreds of CCP members who had gathered in the Great all of the People in Beijing [SCMP].

With many believing Xi is poised to seize "absolute power", it is perhaps no wonder the world is watching China [ABCWashington Post].

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Saturday, October 14, 2017

UK risks going over the cliff edge with WTO option

There has been much discussion in the last week over where the Brexit talks are going with some espousing the view that Britain should prepare for a so-called "no deal" option.

The no-deal option has been described as a hard Brexit or a WTO option. It is perceived to be by many Brexiteers as an easy option and that Britain could simply fall back on WTO rules when it comes to trade.

But falling back on WTO regulations and tariffs is not as simple as many might think.

What is the WTO option?

The WTO option involves trading solely under rules set by the World Trade Organisation [WTO], which govern things like tariffs and quotas.

The WTO Option is an approach to Brexit much favoured by some groupings. It is an approach where the UK leaves the EU without having negotiated any trade agreements with the EU, either within the framework of Article 50 negotiations, or on the margins. Instead, it relies entirely on multilateral WTO agreements covering trade-related matters.

The general thrust of the WTO Option argument is that, "Were the UK to leave the EU, it would continue to have access to the EU's markets, as World Trade Organisation rules prevent the EU from imposing unfair, punitive tariffs on UK exports". In reality, the WTO rules only afford very limited protection against discrimination, and then only in respect of tariffs - which are no longer central to trade matters.

Could the UK simply go ahead and trade under WTO terms as soon as it leaves the EU? The short answer is no. In practice, the UK would have to detach itself from the EU and regularise its position within the WTO before it could sign its own trade agreements, including with the EU. As Roberto Azevêdo, the WTO's director-general, said soon after the Brexit vote, there is no precedent for a WTO member extricating itself from an economic union while inside the organisation.

The process would not be easy and would likely take years before the UK's WTO position was settled, not least because all other member states would have to agree. Indeed decisions amongst the other WTO members has to be unanimous and there are currently 164 WTO members.

Complicated matters

Matters are even more complicated than many might realise. The WTO site points to both short and long term issues Britain might face.

There are Regional Trade Agreements which are "by their very nature ... discriminatory". Under WTO rules, an amount of discrimination against third countries [and that would include the UK] is permitted. But the WTO observes modern RTAs, and not exclusively those linking the most developed economies, tend to go far beyond tariff-cutting exercises. They provide for increasingly complex regulations governing intra-trade [e.g. with respect to standards, safeguard provisions, customs administration, etc.] and they often also provide for a preferential regulatory framework for mutual services trade. Indeed the most sophisticated RTAs go beyond traditional trade policy mechanisms, to include regional rules on investment, competition, environment and labour.

Regulatory frameworks

The crunch issue is the "preferential regulatory framework". Unless goods seeking entrance to the EU Single Market [i.e. British exports] conform to the regulations which comprise the framework, they are not permitted entry. Thus, the assertion that, if the UK left the EU, "it would continue to have access to the EU's markets …", is simply not true. And ,  to spell it out,  if it's not true, it's false.

It would be under such conditions that might well create situations as envisaged by some of long lines of lorries queueing up to get into Europe.

Tariffs in themselves do not prevent access to a market. They might make products more expensive but the biggest issue is one of regulatory conformity.

Tariffs simply impose a tax on entry. Regulatory conformity,  generally as a non-tariff barrier [NTB] or, sometimes, as technical barrier to trade [TBT] is the bigger hurdle.

It is generally recognised that, in order to access the Single Market, goods must comply with EU rules. Conformity is the way of overcoming the NTB. But what advocates of the WTO option have not realised is that there is more to it than that . Potential exporters not only have to ensure their goods conform, they must provide evidence of their so doing. This requires putting the goods through a recognised system of what is known as "conformity assessment".

The point about the Single Market is that border checks have essentially been eliminated. The common rules are monitored by relevant national authorities and there is mutual recognition of standards. Thus one can load a truck with grommets in Glasgow and ship them all the way to Alexandroupoli on the Turkish border, with just the occasional document check.

Delays & costs

But the moment the UK leaves the EU, this stops. The component manufacturer may still comply with exactly the same standards, but if the product requires independent testing , any testing houses and the regulatory agencies are no longer recognised. Thus the consignment would have no valid paperwork. And, without it, it must be subject to border checks, visual inspection and physical testing.

What that means in practice is that the customs inspector detains the shipment and takes samples to send to an approved testing house - one for the inspector, one for the office pool, one for the stevedores and one for the lab is often the case. While estimates vary the cost of a container inspection, detention costs for anything up to ten days and testing fees could result in extra £2,000 to deliver a container into the EU.

Aside from the costs, the delays would be highly damaging. Many European industries have highly integrated supply chains, relying on components shipped from multiple countries right across Europe, working to a "just in time" regime. If even a small number of consignments are delayed, the whole system starts to snarl up.

Then, as European ports start having to deal with the unexpected burden of thousands of inspections, and a backlog of testing as a huge range of products sit at the ports awaiting results, the system will grind to a halt. It won't just slow down. It will stop. Trucks waiting to cross the Channel at Dover could conceivably be backed up the motorway all the way to London.

For animal products exported to the EU, the situation could be worse . Products from third countries, which post Brexit would include the UK, are permitted entry only through Border Inspection Posts [BIPs]. Only at these can they be inspected and, if necessary, detained for testing. But, for trade between the UK and EU member states, the capacity of BIP is entirely inadequate. Until more capacity has been provided, trade in these products post Brexit would essentially stop dead . This would be disastrous for the UK since it accounts for some £9 billion in Britain's export trade.

Two way streets

Of course Brexiteers quickly point out that it would be in the EU's interest to negotiate and come to an agreement on these issues.

If the way out of the UK becomes blocked, the return route and incoming trade from the EU would also suffer. Goods from the EU might be delayed or even stop being delivered. Manufacturers which depend on imported components would struggle and may even be forced to close. The resultant job losses could run into millions.

But other countries use WTO rules, don't they?

WTO option advocates will often say that countries such as China, the United States and Australia all trade with the EU without formal trade agreements, and therefore operate under WTO rules. So why would the UK encounter any problems? The answer is remarkably simple. These countries don't rely solely on WTO rules.

Both WTO option advocates and even many critics have focused obsessively with tariffs, but failed to address the issue of non-tariff barriers.

One of the most important types of trade agreement is the Mutual Recognition Agreement [MRA] on conformity assessment. This gets round the problem of border checks, as the EU will then recognise the paperwork on product testing and conformity certification. Agreements on Customs cooperation to ensure that official paperwork and systems mesh  and trouble-free border crossings may possibly proceed.

China, for example, has a Mutual Recognition Agreement on Economic Operators, signed in May 2014. The United States has one on conformity assessment which runs to 81 pages, agreed in 1999. Australia also has one on conformity assessment.

All of these are outside the remit of the WTO but they are nonetheless trade agreements, and vital ones at that.

Nonetheless while WTO advocates claim countries like Australia has no trade agreement with the EU, the EU and Australia conduct their trade and economic relations under the EU-Australia Partnership Framework of October 2008. This aims, apart from cooperation on the multilateral trade system and trade in services and investment issues, to facilitate trade in industrial products between the EU and Australia by reducing technical barriers, including conformity assessment procedures.

In fact there are 82 agreements between the EU and Australia, of which 18 are bilateral. There are 65 between the EU and China, of which 13 are bilateral. Between the EU and the United States, there are 135, of which 55 are bilateral.

Such is the importance of agreements such as the MRAs that the UK would have no option but to seek a deal with the EU, for which there is a facility within Article 50. But, the moment it sought such deals, it would no longer be relying exclusively on WTO rules. It would now be seeking bilateral agreements along the lines of the so-called "Swiss option".

This comes with as many problems as the WTO option, if not more, not least the length of time it would take to agree a Swiss-type arrangement. Indeed some estimates suggest up to ten years if not longer. And that's assuming the EU wants another complex Swiss-type arrangement.

Complicated negotiations

Issues concerning the WTO will even shape the Brexit negotiations themselves. The government is desperate to ensure that Britain's big exporters do not suffer from Brexit. It has explicitly assured Nissan, a major car manufacturer, that it will not suffer. But WTO rules can make such sectoral deals hard. If Britain were to agree bilaterally with the EU not to apply tariffs on cars, the WTO's "most-favoured nation" principle might force it to offer tariff-free access to other countries as well. Channelling government money to boost exports is also something of which the WTO would disapprove and Britain may come under fire from the 164 other members.

So what is the realistic short-term prospect for WTO access to European and other markets? "None of this is impossible," says Peter Ungphakorn, a former WTO official, "but it won't be sorted out quickly." [FT]

While the schedules are being agreed, the UK's legal status as a trading nation will be undetermined, with all that implies for uncertainty and business decisions. The speed of the UK being able to trade on WTO terms in its own right will partly depend on political will. Yet even if other governments co-operate and accept London's proposals, the legal processes and paperwork are likely to take years.

The Government says that it plans "to replicate our existing trade regime as far as possible in our new schedules". This is a sensible approach. It involves minimal disruption and so reduces the scope for other WTO members to object to the UK's new schedules. For tariff levels in particular, copying and pasting should be straightforward.

But the copying and pasting approach will not work for all aspects of the schedules. There are some areas, notably on quotas and subsidy limits, where the UK must reach an agreement on what share of the EU figure it takes. This will in truth be a three-way negotiation, between the UK, the EU and other WTO members, because it will also lead to a reduction in the EU's quotas and subsidy limits

Bumpy roads ahead

The WTO option may seem like an easy way out for post-Brexit Britain, but that road is, in reality, covered with bumps. And there are already signs of the problems Britain will encounter should it pursue the WTO option.

As Brexit talks stalled in the last week Britain and the EU formally informed members of the World Trade Organisation how they planned to split up the EU's tariff quotas and farm subsidies after Brexit. But the plans had already been rejected by the White House and several other nations [BBC / Guardian].

WTO chief Roberto Azevêdo has pointed out any post-Brexit trade talks must start from scratch and only after a complete divorce from the EU. Pascal Lamy former WTO Director General has said it would be a long and bumpy ride. Why? Essentially there are some 164 countries with which the UK would need to renegotiate, which could take up to a decade, if not longer.

Once the UK has a draft of its schedules, and once it has left the EU, it can start trading off them. The WTO does have a formal process for approving schedules – known as 'certification' – which requires unanimous approval from every WTO member, i.e. 164 countries.

However, WTO members can still trade off schedules that have not been certified. The EU, for instance, has not certified its schedules since 2004, but in the meantime, has altered its schedules to reflect successive waves of enlargement.

At some point the UK will want to certify its schedules, requiring the consensus of all WTO members. But the certification process does not pose an immediate threat to the UK's ability to trade post-Brexit.

Once the UK has declared its schedules and started trading, other countries in the WTO may object, particularly if they can demonstrate that the UK has in some way reduced the level of market access on offer.

If there are challenges, these could be lengthy and expensive for the UK to contest. However, the disputes are likely to take several years to resolve, during which time the UK would be able to continue trading off its schedules, whether or not they have been certified.

There are three big trading partners in the world, the EU, US and China, and they might be the most difficult partners to reach an agreement with. Brexit is a divorce between the UK and the EU, and there will certainly be some tension after the fact. The other issue in constructing a deal with the EU is that all member states have to agree to the terms, which can lead to a stalemate fairly quickly. President Trump has been very vocal about wanting to invest at the national level, at the expense of international trade, to "make America great again". With his "America first" policy in mind, it is not clear how the Trump administration will approach a trade deal with the UK.

China does not have the political involvement of the other two, and may want to maintain or even increase export volume to the UK by minimising tariffs and remaining competitive on a global scale, but it still could prove difficult to organise a deal quickly.

In summary the WTO option will be a long, arduous and potentially expensive exercise with no guarantees that Britain's trading position will improve. Indeed the evidence seems to point to the fact that Britain could lose billions of pounds in lost trade in the near term and may take years to establish new trading relationships.In October 2016 David Davis, the Secretary of State of Exiting the European Union, admitted that businesses would face a cliff edge should Britain fall back on the WTO regulations [Independent].  "We need to conclude this [the EU negotiations] within the two years to avoid any cliff edge," the Brexit secretary said after being quizzed concerning the risks of reverting to WTO rules.

Brexiteers want to turn the UK into a global trading powerhouse. But until the country has sorted out its legal standing, it risks merely sitting on the sidelines.

Sources and links: Guardian / Institute for Government / CBI / FCO / LeaveHQ / Stowga / Economist / Reuters

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Monday, October 02, 2017

Growing number of voices say Brexit won't happen

Hard line Brexiteers may well be adamant that Brexit will happen, but there are a growing number of voices who feel that Britain won't actually leave the EU.

In just the last week or two there have been several high profile politicians who have suggested Brexit won't happen. But what are the chances that Britain will change its mind?

In August this year the new LibDem leader Vince Cable said a combination of the politics of Brexit "unravelling" and the "sheer practical difficulties" could stop UK Government plans to leave the bloc.

"I think there is more than a possibility that it may never happen. I'm not saying it definitely won't but there is a significant possibility," he said [Independent / Guardian]

His views certainly weren't new. Indeed he had expressed such doubts on the Andrew Marr show on the BBC a month earlier.

The former PM Tony Blair had also expressed his doubts several times this year, and said it was "absolutely necessary" that Brexit did not happen. His most recent prediction was that there was a 30% chance of Brexit not happening.

Tony Blair, appearing on Bloomberg TV, was asked what the chances of Brexit not happening were. "It's really difficult to say," Blair responded, "Most people would tell you, and I should say to you I think it is likely it happens."

"On the other hand, I still have some difficulty seeing how after the general election, which produced a hung parliament in the UK, this government is going to get its form of Brexit through. Because I think there are a lot of Labour MPs who will oppose it, and a lot of Conservative MPs who will oppose a hard Brexit. So there's maybe, I sometimes say, a roundabout 30% chance that it's changed. But the truth is a lot will depend on how the debate develops over this year."

He wasn't the only politician expressing doubts on the business channel. Former UK cabinet minister Michael Heseltine said it was "very possible" that Britain would reverse its decision to leave the European Union. "We will once again recognise that that's where we belong," he said in an interview with Bloomberg's Mark Barton on 28th September, just 10 days after Blair's appearance.

The Tory grandee also appeared on the UK radio station LBC where he even suggested Britain would not only remain a part of the EU but also adopt the euro.

He told LBC radio it was "very possible" the UK will never leave the 28-nation bloc, despite Article 50 being triggered in March and the Brexit negotiations now being well underway.

Asked why, Lord Heseltine said there were two likely reasons. "One, that public opinion changes – which it hasn't done yet – and secondly, that Parliament, which is the sovereign body of our country, just hasn't got the stomach for it, so there will not be a majority for it, and a way will be found to upset the present Article 50 procedure." [Independent]

Lord Ashdown, a Lib Dem grandee and former leader of the party, also suggested that Brexit would not happen simply because the current government were "hopeless".

He accused the Government of being incapable of delivering "anything" and predicted there would be a "something quite close to a parliamentary stalemate" in the spring of 2018.

Lord Ashdown, who was speaking at a fringe event at the Lib Dem conference in Bournemouth on Britain's Brexit options, said, "My view is that the dysfunctionality, the dystopian hopeless dysfunctionality of this government, they can't deliver anything - if you ask them to deliver the Sunday papers they couldn't do it, or at least they'd have a row about it." [Mirror]

Failing negotiations

The UK negotiations with the EU have done little to inspire anyone on either side, leavers or remainers. Nor has the EU's chief negotiator Michel Barnier been entirely impressed, saying that there needed to be a great deal more progress before the subject of trade could be discussed [Guardian].

The Prime Minister's speech in Florence was lauded by some in the Conservative party as an attempt to help break the deadlock, especially concerning issues surrounding Britain's financial commitments [Bloomberg]. However, it was condemned by hard liners within her own party for making too many concessions. On the other side it has been seen as an admission of defeat and a desperate plea for more time on seeing that the negotiations were not going so well.

"The Florence speech demonstrates the sheer scale of May's mistake in making Article 50 notification when UK not ready," David Allen Green, a Law and Policy commentator at the FT, tweeted.

Nonetheless, Barnier did describe May's suggestion of a 'transition' as being 'constructive' [Guardian], although the European Union president Jean-Claude Juncker didn't seem quite so optimistic and said a 'miracle' needed to happen in order to go forward [Independent].

Steve Bullock, a former EU negotiator for the UK, was also less than impressed with May's speech saying the the week's events "showed the psychology of Brexit to be composed of arrogance & self-importance accompanied by a crippling victim complex"[Twitter]

Unfolding fiasco

The picture on the surface certainly doesn't look as regards Britain's position in Brexit talks. But neither does the situation look good for Britain and its economy. The pound remains weak, the UK's credit rating has been downgraded [Bloomberg] and the economy is not as strong as some have suggested with consumers surviving on credit rather than earnings [Independent]. In addition Britain has now sunk to the bottom of the G7 growth table [FT].

Meanwhile big business remains uncertain which way to turn. One sector that is gambling in the face of Brexit is the insurance industry some of whom are playing a high stakes game of poker. Contracts agreed, sometimes decades ago, under EU passporting rules might be in jeopardy if and when the UK leaves the EU.

Insurers say that if and when passporting disappears from the UK, they will be unable to legally pay out on those policies. The Association of British Insurers says that its members face the choice of breaking the contract or breaking the law. This is not a small matter since liabilities under these long-term cross-border deals run into billions of pounds [FT].

Some businesses have already taken a hit. As the Tory party conference opened in Manchester it emerged that Monarch airlines had gone into receivership. Monarch had been in financial trouble for some time and only days before with talk that its licence was at risk [Telegraph].

The full reasons why the airline collapsed are multifold. Unite's national officer Oliver Richardson said, "There were a number of factors that impacted negatively on the company."

"However, continuing uncertainty surrounding Brexit and the ability of UK airlines to fly freely in Europe after the UK has left the EU undoubtedly hindered Monarch getting the investment it needed to restructure and survive." [Telegraph]

Wavering odds

So what are the odds that Brexit won't happen. Blair gives it a 30% chance while others such as Vince Cable, Lord Heseltine and Lord Ashdown will only say, Brexit "probably won't" happen. As far as the business experts are concerned there are few who will step up to the plate and air an opinion on the matter. However, the banking corporation Morgan Stanley have suggested there is a 10% chance Brexit won't happen [Business Insider].

That is perhaps little consolation for remainers whose voices are getting louder [BBC / Metro / Reuters]. But it is nonetheless worrying for euro-sceptics, some of whom feel that there are many in government desperately looking for a way to stop Brexit altogether.

In the time since the referendum Theresa May has shown herself to be disingenuous after making a complete U-turn concerning her views on Brexit having seemingly ignored everything she said in a speech she made before the Institute of Mechanical Engineers months before the referendum. This was seen by some to be a cynical attempt to secure leadership of the Tory party. Having seized power she has uttered one meaningless soundbite after another - Brexit means Brexit, a Red, White & Blue Brexit - before invoking Article 50 only to dissolve parliament in order to fight an election which resulted in a hung parliament. 

In order to get the required majority May then made a deal with the DUP with promises of significant amounts of funding to Northern Ireland. However it didn't come without tears being shed. And according to the Times the Queen was not amused, indeed there was apparently 'fury at the Palace' over May's behaviour.

As for the Europeans with whom she and her party are negotiating, there appears to be complete bewilderment as to what direction she is going [Spiegel].  

Ticking clock

Time is running out for Brexit. According to the chief EU negotiator, Michel Barnier, only one year remains to construct a new and acceptable relationship between the UK and the European Union, since six months will be needed for its ratification by the other 27 member states. Any agreement will have to take into account not only trade, but also security, defence, terrorism, crime and much more [New Statesman]. 

Meanwhile the British public is gradually becoming aware of the costs of Brexit. Sterling remains weak despite short lived rallies. Prices have risen for imported food and clothes, and travel abroad has become more expensive. Wages have not increased to match prices, though the relaxation of the austerity pay freeze of 1% may ease the position of public sector workers a little. Many business leaders, though not all, have also come out to complain about lost millions due to the fall in sterling and the uncertainty for the future [City AM]. 

UK growth is down, for the second quarter this year, indeed it is the weakest since 2013 [BBC / Sky News / Guardian].

And what of the special deals Britain will make on the world stage after Brexit? It is already looking shaky after the US, with whom May had touted as a forthcoming major trading partner, slapped a 219% tariff on Bombardier which manufactures aircraft parts [New Statesman]. 

It has also emerged that trade statistics, often used by Leave campaigners during the EU referendum are heavily distorted by the UK's gold import/export industry. The Government's trade statistics show that, over the past five years, the share of UK goods being exported to the European Union was only 46% - a fact frequently referred to by those who campaigned for Brexit.

However, this number is severely distorted by the flow of gold bullion in and out of London - the world's major centre for the trade of this precious metal. In the fourth quarter of last year, a sharp outflow of gold showed up as a sudden spike in exports, causing some economists to conclude that Britain's manufacturers were starting to benefit from a post-Brexit jump in confidence.

In fact, the spike was primarily a sign of investors pulling gold out of vaults in London [Sky News].  

Industry is already getting worried, and particularly the car industry, which is reliant not only on Europe as an export market but also as a source for parts and materials [Sky News].

Cliff edges

Britain, after Brexit may be able to negotiate its own trade deals, but it will have to, if working under WTO rules, negotiate with 163 WTO members when drawing up tariffs and trade deals. Indeed any Brexit negotiation will be like a walk in the park compared to the UK 'rejoining' the WTO as an independent trading nation [Politico].

The UK does not have to join the WTO as such, since it is already a member by having been a part of the EU. The UK's detailed WTO commitments on tariffs and barriers to trade are set out in schedules shared with the EU. On Brexit, the UK would, however, need to have its own schedules and for those schedules to be certified, there must be no objections by any other WTO members, all 163 of them. And the sticking point here is that the decisions within the WTO must be unanimous [BBC / FT].

The UK will of course still be obliged to follow EU rules when it comes to anything exported to the EU.

Outside the EU the UK won't pay the membership fee of some £16 billion a year. But it has to remembered that nearly half of that came back as a rebate. And in addition there were other significant returns in terms of EU funding [BBC].

In fact, rebates and funding aside, the EU membership fee accounts for only 2% of total UK government expenditure [EconomicsHelp / Full Fact / BBC].

For richer or poorer

So will Britain be richer if, as May insists, Britain does leave the EU in March 2019? Well the government may well profit. After the UK leaves in March 2019 it will not be obliged to adhere to new EU tax rules aimed at stopping the likes of Google and Amazon from engaging in tax avoidance  [Times of Malta]. Thus Britain could well become a tax haven for such companies, which would go against the grain of many right wing papers that have in the past few years heavily criticised such enterprises.

But will the average Briton benefit? It is highly unlikely. Agriculture will be unlikely to see EU subsidies replaced by spending from Westminster. Education may also lose out and school milk, currently subsidised by the EU, may also take a hit. And with increased tariffs on many imports, the cost of living is certain to increase, not taking into account continued weakness of the pound.

As for the £350 million for the NHS, which has already been established to be a fantasy figure even by the ONS, cuts rather than spending is likely to be the order of the day.

And as the numbers of EU workers diminish, whole sectors of British industry will also suffer. Whilst only predictions, cuts in the number of EU nurses, fruit pickers, teachers and others will surely change the economic and social landscape.

No future?

It is easy to be flippant and scream "passports, fish and sovereignty". However the change in the colour of one's passport will not make anyone's life easier. Supposed changes to fishing rights - which while important to fishermen, only have a marginal effect on the British economy as a whole - may just create more problems for Britain's fishing industry. And as has already been established, Britain's laws are and have always been sovereign. Indeed while the UK does follow and implement and incorporate EU law into British law, most such regulations are to do with trade. In addition it also has to follow rules and regulations outside the EU in order to trade elsewhere. Outside the EU the UK would still have to follow such rules but would have less say and no veto on such laws, rules and regulations.

All this uncertainty, the headaches of negotiating with the EU let alone the subsequent months if not years of wrangling with the WTO member states, growing signs of slowing - if not failing economy - plus the downsides of being outside Britain's biggest trading bloc may well create a climate where Brexit will be abandoned. It may not happen by implicit declaration. It is unlikely that one will hear May declare something along the lines of, "Sorry it's too difficult and not good for the country so we're abandoning this project!!"

But it might come about through, as Heseltine suggests, another election where the Tories lose to a party which declare they will abandon Brexit and renegotiate a better position for Britain within the EU. Of course any subsequent 'renegotiation of Britain's place in Europe' will likely be a fudge, and things may just continue as they were. But it may be the better option than continue along the path on which the former PM David Cameron sent Britain down.

Even if Brexit is abandoned, there has already been much damage done that will need repairing. Deep division have been carved in society by the EU referendum, wounds that will take many years to heal.

Some companies, particularly financial institutions, have already made shifts, and winning back business may be difficult especially if they find their new homes in places like Frankfurt and Paris just as comfortable.

And there is the issue of EU workers, on whom Britain is reliant. A great many have already upped sticks and left the UK and it might take a while before the xenophobic atmosphere - perceived or otherwise - diminishes enough to encourage them to return.

Whatever side of the argument one stands, there are not many who would stake a bet on what will happen in March 2019. Even staunch remainers will only utter phrases such as 'probably not happen' or lay down odds of a 1 in 4 chance of Britain remaining. There needs to be a far clearer picture of how disastrous Brexit will be before those odds swing the other way and public opinion shifts.


tvnewswatch, London, UK

Wednesday, August 23, 2017

When language is not a barrier

Recently the European Commission President Jean-Claude Juncker proclaimed that English was losing its importance. However, for anyone travelling around the world, and indeed across Europe, it is clear that English is almost a necessity.

European Commission President Jean-Claude Juncker told a conference in Italy on the EU that "English is losing importance in Europe".

Amid tensions with the UK over looming Brexit negotiations, he said he was delivering his speech in French.

"Slowly but surely English is losing importance in Europe and also because France has an election," he said, explaining his choice of language.

Meanwhile he called the UK decision to leave the EU "a tragedy".

Britain's leaving the EU may well be a tragedy, but Britain's influence around the world cannot be denied, especially when it comes to language.

While Mandarin Chinese is the second most widely spoken language after English, it is mainly of importance within mainland China itself.

English, on the other hand is spoken by people all around the world.

English is of course the international language when it comes to aviation in particular and to some extent for maritime communications.

But English is often the second language after the local language.

Go to China and, while having some fluency in Mandarin Chinese is obviously useful, one will find many people also speak some degree of English.

But the importance of English is even more marked when travelling around Europe.

Of course every country and its people are proud of their own language. But the fallback, in order to communicate with nationals from other countries better, is very often English.

One marked example was a coversation heard outside a bar in central Portugal. "So you're from Italy? But you're not members of the Mafia.." joked some young Portuguese as they chatted to some Italian girls over a beer.

Inside the bar the conversation between a Portuguese guy, two Belgians and a Brit was almost entirely conducted in English.

Despite the reputation that the French have for arrogantly refusing to speak anything other than their mother tongue many are surprisingly fluent in English. Moreover they are often very accommodating and willing to chat at length in English whilst just as willing to let you practice one's French.

Of course it has to be said that not everyone in mainland Europe, or indeed around the world, speak English. But that said a great deal more foreigners speak English than Britons speak any foreign language.

"You have it too easy," says one Belgium who lives and works in Portugal. She was herself fluent in Dutch, French, Portuguese and English, as well as her native language of Flemish.

And of course she was right. Many Brits either arrogantly expect people to speak English or simply cannot even be bothered to make the effort to learn something of the language whare they are visiting.

It might be a little too much to expect from the British that they become fluent in several languages. But for regular visitors to countries on the continent or elsewhere in the world it is surely just a matter of being polite to at least attempt to say something in the local language.

While not fluent in Mandarin Chinese by any means I can survive fairly indepedently whilst travelling in China. But even one off visitors should at least attempt to say 谢谢 [xie xie - thank-you].

Having only visited Spain once, and never having stopped by Portugal, both languages were alien to me.

Nonetheless I made the effort to learn some key words and such attempts are always greeted with delight.

Jean-Claude Juncker is wrong to say English is losing its importance. But he might have been right to suggest that it is just as important to make an effort to learn and speak more than just English.

tvnewswatch, Aragon, Spain

Tuesday, July 25, 2017

Lost in France after Brexit vote

As Britain negotiates its withdrawal from the EU British expats are perhaps understandably nervous and anxious about their future.

In the Dordogne region of France, a popular haunt for Britons living in Europe, many are unsure how the situation will play out.

Some are looking at obtaining French citizenship, but others, having been in France so long feel as though they shouldn't have to jump through hoops in order to stay.

"No, I'm British," says Peter, one expat who has been in France for fifty years, when asked if he might apply for French citizenship. "I guess they can always try and find me and throw me out." 

While wanting to stay in France he feels the British government have failed in attempting to negotiate from a position of strength and that the EU will walk all over Britain in the withdrawal negotiations.

Other Brits are pragmatic and are seriously appraising their situation. "I guess I'll apply for French citizenship," says Alan, originally from Liverpool, and who now works at a campsite by the river Dordogne. Unlike some, he has yet to look into the bureaucracy and paperwork involved.

Others have been more focused. "I've got all the forms, but yes, you're right I really should make a start on it," Paul, another British expat, says. He moved to France over 15 years ago having quit his job in IT and has a successful business growing grapes and making wine.

Brexit could make his life all the more complicated given that his children, who were born in France, are French, while he and his wife are still British.

While attaining citizenship may not be a problem, for Paul and his family at least, the forms are daunting. 

French authorities require information on family members including mother and father of all those applying and birth and marriage certificates must be officially notarized and translated.

Tax documents must be submitted to show one's earnings. And many of the forms, of course, have to be filled in and submitted in French.

Any mistakes and one has to reapply. It can be a real headache as some of the required documents are only valid for a short period of time. So should issues arise with one part of the application, things can get very complicated and frustrating.

It is perhaps understandable that some British expats simply do a Gallic shrug of the shoulders and say, "I don't know what's going to happen," whilst perhaps hoping that the whole Brexit thing would just go away.

tvnewswatch, Dordogne, France

Sunday, July 16, 2017

May wins 3rd place in unpopularity contest

After months of sloganeering Theresa May has dug herself, her party and the country into an ever deeper hole as she adamantly continues along the path towards Brexit.

May essentially seized control of the party by default as other potential candidates dropped out of the leadership battle after Cameron left the ship following the EU referendum. And since then she has continued to throw out one-line battle slogans.

Theresa May immediately maintained that Britain was going to leave the EU, that it was the "Will of the people". But what sort of Brexit would it be. May refused to give any more detail than to say "Brexit Means Brexit", a meaningless slogan which prompted much ridicule and incredulity. As the months passed her slogan changed as she declared she was to seek a "Red, White & Blue Brexit". The meaning was just as opaque. Then as it became clearer that a Brexiteer's vision of a "Having a cake and eating it" was not on the table May declared "No deal is better than a bad deal".

Attempting to consolidate power May declared an election soon after invoking Article 50 and less than a month after the Westminster Bridge terrorist attack. Running under the banner of "Strong and Stable" May saw her strength gradually drift away as she was instead accused of being "Weak and Wobbly".

"Enough is Enough" May chanted as terrorists once again launched another terror attack, this time targeting children and families at a pop concert in Manchester. Dreadful and appalling as it was, the slogan made her sound like a screeching head mistress rather than a leader. The statement also seemed to belittle previous attacks.

Within days soldiers were on the streets and security was beefed up at transport hubs while the terror threat level was raised from severe to critical suggesting an attack was imminent. It all seemed little more than a publicity stunt to get pictures in the papers of law enforcement and army soldiers protecting Britain.

However only days after the threat level was raised it was once again lowered to severe and security levels diminished. Then came yet another terror attack this time targeting Londoners and tourists on London Bridge and at restaurants near Borough Market. It was the third terrorist attack in Great Britain in just over two months.

While condemned by all sides of the house, there was also criticism of May for her police cutbacks during her time as Home Secretary.

May won the election, but there was certainly no mandate. The Tories lost a number of seats and May had to seek support from the DUP to prop up her minority government in what the opposition labelled a "Coalition of Chaos". Tory policies, austerity, May's stance on a hard Brexit and arguably a number of terror attacks and her police cutbacks had all played a part in her loss of support.

In little over a year May had taken a weak mandate for Brexit [52% was, after all, hardly a super majority that many democracies require for any major constitutional change] and doggedly sailed Britain towards what was looking like a more and more calamitous cliff edge.

Just weeks after the election and three months after Article 50 was invoked negotiations with the EU already seemed to be going somewhat awry.

Meanwhile May's first G20 didn't seem very welcoming. She looked somewhat isolated and appeared to hitch herself to President Trump [Business Insider]. But while he declared that he would be looking to secure a quick trade deal with the UK, he evidently seemed to be unaware that Britain could not actually sign anything until it had left the EU which won't be until March 2019.

Trump may seem to have a liking for Theresa May, but her popularity both at home and across Europe has dwindled significantly [Sky News].

While Trump and Putin were more unpopular in many European countries, May came a clear third place in unpopularity ratings of a YouGov poll. May had a negative rating in all European countries, with the Prime Minister viewed most unfavourably in Germany.

Among the 2,070 Germans surveyed, 62% had an unfavourable view of Theresa May with just 17% viewing her favourably, giving the PM an overall rating of -45 in the European powerhouse. May also had a negative rating in France, Denmark, Sweden, Finland and Norway.

The unpopularity is growing not only in Europe, but also back at home, and within her own party.

There are clear disagreements within Tory ranks as to what direction Brexit might take. And there are warnings from outside the party that Britain risks far more than even so-called 'project fear' predicted.

Top former civil servants have warned Theresa May that squabbling cabinet ministers, unrealistic expectations and an overburdened administration risk derailing her hopes of a smooth Brexit [Guardian].

May's Red, White and Blue Brexit may well send Britain over the cliff, but according to one former PM, a Corbyn government could put Britain on it's back.

"If a rightwing populist punch in the form of Brexit was followed by a leftwing populist punch in the form of unreconstructed hard-left economics, Britain would hit the canvas, flat on our back and be out for a long count," former Labour prime minister Tony Blair wrote [Guardian].

While there are still a great number of eurosceptics and Leave voters who doggedly with to continue on their mission to drag Britain out of the EU, there is, at least according to some within Tory ranks, that perhaps wish there had never been a referendum and that the whole issue would just disappear.

"I think a lot of people will turn over in the night and think is there a way out of this" Alan Duncan said during a BBC2 documentary 'Brexit Means Brexit'.

With all the problems that Brexit is likely to create, the economic uncertainty, and the increased societal division, it is perhaps no wonder that people outside Britain are puzzled why the country is extracting itself from the single biggest trading block in the world.

May is unpopular, but Britain is fast becoming a laughing stock [Guardian].

tvnewswatch, London

Saturday, July 08, 2017

Return from a long hiatus

Any regular readers of this blog may well have noticed a lack of posts these last few months. There are a wide variety of reasons but one primary reason is to do with time.

Anyone who creates any online content will know that it takes time and thought. An article that takes just 5 minutes to read may take 30 minutes to writes, longer if there is a great deal of research behind it. YouTube videos can take even longer especially if one employs profession production methods.

But what's the reward? For some it's purely a thing of passion or interest. Even if no-one reads or views the online video or article, it was merely the creation that was important to the creator. For others it is the kudos; the thrill that someone has even taken time to read or watch one's creation. And there are of course some that create content to make money, although one has to get a lot of hits to get any significant return.

But whether a hobby, passion or financial venture, it still comes down to time. And that has been the primary issue resulting in the lack of posts on this platform. One has to juggle work, family and leisure time and somehow find space and time to write and create a blog post. And it all becomes even more complicated when one throws international travel into the equation. A reduced passion, it has to be said, has also played a part. Even for a news junky everyday events can become just too depressing after a while, especially if it's one's own country that's in the firing line.

Britain has seen one terror attack after another in recent months [Westminster Bridge, Manchester Arena, London Bridge and Finsbury Park Mosque], and a devastating fire at Grenfell Tower which left dozens dead and many families displaced. The UK is now being led by a weakened Tory government following a disastrous election which has created further uncertainties in Northern Ireland and the Good Friday Agreement due to deals made with the DUP. And all this against the backdrop of Brexit. Whether one is pro or anti Brexit no-one can surely deny the uncertainty and division created by the EU referendum.

Burnout is a real challenge for a lot of journalists who cover death on a regular basis. Many war reporters come home with similar post traumatic stress symptoms to soldiers. But what is often overlooked is the effects on those who write on the less extreme, but nonetheless equally depressing reports that journalists have to cover.

As a photojournalist I have seen, photographed and reported on countless serious road traffic accidents, fatal fires, riots, terror incidents and the aftermath as well as funerals and memorials. There are the less dramatic stories which can be just as heart-rending, be it a cancer sufferer doing a fun run or victims of surgery or crime.

Good employers will make counsellors available for reporters who have been involved covering tragedies, war zones or too much death in general, but just as with soldiers, many journalists don't want to admit they need help. For some that help is not even offered since many people involved in news gathering are freelance.

Many journalists try to disconnect and leave it at work. But this can be hard to do. You try to appreciate your friends and family more. You try to make time for positive stories. But ultimately, a lot of people move on to other beats or leave the industry altogether.

So there are are a lot of reasons for the hiatus. But one has definitely not quite hung up one's boots and camera yet. But sometimes one needs a rest from it all. And family and work have to come first. That said, efforts may well be made to post more content in the coming months, although it is difficult to pick up the baton and run with it after such a large gap.

tvnewswatch, London

Wednesday, March 29, 2017

Off down the rabbit hole into a fantasy land

Theresa May has officially kicked off the start to negotiations to extract Britain from the European Union and sent the country down a rabbit hole and into a fantasy land [BBC].

At least this is the view of Ken Clarke, the veteran parliamentarian, who was the only Tory to vote against triggering article 50. He made a passionate pro-Europe speech making him an unlikely hero of the remain left, and likened the Tory PM Theresa May to Alice in Wonderland as she prepared to send Britain into what might end up as a Titanic disaster rather than the Titanic success that Boris Johnson has hailed Brexit will be [Guardian].

Britain could tumble down the rabbit hole "and emerge in a wonderland" where suddenly world leaders are "queuing up" for to strike trade deals with Britain including "nice men like President Trump and [Turkish] President Erdogan," Clarke declared sarcastically.

"I do want the best outcome for the UK from this process," he said. "No doubt somewhere there's a hatter holding a tea party with a dormouse!" he quipped [Channel 4 / Guardian].

"Brexit could be a historic disaster"

Clarke has never minced his words when it comes to Brexit and said it will be a disaster for Britain.

"I don't want to fall into the [trap] of wandering around, positively welcoming gloom and disaster, so as to be able to say: 'I told you so.' But I actually do think it will make us poorer. It could be a historic disaster."

"If it turns out to be at some enormous cost and it brings an end to international investment in quite a lot of sectors of the economy, then of course it could be a disaster." [Guardian]

He is not the only Tory to decry the folly of Brexit. Tory grandee Lord Heseltine has consistently hit out at Brexit campaigners for not having a clear plan. Speaking on BBC's Newsnight only days after the referendum result Lord Heseltine said voters were "sold a pup"

He told Evan Davis that British people were misled by Brexit campaigners, and that - regardless of whether Boris Johnson became prime minister - he should be put in charge of negotiations with the EU because "he got us into this mess". He also argued there should either be either a second referendum or a general election to make sure the "will of the people" is met [YouTube].

But his battle against Brexit has earned him no support from much of the Tory party. Indeed soon after he voted against the government's Brexit legislation he was sacked as a government adviser [BBC].

Former PM John Major has also spoken out calling Brexit an "historic mistake" [Independent].

Remainers vilified

But anyone bold enough to stand up to the so-called "will of the people" has been vilified in the media. Tony Blair, Peter Mandelson, Ken Clarke, Lord Heseltine, Nick Clegg, Tim Farron, Gina Miller and High Court Judges have all found themselves at the sharp end of the sword as the right wing press tear into them.

Judges have been labelled the "Enemies of the People" while others have been attacked in social media and even received death threats.

Gina Miller has been singled out by many hardcore Leave campaigners for her High Court action which sought to clarify that only parliament could vote on whether Article 50 could be triggered rather than the PM unilaterally invoking a Royal Prerogative [FT].

Gina Miller has said she never expected the levels of abuse she received [New Statesman]. She says she doesn't "know Britain any more," and has even talked of leaving the country altogether as the vitriol and threats have become so severe.

Quitting the UK

Miller is not the only one thinking of leaving. Indeed many people have already left whilst there is also a decline in some people coming in.

The numbers of those leaving the UK because of Brexit are difficult to determine. But there are some notable examples.

The director of the V&A Martin Roth quit over his disillusion with Brexit [Guardian / Independent]. Tristram Hunt then quit as Labour MP of Stoke on Trent to become V&A director and in so doing prompted a by-election [Guardian / BBC]. Labour retained the seat and saw UKIP's leader Paul Nuttall flounder [Guardian].

Since the Brexit vote there has been some indication as to how unwelcome many Europeans now feel. The number of nurses coming to the UK from the EU since the Brexit vote has fallen by 90% [Telegraph].

And the hospitality trade has expressed concerns as much of it relies on EU migrant workers.

Yet should anyone make and public comment or raise such concerns one is immediately booed down as was one woman on a recent broadcast of BBC Question Time [Huffington Post].

Whilst some argue that Brits could easily fill rolls currently taken by EU citizens, the fact is many British people don't even apply to do such work. Indeed in the last week Pret A Manger said only around 1 in 50 applicants were British. It has even began to dawn on the ardent Leave campaigner Tim Martin, owner of the Wetherspoons pub chain that EU citizens were much needed in Britain.

Britain could not afford to put the brake on immigration, Martin said whilst calling for a special deal for EU workers which took advantage of its proximity compared with countries such as India and China.

"For the UK to be a successful country and economy in the next 20, 30, 50 years, we need a gradually rising population and that will need some type of reasonably controlled immigration. If we don't get it I think the economy will tend to go backwards," he said.

His comments were criticised by Remainers who pointed out that being a member of EU already gave such advantages [Guardian].

Growing racism and xenophobia

Several months after the referendum the fallout for race relations has improved little. One A Polish woman was booed by audience members on BBC1's Question Time when she said she no longer feels welcome by 52% of British voters who backed Brexit. The woman says she's lived in the England for 23 years and was never discriminated against before the Brexit vote [Independent / Guardian].

Post-Brexit racism soared 40% according to Home Office figures figures and one Polish man was even killed after an attacked which police described as a "hate crime" [Independent].

And more recent figures appear to show there is no slowing of such crime. Indded all the sign appear to indicate an increase in xenophobia and hate crime [Independent].

UKIP have been blamed for much of the anti-immigrant stance that dominated the Leave campaign. But many Tories were also guilty of stirring the pot which has emboldened the far-right.

And in parliament Ken Clarke, who has long stopped caring about what anyone in the Tory party thinks about him, poured scorn on some of his own colleagues. Enoch Powell would not feel out of place among the current crop of "mildly anti-immigrant" Tories, Clarke said in his 20 minute address to parliament last month.

Trade and weak pound

The racism and xenophobia was arguably always there. Brexit has just helped in emboldening the racists and given an anti-immigrant stance an air of respectability.

Britain faces more that infighting and thuggery however. In the coming years it needs negotiate a divorce from the EU, to establish trade deals with the EU as a whole and sign new deals with other countries post-Brexit.

And, as has been iterated many times, this is by no means an easy task.

May has all but said she'll tear up all trade ties with the EU and start over, essentially taking Britain back to WTO rules. What is little talked about is that by doing so means Britain with have no signed trade deals after leaving the EU and will have to thrash out deals with other blocks independently. Such a process could take years and under WTO rules have to be ratified by all 164 WTO members.

Contrary to popular perceptions, Article 50 inaugurates a withdrawal process, not a trade agreement. It will involve negotiating essentially technical issues, though important ones – such as the rights of British citizens in the EU and of EU citizens in the UK – and can be achieved within the two-year limit. Article 50 does allow for a shadow negotiation on trade matters. Indeed whilst May wants to negotiate a trade deal in tandem Michel Barnier, the EU chief negotiator, has all but ruled this out.

Complicated negotiations

And thus it gets very complicated. The UK cannot simply 'cut and paste' the terms of its current WTO membership - as part of the EU - and carry those terms over. Depending on the terms of Brexit, at least some of these schedules will need to be rewritten, because leaving the EU will affect the EU's own commitments to other WTO members. Agreeing the UK's new schedules will involve negotiations between the UK, the EU and other WTO members to resolve sensitive issue such as limits on agricultural subsidies and the size of tariff quotas - where certain quantities of imports are charged lower tariffs. There will also be questions about how existing EU-wide quotas – of which there are currently almost 100, mostly on agricultural products – are divided up between the UK and the EU post-Brexit [Institute for Government / Guardian / Economist].  

Brexodus

The Remain campaign was labelled as project fear for its predictions of chaos following a Brexit vote. However, many predictions are likely to come true as time passes. There was no immediate departure of banks and manufacturing. But as these business sectors see Brexit as impeding their operations they will shift. Indeed there has already been signs that some firms are shifting operations.

This will undoubtedly affect jobs and further burden government expenditure as regards welfare benefits at a time when austerity is still an issue.

Recently the French presidential favourite Emmanuel Macron suggested UK talent move to France [Sky News / Independent]. While the language barrier might prove difficult such offers may only serve to increase the brain drain. There are a great many Remain voters that will remain in the UK, but there is a large proportion looking to escape Brexit Britain [Guardian].

Only time will tell, but it seems clear already that there will be less industry, a smaller financial sector and less opportunities unless one wants to pick strawberries or work in Pret A Manger.

But given the falling value of sterling and the rise in the cost of living, any job will be probably much appreciated.

Brexit is built on fanciful dreams of an open Britain which will trade freely with the world. But quite is Britain offering to trade with the world it isn't already selling? And how would any future trade deal be any better than the trade deals Britain already has in place with those countries? As for buying things, Britain already buys from countries all around the world, and there is no reason to indicate that Britain would buy any more than it already does. Indeed buying products from halfway round the world will be more expensive not only on potential WTO tariffs, which would apply to all countries the UK might import from, but also due to transportation costs. So in respect to the belief that Brexit will conjure up a Wonderland, Clarke is right. But unlike Alice's adventure there won't be the relief of waking up when the stack of cards come crashing down. In fact a leaked report has already indicated Britain is in for an "economic shock" should it leave the EU without a deal [Independent].

No clear plan

It seems clear that there is still no clear plan. Theresa May suggests no deal will be better than a bad deal and some in her party have embraced this. Indeed even amongst many Brexiteers the WTO option is seen as a kamikaze Brexit. The Daily Mail this weekend warned that Andrea Leadsom and her ultras would steer the UK not towards a soft Brexit or a hard Brexit, but a Kamikaze Brexit.

Yet it has emerged that there are no contingency plans for Britain falling back onto WTO rules. In fact it has emerged that the government has not carried out a full assessment of the potential economic impact of Britain leaving the EU without a trade deal, after the Brexit secretary told a committee of MPs, whilst saying that modelling the repercussions of a default to World Trade Organisation [WTO] arrangements were impossible [Guardian / Mirror]. 

However he later contradicted this when on BBC Question Time the Secretary for Exiting the European Union said the government had a "huge contingency plan" for the UK leaving the EU without a deal [BBC].

During the programme Davis also said the UK would abide by its obligations when it comes to settling outstanding liabilities with the EU, but played down claims these could amount to £50bn. However the EU has already threatened to take the UK to the International Court should it not pay up the full amount [Business Insider].

Meanwhile, former Lib Dem leader Nick Clegg said the EU was "simply going to ask us to settle the tab before we leave", and Labour Brexit spokesman Sir Keir Starmer said the UK had to honour its debts "otherwise no country is going to want to deal with us" in future trade negotiations.

Rabbit holes & elephant traps

Today's triggering of Article 50 marks a milestone on a long road. But the path down which it leads is treacherous and full of potholes. Ken Clarke has likened it to heading down a rabbit hole to a fantasy land. Newspaper pundits, such as the Telegraph's Christopher Booker, suggests Davis is heading into an elephant trap.

"As for the fond belief that, without any deal, we could continue to trade with the EU just 'under WTO rules', those still suggesting this are clearly unaware that not a single developed country relies just on 'WTO rules' to trade. The EU treaty database shows that it alone has no fewer than 880 bilateral trading arrangements with almost every country in the world, including 20 with the US and 67 with China; all of which we would drop out of by leaving the EU."

There are other traps too as the "electronic, light-touch customs checks" that allow 10,000 British trucks a day to move goods anywhere in the EU without border controls.

"[Davis] still doesn't seem have grasped is that the moment we leave the EU [and the European Economic Area] to become a 'third country', we are automatically excluded from this electronic system: to be faced with all the need for paper documentation and inspection procedures which could soon have lorries backing up from Dover to London and beyond."

"The horrifying fact is that our politicians are heading for these negotiations without any real idea of what a mighty elephant trap awaits them." [Telegraph]

There are a good many that believe Brexit will be a disaster for Britain. Former UKIP Nigel Farage is not one who subscribes to this view, but has said he would leave Britain should Brexit fail. "If Brexit is a disaster I will go and live abroad. I will go and live somewhere else." [Business Insider]

That will surely bring great comfort to countless Briton's left without jobs as car plants relocate, or British housewives struggling with increasing shopping bills and as those with jobs face higher taxes to make up shortfalls as the City shifts to Europe.

No-one really knows where the road to Brexit will lead. Indeed to only thing certain is the uncertainty. And business hates uncertainty.

tvnewswatch, London

Monday, February 27, 2017

Former PM, John Major, brands Brexit an 'historic mistake'

John Major, the former Prime Minister has made an incendiary speech at Chatham House in London branding Brexit a 'historic mistake'. This is the speech in full:

Eight months ago a majority of voters opted to leave the European Union. I believed then – as I do now – that was an historic mistake, but it was one – once asked – that the British nation had every right to make.

The Government cannot ignore the nation's decision and must now shape a new future for our country.

Some changes may be beneficial: others may not. A hard Brexit – which is where we seem to be headed – is high risk. Some will gain. Others – will lose.

Many outcomes will be very different from present expectations. We will find, for example, that – for all the social pressure for immigration control – economically, we will need their skills.

The Referendum was one of the most divisive votes in British history. It not only divided the four nations of our United Kingdom, but opened up divisions within those nations, within political parties, within neighbourhoods, within families, between age and income groups, and among friends.

It will not be easy to heal those divisions and unite our nations. Yet that is what we must do.

In Scotland, I believe a hard Brexit will encourage a second referendum on independence. This may seem improbable at the moment, but it would be reckless to ignore the risk.

As we saw last June, emotion and national pride can overcome economic self-interest. If Scotland were to become independent, both she and the UK would be diminished. That cannot be ignored as Brexit evolves.

The same is true of Northern Ireland. Many years of painstaking effort went into the Irish Peace Process which, even apart from Brexit , is at a fragile moment. Uncertainties over border restrictions between Ulster and the Republic are a serious threat – to the UK, to the peace process, and for Ireland, North and South. A special deal will be necessary.

I will return to these issues on another occasion.

As I voted on the losing side, I have kept silent since last June. This evening I don't wish to argue the EU is perfect. Plainly it isn't. Nor do I deny the economy has been more tranquil than expected since the decision to leave was taken.

But I do observe we haven't yet left the EU, and I have watched with growing concern as the British people have been led to expect a future that seems to be unreal and over-optimistic. Obstacles are brushed aside as of no consequence, whilst opportunities are inflated beyond any reasonable expectation of delivery.

I am no longer in politics. I have absolutely no wish to re-enter it in any capacity. I don't seek publicity – more often than not, I shy away from it.

But I can't ignore what I learned in Government. Nor can I forget the people who voted to leave Europe in the belief it might improve their lives. If events go badly, their expectations will not be met, and whole communities will be worse off. The particular fear I have is that those most likely to be hurt will be those least able to protect themselves.

So, I have two objectives this evening: to offer a reality check on our national prospects; and to warn against an over-optimism that – if unachieved – will sow further distrust between politics and the public – at a time when trust needs to be re-built. It would be better to underplay than overplay expectations.

The post-referendum debate has been deeply dispiriting.

After decades of campaigning, the anti-Europeans won their battle to take Britain out of Europe. But, in the afterglow of victory, their cheerleaders have shown a disregard that amounts to contempt for the 48% who believed our future was more secure within the European Union.

Remain voters are of all political persuasions, and of none. Over recent months, many have written to me in dismay – even despair.

They are people from every walk of life who have every right to their view, every right to express it, and every right to have their opinion represented and tested in Parliament.

This 48% care no less for our country than the 52% who voted to leave. They are every bit as patriotic. But they take a different view of Britain's future role in the world, and are deeply worried for themselves, for their families, and for our country.

They do not deserve to be told that, since the decision has been taken, they must keep quiet and toe the line. A popular triumph at the polls – even in a referendum – does not take away the right to disagree – nor the right to express that dissent.

Freedom of speech is absolute in our country. It's not "arrogant" or "brazen" or "elitist", or remotely "delusional" to express concern about our future after Brexit . Nor, by doing so, is this group undermining the will of the people: they are the people. Shouting down their legitimate comment is against all our traditions of tolerance. It does nothing to inform and everything to demean – and it is time it stopped.

Our Parliament exists to scrutinise the Executive. That is its job. So, it is depressing to see "Leave" enthusiasts in Parliament acting against their own principles. To win the Referendum, they asserted the sovereignty of our own Parliament: now, they speak and vote to deny that same Parliament any meaningful role in shaping, in overseeing, or in approving the outcome of our negotiations in Europe. Our Parliament is not a rubber stamp – and should not be treated as if it were.

As a former Parliamentarian, I believe the negotiations to come are so crucial to our nation's future that the Government would be wise to take frequent account of public opinion through Parliamentary debate.

Of course, neither Parliament nor public can micro-manage the negotiations. We must trust Ministers to do so. And they must have flexibility.

But Parliament must be free to debate and comment and advise. For it not to do so would be wrong in principle: it would also be unwise politically if – as it might – the will of the people evolves, and the reality of Brexit becomes unpopular.

The hopes of those who favoured leaving the European Union are sky-high. We are told that countries "are queueing up to do trade deals with us". That "our best days lie ahead".

It all sounds very enticing. And – for the sake of our country – I hope the optimists are proved right. But I'm not sure they will be. My own experience of international negotiations – and the national self-interest that accompanies them – makes me doubt the rosy confidence being offered to the British people.

Negotiations are all about "give" and "take". We know what the Brexiteers wish to take: yet we hear nothing about what our country may have to give in return. If anyone genuinely believes that Europe will concede all we wish for – and exact no price for doing so – then they are extraordinarily naïve.

As I consider the complexities that lie ahead, the words of Kipling come to mind:

"I keep six honest serving men

(They taught me all I knew);

Their names are What and Why and When,

And How and Where and Who."

It is the detail – the what and the why, the when and the how, and the where and the who – that is key. To avoid later recriminations, the British public needs to be made aware now of the hurdles ahead – and what different outcomes will mean for their future.

Let me turn to the politics of exit.

Leaving the European Union is not just about trade. It will have political consequences. For over forty years, British foreign policy has been based upon the twin pillars of our relations with the United States and the European Union. To be straddled between these two economic and political giants has served us well.

Outside the European Union, we become far more dependent upon the United States and – for four and possibly eight years – upon a President less predictable, less reliable and less attuned to our free market and socially liberal instincts than any of his predecessors.

As a boy, I was taught that America was our greatest ally and – throughout my life – I have seen her as so.

But America's size and power means we are, by far, the junior partner: mostly we follow – only rarely can we lead. Despite the romantic view of committed Atlanticists, the "special relationship" is not a union of equals. I wish it were: but it isn't; America dwarfs the UK in economic and military power. That, sadly – is fact.

Once we are out of the EU, our relationship with the United States will change. She needs a close ally inside the EU: once outside, that can no longer be us.

That may not be the only change. If we disagree with American policy, we may weaken our ties. But if we support it slavishly, we become seen as an American echo – an invidious role for a nation that has broken free from Europe to become more independent.

And – inevitably – there will be disagreements: the US wish to contain China and engage Russia; we wish to contain Russia and engage China.

We seem likely to disagree also on refugees, free trade, the legality of Jewish settlements, and climate change. How many disagreements can there be before even the closest of ties begin to fray?

Until now, the world has seen the UK as a leader within Europe. We are the second largest economy, with hopes of one day overtaking Germany. We are one of only two nations with significant nuclear and military power. We have the widest, and deepest, foreign policy reach of any European nation.

In Europe, we have often set policy: the Single Market; enlargement to the East; restraints upon expenditure – together with a host of less prominent policies. Our role within Europe has magnified the power of our nation state: once we leave, that will no longer be so.

The Prime Minister knows all this: her policy to maintain a good relationship with Europe is surely right. But, at some time, she will have to face down those who favour total disengagement – and who have never accepted our role within Europe.

For some, a total divorce has been a decades-long ambition. I believe they are utterly wrong. And although – today – they may be allies of the Prime Minister, the risk is that – tomorrow – they may not.

I am no dedicated Europhile. I said "No" to the Euro and "No" to Schengen on open borders. But I have never doubted the importance of co-operation with a successful Europe.

And – in voting to leave – we have done the EU great harm.

For the loss of the UK will weaken the EU – especially when set against the superpowers of America or China. For the first time, the EU is contracting not expanding. It is about to become smaller and less relevant. And, without the UK, it may change in character, becoming more protectionist and less of a pillar of free trade. Such a Europe would be damaging to British interests.

Our departure is also adding to domestic political problems across Europe. Britain has rejected the colossus of the EU. This has energised the anti-EU, anti-immigrant nationalists that are growing in number in France, Germany, Holland – and other European countries.

None of these populist groups is sympathetic to the broadly tolerant and liberal instincts of the British. Nonetheless, their pitch is straightforward. If Britain – sober, stable, moderate, reliable Britain, with its ancient Parliament and anti-revolutionary history – can break free of a repressive bureaucracy in Brussels, why, then "so can anyone". It is a potent appeal.

I caution everyone to be wary of this kind of populism. It seems to be a mixture of bigotry, prejudice and intolerance. It scapegoats minorities. It is a poison in any political system – destroying civility and decency and understanding. Here in the UK we should give it short shrift, for it is not the people we are – nor the country we are.

Whatever grievances exist, the UK and Europe cannot ignore one another without mutual damage. As the Prime Minister has intimated, our future self-interest is to co-operate on all aspects of security; on terrorism; on crime.

We should take a common position on climate change; on human rights; and on representative democracy. We should continue to co-operate over the migrant surge to Europe and contain Russian misbehaviour.

The plain truth is this: irrespective of Brexit, the UK benefits from engagement with Europe – not isolation from Europe – and both parties have an interest in ensuring that is maintained.

My hunch is that, over the years ahead, the political price of leaving the EU may turn out to be greater than the economic cost.

That said – to protect our interests – the trade negotiations will require statesmanship of a high order. There is a real risk the outcome will fall well below the hopes and expectations that have been raised: I see little chance we will be able to match the advantages of the Single Market.

In my own experience, the most successful results are obtained when talks are conducted with goodwill: it is much easier to reach agreement with a friend than a quarrelsome neighbour.

But, behind the diplomatic civilities, the atmosphere is already sour. A little more charm, and a lot less cheap rhetoric, would do much to protect the UK's interests.

The negotiations will begin with the costs of disengagement. These could be politically explosive.

During the Referendum, the "Leave" campaign promised to "take back control" of huge sums of money, and pay an additional £350 million a week to the NHS.

Many believed this, yet the bitter irony is that the "divorce settlement" – that is, the cost of leaving Europe – may involve paying out much larger sums of money than that.

The EU Chief Negotiator has estimated that our bill for exit may total between €40 billion to €60 billion.

I find this figure very contentious. But the bill will be substantial: billions, not millions, and very unpalatable. It will come as a nasty shock to voters who were not forewarned of this – even in the recent White Paper.

One MP has referred to the estimated divorce payment as "a threat", his argument being that "you pay to join a club but not to leave it".

Of course that is true: but when you leave any club, you are obliged to settle your debts, and that is what the European Union is going to expect the UK to do.

There are liabilities to be met: pension costs, legacy costs, contingent liabilities, a proportional share of work-in-progress. The EU will argue we have a legal obligation to pay these bills.

They may be right – but the issue is not clear-cut. Some of the EU's claims are highly questionable and – unless there is a political agreement – any dispute may have to be resolved in Court. An agreement would be preferable and, if she sanctions one, the Prime Minister will deserve support.

The EU Chief Negotiator has also warned that the separation costs must be agreed before any detailed trade negotiations can begin. However, I doubt he will be able to sustain such a hard line if we are prepared to engage in constructive talks: we shall see.

But if there is a stand-off – perhaps because of a backlash against the size of the exit bill – then trade talks may have to await a Court decision, be delayed indefinitely – or scrapped altogether. In either event, the faint hope of a comprehensive trade deal by Spring 2019 will have gone.

Without such a deal with Europe, three options arise:

we can leave the EU with a flimsy, inadequate deal; or

we can seek a transitional relationship – perhaps for 3-5 years – for which, as non-members, we would have to pay. A minimum option would involve staying in the Customs Union and submitting to the jurisdiction of the European Court of Justice; or

we can trade with the EU on a WTO basis.

The more one examines probabilities, the more contentious becomes the task of leaving.

Some of the most committed Brexit supporters wish to have a clean break, and trade only under WTO rules. This would require tariffs on goods – with nothing to help services, and nothing to inhibit non-tariff barriers. This would not be a panacea; for the UK – it would be the worst possible outcome.

But – to those who wish to see us adapt to a deregulated, low-tax enterprise economy – it is an attractive option, and wholly consistent with their philosophy.

However, it has worrying implications for public services such as the NHS – and for the vulnerable who, I'm delighted to say, the Government has pledged to help …. and I know how personally committed the Prime Minister is to this.

So there is a choice to be made, a price to be paid; we cannot move to a radical enterprise economy without moving away from a welfare state. Such a direction of policy, once understood by the public, would never command support. It would make all previous rows over social policy seem a minor distraction.

A new trade deal with Europe will be hugely complex. No-one should envy the Secretary of State and his negotiators. Some industries – cars and aerospace for example – hope for special, perhaps industry-to-industry, deals for their exports to Europe. The difficulties of this are legion: the chances of success are slim – not least since the German Chancellor is likely to rule out sectoral deals. Even if she does not, WTO rules expect agreements to cover all trade, not a few handpicked sectors.

Many practicalities arise: even a partial customs deal with Europe would not eliminate the need for country-of-origin certificates. Or border checks. Or certification that regulations are met. Or other frustrations. And any deal must be agreed by 27 nations, each with their own national interests. No-one can be certain how long this will take: a conclusion within two years is very, very optimistic. Business needs to factor this in to their plans.

Domestic political hurdles arise, too: if cars and aerospace were to get favourable deals, why not textiles and widgets? How would the Government soothe the ire of those not receiving preferential treatment?

Nor will free trade deals with third countries be straightforward. Even the most attractive options come with political hazards.

In Washington, the Prime Minister discussed a deal with President Trump. Both Leaders were keen, which is excellent. But the omens are mixed.

Early actions confirm that President Trump has put protectionism at the heart of his trade policy. "America First" is more than a slogan.

Tariffs between the US and the UK are already minimal: there is little scope for lowering them even further. The UK runs a healthy trade surplus with America: President Trump may wish to narrow – or eliminate – that gap. That being so, British hopes should not be set too high.

Nor will it be easy – or quick – to reach agreement on contentious issues such as medicine, or cars, or beef raised with growth hormones. In comes American beef: Out go European subsidies. That won't be an easy sell to the beef industry.

China and India are both attractive candidates for enhanced trade. But, in negotiation, India will seek immigration concessions for students and non-students alike which, prima facie, is in direct conflict with Government plans.

China, as I know from experience, is a tough negotiator, and will strike a hard bargain. As she is the largest trading partner to 120 countries, and the largest export market for 70 of them, a trade agreement with the United Kingdom may not be one of her main priorities.

The Government must also replicate the 53 deals struck on our behalf by the European Union. So far, only 12 are in play. There is a very, very long way to go, and the question arises: are 65 million Britons likely to get the same favourable outcome as 500 million Europeans?

I set out these difficulties, not because I don't think deals can be done – some certainly can – but to be realistic about the timescale and complexity of the huge undertaking that lies ahead. It is crucial to business and the public – that our expectations are consistent with what can be delivered. It matters to the Government, too: Ministers must not over-promise.

In two years' time, the UK will be the first nation to leave the EU. This will be a real irony, as the first proposal for a European Union came not – as is generally supposed – from the Frenchman, Jean Monnet, but from an Englishman.

Three and a quarter centuries ago, in 1693, William Penn advocated a European "Dyet or Parliament" as a policy to end perpetual military conflict on the Continent. It took 280 years and two world wars to convince his fellow Britons.

43 years later, the British people reversed that decision.

Let us hope – for the futures of our children and grandchildren – they were

Reports: BBC / Sky NewsGuardian

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