web analytics
a

Facebook

Twitter

Copyright 2015 Libero Themes.
All Rights Reserved.

8:30 - 6:00

Our Office Hours Mon. - Fri.

703-406-7616

Call For Free 15/M Consultation

Facebook

Twitter

Search
Menu

Benedict Rogers: If we mean what we say about ‘global Britain’, we must stand up to China

Benedict Rogers is a human rights activist and writer, and a former parliamentary candidate. He is East Asia Team Leader of the international human rights organisation CSW, co-founder and Chair of Hong Kong Watch and co-founder and Deputy Chair of the Conservative Party Human Rights Commission.

Iain Duncan Smith was right when he said that “for the past two decades, we have cosied up to China in a way that is becoming an embarrassment”. He argued that “the UK needs to stand shoulder to shoulder with its allies. China is not an ally.”

What he didn’t say is that there are also two myths about China. The first is that it is the forthcoming superpower, a strong and stable force in the world. The second is that in order to trade with China, we need to kowtow.

The coronavirus has not only exposed millions of people to a public health crisis, it has exposed the fragility of the Chinese Communist Party. A strong, secure government would not hide the truth about a new virus, it would act immediately to prevent its spread. Yet when Dr Li Wenliang first warned about the outbreak, the response of the authorities was to silence and threaten him. He was forced to sign a confession, apologising for spreading rumours and disturbing public order.

Only when the virus was so obvious did the authorities take some steps to deal with it – but too late. At least 2,000 people in China alone have died, and it has become a global emergency – caused in large part by a regime based on lies and fear. Even now, citizen bloggers reporting the truth disappear.

A self-confident government does not expel Wall Street Journal reporters because of a headline. A self-confident government does not incarcerate at least a million Uyghur Muslims, just because they have beards, wear veils, or surf the Internet. A self-confident government doesn’t destroy thousands of crosses and dynamite churches.

A self-confident government does not deny foreign activists, academics, and journalists entry to Hong Kong, branded “Asia’s world city”. In October 2017 I was one of the first westerners refused entry on Beijing’s orders, exposing the erosion of the much-vaunted “one country, two systems” principle. My incident became a diplomatic one, with the Foreign Secretary at the time – Boris Johnson – issuing a statement, the Foreign Office summoning the Chinese ambassador, and questions being raised in both Houses of Parliament. Since my case, others have faced a similar fate, including the Victor Mallet, the Financial Times’ Asia Editor; Dan Garrett, an academic; and Michael Yon, a journalist.

A self-confident government would not invest so much effort in trying to silence western critics. Over the past two years I have received numerous anonymous letters posted to my home address, my neighbours, and even my mother. More recently I have received daily emails either harassing me or, using fake email addresses in my name, impersonating me to others in an attempt to discredit me. And I am not alone.

Furthermore, a self-confident government would not lobby parliamentarians about a British activist. Yet I know several who have been asked by the Chinese Embassy to shut me up, and at least two who, in meetings with the Chinese Ambassador about global issues like trade or climate change, have faced as the first agenda item a specific request to silence Benedict Rogers. A self-confident government would have better things to do.

So stop thinking that the Chinese Communist Party is this confident power that we should not cross. It exhibits all the characteristics of a bully, and bullies are by definition insecure, fearful and weak. They may show aggression, but their aggression only works if we kow-tow to it.

That leads to the second myth: that we can’t afford economically to lose China, and thus we must do deals whatever the cost.

The record shows that, though it may huff and puff, the regime in China will still sell goods and purchase products based on demand, not politics. Germany’s Angela Merkel has, among western leaders, been one of the most consistently outspoken about human rights in China, yet Germany remains China’s largest trading partner in Europe.

When Xi Jinping visited the UK in 2015 an American businessman in Shanghai, James Macgregor, told the BBC: “If you act like a panting puppy, the object of your attention is going to think they’ve got you on a leash. China does not respect people who suck up to them.” The Chinese regime might not like it when you stand up for values, but they are more likely to respect you than if you kowtow.

But how important is China, really? As Chris Patten, the last governor of Hong Kong, put it in his recent Paddy Ashdown Memorial Lecture on the city:

“The truth is that behaving in a way that corresponds with our traditional values does not threaten economic catastrophe. The idea that you can only do business with China if you say and do what Beijing wants has always been nonsense … Whatever became of the cornucopia that was supposed to come with the “golden era” of Britain’s dealings with China? This is the usual self-serving guff.”

In our post-Brexit era, we must carve out a role for global Britain. But that means what it says. Global. What about India? Brazil? What about the democracies of Asia – Japan, Korea, Taiwan, Indonesia, Malaysia – who, however imperfectly, are far closer to our values than Xi’s China? And what about our allies in Hong Kong, who share our values and are, as a new report by Hong Kong Watch launched next week shows, trying to save the world’s third most significant financial centre and the UK’s third largest trading partner in Asia?

To sign a cheap deal that allows a corporation, Huawei, which is closely aligned with the Chinese regime and is complicit with grave human rights violations into our national telecommunications infrastructure, potentially undermining our closest relationships with allies who share our values and intelligence, is madness. To allow the perception to prevail among those who struggle courageously to preserve the rule of law and basic freedoms in Hong Kong that Britain, despite its obligations under the Sino-British Joint Declaration, has abandoned them, is tragic.

And for the Chinese ambassador in London to be declaring, unchallenged, that the Prime Minister wants to “work with China [and] … elevate the relationship to a new level” when that regime stands accused of crimes against humanity, cultural genocide, the most severe crackdown on human rights since the Tiananmen massacre, an increasing breach of its promises to the people of Hong Kong, the worst repression of religion since the Cultural Revolution, an increasingly grave threat to our own freedoms and security and – despite its charade of confidence – an increasingly unstable regime, seems unhinged.

The UK’s China policy needs a wholesale review. We didn’t “take back control” from Brussels only to surrender it to Beijing.

I am deeply pro-China, as a country and a people. I have spent much of my adult life in China. I want China to take its rightful place on the world stage. But I want it to do so as a friend not an enemy, a force for good and not a threat. It can only do so if it is free of a deceitful, repressive and insecure regime. And that requires us to have the courage to stand up to that regime which the British barrister Sir Geoffrey Nice QC, who chaired the independent China Tribunal on forced organ harvesting, describes as “a criminal state”.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Stephen Booth: Northern Ireland almost derailed the first phase of Brexit talks – it could do the same to the second

Stephen Booth is the Head of the Britain in the World Project at Policy Exchange.

Border arrangements on the island of Ireland dominated the first phase of Brexit, almost derailing the wider withdrawal negotiations between the UK and the EU altogether. It took the personal interventions of Boris Johnson and Leo Varadkar to break the impasse, unblocking the path to the eventual UK-EU Withdrawal Agreement. Agreeing how to implement the compromises they reached within the Northern Ireland Protocol could yet prove to be just as complex and politically controversial in the next phase of talks.

In recent weeks, UK ministers and EU officials have been increasingly at odds over what the post-Brexit arrangements will mean for goods crossing the Irish sea. The EU insists that a strict implementation of the commitments included in the Protocol necessitates various border checks to be made on goods flowing from Great Britain to Northern Ireland. However, the UK Government has ruled out intrusive checks on trade in either direction and argues that the implementation of procedures envisioned under the Protocol remains subject to discussion and agreement.

To recap, the Protocol, due to come into force at the end of the transition period on 1st January 2021, avoids the need for new North-South border checks on the island of Ireland by creating a special economic status for Northern Ireland. Northern Ireland remains in the UK’s customs territory and will therefore be subject to the UK’s independent trade policy and can be included in any new UK trade agreements. However, Northern Ireland will be subject to the EU’s customs procedures to ensure that goods “at risk” of ending up in the EU single market, rather than being consumed in Northern Ireland, are subject to the correct EU tariffs and regulations. UK authorities are responsible for ensuring procedural compliance, but EU representatives can request to be present at customs or regulatory inspections.

Northern Ireland will effectively remain in the EU’s single market for goods, aligning with EU rules for agricultural and manufactured goods. Finally, the Protocol provides a mechanism whereby, after four years, Stormont can withdraw its consent for the special arrangements, in which case Northern Ireland would revert back to full alignment with the rest of the UK, after a two-year cooling off period.

Confusion flows from the fact that, while the Protocol sets out the provisions of EU law that will apply in Northern Ireland, there is much left unsaid about how these provisions are implemented, supervised and enforced in practice. Exactly how trade across the Irish Sea works will therefore be determined by decisions yet to be taken in a UK-EU Joint Committee, and by the wider UK-EU trade relationship, which is yet to be negotiated. For example, if the UK and the EU achieve their stated ambition of a free trade agreement, some tariff and regulatory issues could be simplified.

Ultimately, the debate is beset by the same conflicting interests witnessed in the previous talks. For the EU, having avoided the prospect of a North-South border for now, the primary concern is the integrity of its external border, which will be shifted to the Northern Ireland border. In the first instance, the EU’s approach to such questions is, as ever, a legalistic one and its base case is that all the usual checks should apply.

On the other hand, the Government not only wants to protect Northern Ireland’s place in the UK internal market. It is also mindful of the potential political instability that could result from any measures that would further alarm Northern Ireland’s Unionist community. It therefore favours pragmatism. Indeed, it is in the New Decade, New Approach paper, which helped restore power-sharing at Stormont, that the Government commits to negotiating “additional flexibilities and sensible practical measures across all aspects of the Protocol that are supported by business groups in Northern Ireland and maximise the free flow of trade.”

Achieving a flexible and light-touch approach to policing the Protocol will require intense diplomatic efforts on the UK’s part over the next ten months. However, the UK can argue that it was the EU which previously suggested that any GB-NI procedures could be “de-dramatised”, with the vast majority of regulatory checks taking place in the marketplace rather than at points of entry. Indeed, Article 6(2) of the Protocol states that the Joint Committee “shall adopt appropriate recommendations with a view to avoiding controls at the ports and airports of Northern Ireland to the extent possible.”

Since the island of Ireland is treated as a single unit for the purposes of animal health and disease prevention, there are already checks on animal imports from Great Britain to Northern Ireland. Reaching a mutual recognition agreement on agricultural standards, similar to that between the EU and New Zealand, could minimise the need for any further checks, though this might also depend on the degree of UK regulatory divergence.

Ultimately, as the EU eventually conceded, the Protocol will only work over the long-term if there is broad-based political consent for it in Northern Ireland. Gaining this consent is going to be a difficult challenge, given the circumstances from which we have started this process. It will certainly require more political sensitivity and less legal rigidity from the EU than we have seen up to now. The Government has wisely committed to ensuring that the Northern Ireland Executive is represented at the UK-EU Joint Committee, which will also be attended by representatives from the Irish government. However, the UK must also convince the EU, and the Republic of Ireland in particular, that this is a shared political challenge and there is a joint interest in establishing workable, pragmatic solutions.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tim Morris: Freeports will be transformational, with the right approach

Tim Morris is the Chief Executive of the UK Major Ports Group.

Increasing trade and prosperity in the UK post-Brexit, or, as coined by the Prime Minister “unleashing Britain’s potential,” featured heavily in the Conservative Manifesto. Boris Johnson reiterated this commitment in his inaugural address to the country on 13th December, stating that the Government would ‘prepare for an economic package to boost British business and to lengthen [the UK’s] lead as the number one destination for overseas investment’.

A key part of this package are freeports, something the Prime Minister has expressed his personal support for in the past. With the consultation on freeports now live and the Budget soon to be announced, the Government is presented with ample opportunity to demonstrate the seriousness of its intent.

Freeports undoubtedly offer the promise, in the right circumstances, to boost post-Brexit Britain’s capability to trade with the world and to produce thousands of jobs in some of the UK’s most deprived areas, a number of which include historical Labour seats that Conservatives won in 2019. However, ensuring that the potential of the proposal is met will require decisive and carefully considered policy.

Freeports are an area, or linked area, that are subject to special rules to boost economic development, including differentiated duty treatment. These duty changes normally involve businesses avoiding onerous tariffs on imports and exports, and different models can be applied to different regions to boost specific industries. A freeport of course does not have to be a seaport. However, as 95 per cent of the UK’s trade with the world is by sea, the focus of this initiative to “boost British business” and “overseas investment” is clear.

With the UK leaving the EU, freeports have come back into focus. The UK has of course had the ability to establish freeports as an EU member- the UK had a total of seven freeports between 1984 and 2012 – and could indeed tweak duty rules today. But the opportunity now before us is to take a step change approach that this country hasn’t done before, really harnessing the potential of a full package of measures including, but certainly not limited to, duty treatment and bottom-up support. We don’t pretend that freeports are a silver bullet, and they must be part of a wider strategy to ‘level-up’ often hard-hit coastal communities all around the UK, but experience from elsewhere shows they can be transformational in the right circumstances.

Tariff and duty changes alone are not enough for long-term, sustainable success. Another vital area where Government can play a decisive role is in establishing planning rules which set out upfront the criteria for development, so locations can capture investment opportunities quickly.

Streamlined processes for approving the movement of goods for import and export will help all businesses, particularly SMEs, trade with the world more. High capacity road, rail and energy links must be in place upfront, so businesses are ready to trade straight away.

Incentives both in terms of funding and accounting treatments such as capital allowances are common across all nations battling to secure inward investment.

Finally, a strong local commitment must be central to making freeports work long-term and deliver benefits to surrounding communities, including through aligning local skills providers with the skill needs of the ‘Zone’.

We strongly believe that the adoption of these measures must be a core part of the new Government’s work. They are most powerfully combined within a freeport model, but can in fact individually bring benefits to the UK’s capacity to trade and to boost coastal communities.

Many port operators, together with local stakeholders, are interested in submitting freeports proposals. For industry and potential investors, it is crucial that the process for becoming a freeport is fair, transparent and evidence-based. Through such a process, a meaningful raft of policy and regulatory levers, as well as strong local support, we are confident that freeports and ports more generally can grow their vital contribution to the UK and all our lives.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ed McGuinness: The threat from Sinn Fein to the Union is serious

Ed McGuinness is Chairman of Islington Conservative Federation and stood for Hornsey & Wood Green at the general election. He grew up in Belfast.

With Sinn Fein’s shocking success in the Republic of Ireland’s General Election, Boris Johnson’s Government needs to sit up and take notice. This is not the election of an ally and trading partner whom the United Kingdom keeps at arm’s reach and offers a congratulatory phone-call to when the final results are tallied. The relationship between the Republic of Ireland the United Kingdom arguably runs deeper than the relationship experienced by any two countries elsewhere on the planet, forged by blood and treasure.

Sinn Fein, a party that stands candidates across the whole of the Island of Ireland has tapped into a feeling across the demographic spectrum in the Republic of Ireland with message used by political parties around the world associated with success – the economy. Quite frankly, when Fianna Fáil and Fine Gael look back at the wreckage of this election they will wonder how they managed to mismanage the campaign on such a simple message. Sinn Fein has managed to tap into the deep feelings felt throughout the Republic where people feel left behind since the 2008 Global Financial Crisis. We should note here that Ireland was left severely crippled by the crisis which saw one of its major banks collapse and the necessitation of an €85m bailout package from the IMF, EU and some bilateral loans (including from the UK). This was on an order of magnitude greater than that experienced by us in the UK. The collapse destroyed the credibility of the presiding party, Fianna Fáil, which made a collation between the two main parties, leading up to this election, to maintain this duopoly on Irish power even more galling to the Irish electorate.

Sinn Fein offered a solution to the people of Ireland – albeit it an unrealistic one. In contrast to their election manifesto for the General Election in the United Kingdom, they actually had an economic message which promised greater spending on infrastructure and a huge public housing program – the advantage of campaigning in poetry.

The system of government in Ireland also benefitted the Sinn Fein message during the General Election, with a confidence and supply agreement between Fine Gael and Fianna Fáil, allowing both to be tarred with the same mistakes and neither able to claim credit for the successes. This allowed Mary Lou Macdonald to walk straight through the middle and mop up the pieces.

Not to be underestimated is the effectiveness of the Sinn Fein campaigning and branding machine. In Northern Ireland, in particular, they are absolutely tapped into their communities, providing a plethora of services and even their own, widely circulated newspaper. On branding, both Fine Gael and Fianna Fáil have, at least during campaigning, ruled out a governing coalition with Sinn Fein due to, just 23 years ago, being officially the political wing of the Provisional IRA – a group responsible for over 30 years of violence across the island. Macdonald, at least in the Republic, seems to have been able to manage a seamless transfer of power from Gerry Adams, and in doing so, shake of the perception of her party being active participants in the perpetuation of violence – something anathema to most in Ireland. The recruitment of youthful candidates, who have no direct experience of the Troubles has been key in this, not only throwing off the dark past, but looking like a youthful, vibrant, energetic organisation.

Let nobody suppose that Sinn Fein has changed its stripes or indeed its raison d’être and the threat it poses to the United Kingdom. We should first count ourselves lucky that, having only stood in 40 seats, Sinn Fein cannot possibly form a majority governing body in the Dáil Éireann, they have 37 seats and lead the polls. They do however hold the balance of power now, whether we like it or not. We can not deny that democratic event, but this will take very careful management from the UK.

This result will buoy Sinn Fein, which is currently only the second largest party in Northern Ireland, to push for further reforms in the North. No doubt they will come forward with their much historical tagline of having been given a “democratic mandate” for change. This could see Northern Ireland squeezed between an active cessation grouping pulling the strings in the South, aided by their counterparts answering those calls in the North.

More pressingly, having a rather large foot in the door, as Sinn Fein will have, gives them influence over the Irish position on the Brexit negotiations within the EU. Do not pass this off as a small country, with a small Party trying to get its way. As I mentioned the Sinn Fein communication machine is impressive, not only that, but their negotiating stance is often very aggressive and unyielding (they held fast for almost three years in Northern Ireland – doing incredible damage to the economy in the process). If they have the opportunity to use the Brexit negotiations to forge a path towards a border poll they will take it. Though Ireland as a whole is a small cog in the EU machine, its influence will be magnified during the trade negotiations given the importance of the bilateral relationship with the United Kingdom.

For the past half century, the relationship between the two Governments has been based on a mutual benefit for Northern Ireland, neutrality in the border poll question and the sovereignty of the people of Northern Ireland and the Republic of Ireland to choose their own destiny when they are ready to. The UK Government now faces an entirely different reality. A major party, who cannot be ignored, by a grand coalition in the Republic lest they being an outright majority in the next election, in the Irish government is now committed to ending Northern Ireland’s place in the United Kingdom. Not only that, but they actually deny the British Governments right to have any control over Northern Ireland at all. That party will now be equipped with the machinery of Government across the island of Ireland (North and South) and will wield its influence at a critical time for the United Kingdom.

With the fate of the union also in balance in Scotland, Boris faces issues on multiple fronts. It seems the Irish question is also far from answered.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Rachel Wolf: Achieving net zero will require massive changes to our lives – when is anyone going to tell voters?

Rachel Wolf is a partner in Public First. She had co-charge of the 2019 Conservative Manifesto. She was an education and innovation adviser at Number 10 during David Cameron’s premiership and was founding director of the New Schools Network.

At the end of the 18th Century, Thomas Malthus predicted doom for mankind. His theory was that as populations grew, the food would run out, and only by having fewer children would we survive. Malthus understood society pre-industrial revolution: subsistence living was common, and the supply of land was finite.

Malthus was wrong, or at least for 200 years, because humans changed the game. The innovators behind the industrial revolution – begun in Britain – discovered how to harness new forms of energy (fossil fuels) to monumentally increase our output and our wealth. From this has come the global rise in life expectancy, living standards, and social mobility of the last two centuries.

Now, we need to find a way of substituting those forms of energy or removing their effects from the atmosphere. The Government has committed to ‘net zero’ greenhouse gas emissions because it does not want the side effects of the energy sources we have used for centuries to destroy the planet. At the same time, we do not want to return to an era where children (and their mothers) regularly died, and where the majority of people lived in what would now in the UK be considered wholly unacceptable poverty.

This is a staggering challenge. Much, much bigger than Brexit. And yet the public debate is, relatively, non-existent.

The UK is the first country to enshrine in law reaching “net zero greenhouse gas emissions” by 2050. In other words we don’t want the total amount of greenhouse gases in the atmosphere to go up from 2050, but we don’t mind if that’s because we’re releasing less, or if we’re capturing and storing what’s already out there.

For example, the steel industry could, in principle, change the way it makes steel. But we can’t, yet, produce steel at scale without fossil fuels (it’s a lot harder to solve than producing electricity for our homes). An alternative is to ‘capture’ the emissions. The problem is, we don’t know how to do that at scale yet either. Many of the technologies are immature at best, and time is ticking. Nuclear might be used more, but it won’t be the entire solution.

At the same time, the UK is not the planet – and one of the problems with counting ‘net’ emissions is that we increasingly import goods whose environmental impact is not accounted for. If we shut down all the industry in the country by imposing costs not borne by international competitors, we can make it look as though our emissions have gone down, whilst continuing to import higher carbon products from elsewhere. In this scenario, the planet is no better off. In fact it might be worse, and in the meantime we are much poorer.

On the other hand, if the entire world is going the same way as the UK – and an increasing number of countries are committing to net zero emissions – being the first mover could give us technological expertise that leads to substantial exports in their own right, and help drive action across the globe.

This is, to climate and energy experts, a ludicrously simplified description of what the Government is trying to achieve. It is also many steps more complicated than the current conversation with the public. This policy area – which has pervasive, dramatic consequences – is either operating in a world of acronyms among experts or simplistic student protests.

Nor are we fully discussing the different options. I’m currently working on a commission that is exploring how carbon pricing could help the transition to net zero. There are two major potential advantages of this approach. First, it avoids government picking winners and lets companies decide how to reduce emissions. Second, the money can be given back to individuals and industries. This is why Republicans in the US, for example, are increasingly in favour of such a policy.

As part of this process we’ve done a large amount of recent research into net zero. Unsurprisingly, the public have no idea what it really means, or how it might change their life. They frequently mix it up with other government commitments like plastics. They care about the environment, but no one has begun to explain the changes in their lifestyle that might be required to reach net zero in the next 30 years. They already think they pay a lot of tax, and are currently unprepared to pay lots more for the environment. Unless we get this right – and develop solutions that can mitigate the cost – the situation is ripe for a new UKIP-style party to whip up hostility (as the gilets jaunes in France show).

Rather than discuss this, we have spent much of the last few days talking whether Claire Perry O’Neill was rude to a civil servant about a taxi or not – and if the Government was sufficiently clear about why, exactly, they didn’t want her to chair a climate conference. Net zero is an issue that – far beyond Brexit – is going to affect the voters in our new seats: their lives, and their jobs. We all need to start talking properly to them about it.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: The core challenge that Johnson’s Government won’t face up to. Boosting growth.

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute.

Boris Johnson famously wants to “unleash Britain’s potential.” But where economic growth is concerned, the Bank of England thinks the problem is too little potential in the first place.

Last week, it revised down “potential output growth” for the next three years, from 1.4 per cent to 1.1 per cent per year, implying less capacity for growth without overheating. That’s a stark contrast with the historic 2.8 per cent growth rate that Sajid Javid aspires a return to.

Potential growth is calculated by making judgments on potential additional hours worked economy-wide and on potential labour productivity growth (i.e. improvements in output per hour worked). On both, the Bank’s judgment is grisly.

With unemployment low, employment high, and EU immigration slower, the Bank revised down growth attainable by simply adding people or hours. More worryingly, it has given up expecting a productivity growth rebound, instead judging our post-crash performance a kind of “new normal.” For 2020-23, it expects productivity growth of 0.5 percent per year; far below the 2.2 per cent per year seen pre-crash or even the above one per cent forecast last year.

If this seems dry and arcane, the implications are not. If accurate, worse potential growth driven by weak productivity means less robust improvements in living standards, a worse “structural” budget deficit, and macroeconomic “stimulus” becoming more impotent. Indeed, trying to “boost the economy” through Government spending or monetary stimulus would more likely just generate inflation.

As Javid prepares for his March Budget then, the Bank’s verdict should trouble him. Last March, the Office for Budget Responsibility itself forecast potential growth at 1.5 per cent for 2020, rising to 1.6 per cent through 2023. But that assumed productivity growth jumping to 1.3 per cent per year. If the OBR now agrees that 0.5 per cent is likelier, Budget day will bring terrible economic headlines.

Now we should not take the Bank’s judgment as gospel, of course. Economists understand less about “potential” than reporting suggests. Defining “capacity” for companies, let alone large economies, is hard. As Chris Dillow has written, in a world of intangible assets and digital technologies it’s not even clear what capacity means. What is Google’s “capacity”? The Bank may prove as unduly pessimistic as it recently was overoptimistic.

But that doesn’t make its intervention unimportant. Olivier Blanchard, Guido Lorenzoni and Jean Paul L’Huillier’s work suggests negative judgments from forecasters about potential growth can become self-fulling. If consumers and investors expect to be poorer, they might cut their cloth now. They find, internationally, that a 0.1 per cent downward revision to potential growth leads to a fall in consumption growth that year of anywhere between 0.4 and 0.7 per cent. Just what the Chancellor needs.

Few can deny too the problem that the Bank’s revised judgment reflects. As years since the financial crisis roll by, it becomes ever easier to conclude that Britain is in a productivity growth slump with no sign of returning to pre-crash trends. The question really is: does the government intend to do anything meaningful about it?

It feels tired to posit this question. Commentators like me having been making the case for trying to raise the potential growth rate since 2010, to little avail. Partly this reflects a helplessness from policymakers in the face of trends beyond their control; partly it’s disagreements about what pro-growth policy is.

So let’s recognise uncomfortable truths upfront. Yes, slower growth across countries since the crash suggests something about the bank crisis or the unsustainability of what went before has impaired growth. Yes, an ageing population is another headwind. And, yes, Brexit has slowed growth to date, though how much due to pure “uncertainty” chilling investment, as opposed to negative expectations about future trade policy, is unclear.

But acknowledging all this shouldn’t induce fatalism. In fact, it strengthens the imperative for other pro-growth policies in recompense. We shouldn’t just treat the economy’s weak potential as a fait accompli – an unwelcome external force that affects budgets. No, given its importance, we should see weak growth as a failure of collective current policy. At the very least, sustained poor growth gives reason to review programmes tolerable in “good times” that we suspect come with a growth trade-off.

Is the government really prioritising growth today? Javid’s ambition is commendable, but actions must follow words. Prioritising something means willingness to accept trade-offs in its pursuit. Yet last week, ministers were asked to consider cutting programmes that didn’t fulfil the Government’s stated priorities – tackling crime, funding the NHS, or “levelling up” regions. Growth got no mention. Indeed, if growth is a priority, why not ask “does this programme improve the economy’s potential?”

Often, it seems that the Government thinks talking about any economic policy is synonymous with being pro-growth. But, listening to recent announcements, it’s difficult to conclude that rapid growth is a guiding star.

True, in some areas people like me just disagree with them on what might boost growth – little surprise given how contentious the literature is. Dominic Cummings thinks a British ARPA will generate loads of spillovers from public science and R&D spending. Javid thinks a further education skills push will raise human capital in the long-term. The whole government seems sold on regional infrastructure being transformative (Japan through the 1990s colours me sceptical). We can debate this, while recognising that government noises on planning have been well-evidenced and unambiguously pro-growth.

In other areas though, growth is clearly a secondary concern, at best. No coherent tax reform agenda appears likely, and Ministers are prioritising a broad-based National Insurance cut that will do little for potential growth. Boris Johnson talks up the benefits of using regulation to strengthen environmental outcomes and worker protection; there’s little mention of growth trade-offs here, or a pro-growth review of repatriated EU laws.

Though Johnson laments mercantilists and tariffs, last week his government briefed on using them to encourage countries to make trade deals with it – an approach that has seen Donald Trump cripple U.S. manufacturing productivity by raising its input prices. Public service reform ideas seem non-existent. The minimum wage keeps being raised. On infrastructure, HS2 is being prioritised over schemes with bigger estimated economic bang for the pound. And whatever your view of climate change, it’s undeniable that rapid decarbonisation impairs an economy’s growth potential, despite fairytales of win-win “green growth.”

Now, setting all dials to maximise growth is neither easy nor politically viable. Governments, understandably, have other aims and electoral mandates. But given its central importance – not least how it can make all other challenges easier – it still gets insufficient attention. With the government’s healthy majority, anti-growth headwinds, and leaving the EU, there’s surely never been a more necessary or better time to act on the Bank’s warning and try to see what sticks.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Greg Hands: Trade policy is back, so it’s time MPs mastered the topic

Greg Hands is MP for Chelsea and Fulham, and Co-Chair of the Free Trade Parliamentary Caucus.

Many things will change in this Parliament; the importance of trade will be probably the largest and most durable shift, now that Britain has left the European Union.

Today I am launching in the House of Commons the Free Trade Parliamentary Caucus, which will seek to both make the case for free trade, and to bring expertise into Parliament to allow them to have a more informed say.

The return of Britain’s independent trade and regulatory policy presents a once in a generation opportunity to increase economic growth, strengthen our relationships with other countries and play a leadership role in promoting liberalising trade around the world.

Of course, we cannot assume that any of this will happen automatically. But one of the biggest changes brought about by Brexit will be the Government’s independent trade policy and the Parliamentary scrutiny of it.

Trade is back at the heart of government, where it should always have belonged. I was one of the founding ministers at the Department for International Trade, under Liam Fox, who was the first Cabinet Minister solely for trade since 1983. He has been ably succeeded by Liz Truss, who gives way to nobody in her enthusiasm and drive for the subject.

Trade policy is one of those cross-cutting issues which affects nearly every department. Many think that trade is all about tariffs and quotas. Those are important. But most trade negotiations are taken up by discussions over behind the border barriers – that means regulation and competition issues. In addition to the DIT, the Treasury and Department for Business are instantly involved.

There will be aspects that will affect the Home Office, too, such as the labour and migration elements of trade agreements. The working of the Irish border, and the precise details of how East-West trade between Britain and Ireland works will require careful thought and close collaboration with Irish authorities by HMRC and potentially the Northern Ireland Office.

Fishing and farming are two of the sectors most affected by leaving the EU, making the Department for the Environment, Food and Rural Affairs a major player in any trade negotiation.

The Scottish and Welsh Governments, and the Northern Ireland Assembly, will also have roles, as many of these matters are devolved (although trade policy and international treaties are clearly not).

It is well known that free and fair trade is the fastest way for developing countries to escape poverty but is unfortunately not always practiced by the developed world. The Department for International Development will soon find it has another, powerful weapon in its armoury.

Trade is a pillar of foreign affairs. Trade agreements may be legal in nature and economic in content but are often motivated by geo-politics. Japan, for instance, is motivated to sign a bilateral trade deal with the UK and for our early accession to the Comprehensive and Progress Trans-Pacific Partnership (CPTTP) trade block of 11 nations, which is partly driven by the commercial and security threat of China. They hope closer economic ties will bring a stronger relationship and greater security co-operation.

The close relationship between commerce, diplomacy and security means the Ministry of Defence is also part of the trade dialogue. And that’s even before we get to the defence procurement opportunities in trade negotiations.

We all know the NHS is off the table in any trade talks. But there will still be professional licencing to agree, along with any issues around drug patents and pricing. DCMS will have issues around domestic content restrictions, intellectual property rights and digital competition. The Department for Education will want to ensure education – one of our export success stories – continues to thrive.

So Government will have to work closely together, led by the Department for International Trade. The same is true of both Houses of Parliament.

After 47 years without our own trade policy, it is no surprise that we lack domestic expertise. There have been heroic efforts by civil servants at the DIT to master the brief, and a handful of Parliamentarians who stand out for their interest and knowledge of trade and customs policy.

But on the whole, we are reliant on British experts who learned their trade overseas, such as Shanker Singham who spent 20 years practicing trade law in the United States, or dual nationals like Crawford Falconer, New Zealand’s former Ambassador to the WTO and Chief Trade Negotiator, who joined the UK government as Chief Trade Negotiations Adviser in 2017.

There is a small, but important community of trade policy commentators at think tanks too, like Allie Renison at the Institute of Directors, David Henig at the Trade Policy Observatory and Sam Lowe at the Centre for European Reform.

Of course, trade is about much more than just trade agreements. Barriers can be analysed and reduced plurilaterally, multilaterally or bilaterally, with or without formal treaties. One thing is for sure though: MPs and Lords will be poring over the fine detail in the coming years. The Department has set a target of 80 per cent of UK trade being covered by trade agreements within three years. Priority deals include of course the EU itself, as well as the United States, Japan, Australia, New Zealand and the CPTTP.

As we enter the transition period, we face intense trade negotiations on multiple fronts and our taking back of our independent seat at the WTO. It is unprecedented for a pro-liberalising trade G7 nation to re-join the WTO with the opportunity to impact the evolution of global trade. The challenges for Ministers, civil servants and business are real. But the opportunities for our economy and our relationships around the world are considerable.

It for these reasons that I am launching a Free Trade Parliamentary Caucus with fellow MPs Suella Braverman and Mark Garnier. The Trade Caucus will be an opportunity for Parliamentarians to deepen and broaden their understanding of trade policy, discuss challenges and opportunities and advocate for free trade in the UK and globally.

We will look at the role of trade in foreign affairs, how free trade can help the world’s poorest countries and how to create high paying jobs through boosting UK exports. Whether colleagues represent a rural constituency with a significant number of farmers, a coastal constituency home to commercial fishing fleets or have a personal interest in foreign affairs, international development or the economy – trade policy matters too.

I have been heartened by the level of interest from colleagues, and hope those who cannot make it to our inaugural meeting today will join the group and get involved.

We owe it to our constituents and to the country to make a success of leaving the European Union. I hope the Free Trade Caucus will be one way of doing that.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

WATCH: PM says UK has “embarked on a great voyage”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

David Gauke: The drama of Brexit is not done yet

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the recent general election.

It is the morning after the night before. For most readers of this website, it is a moment of triumph as we leave the European Union. This is an historic moment: many have campaigned long and hard to deliver Brexit and it is perfectly legitimate to celebrate it.

Personally, I never had much of an emotional attachment to the European institutions or the more integrationist aspirations of some pro-Europeans, but I do believe that our prosperity and global influence will be diminished by our departure. So, forgive me, but I stayed clear of the English sparkling wine last night.

We remain a divided nation and this is not a moment where the country comes together in one shared emotion. Some sensitivity is required from all sides. Steve Baker, in particular, has been impressive in making the case that the manner of our departure should not aggravate existing divisions.

It is now time to focus on what happens next. What will our future relationship with the European Union look like? In truth, it is what we should have spent the General Election campaign debating, but did not.

The UK Government’s position for some time is that everything should be agreed before the end of the year. No extension to the Implementation Period because that wouldn’t be ‘getting Brexit done’. (You might have thought that Brexit was ‘done’, has just been done, but clearly it is a little more complicated than that).

In recent weeks, the Government has also been more explicit that its focus is on zero tariffs and zero quotas, but with ability for the UK to diverge on regulations. Alignment (dynamic or otherwise) is out of the question. After all, what is the point of Brexit if you cannot make your own rules?

It has to be said, it is a fair question. But there are some big consequences of trying to pursue ‘the point of Brexit’. Even with zero tariffs and zero quotas, you will be very far from having frictionless trade. For an advanced economy like ours, most of the costs of trade barriers relate to non-tariff barriers. Even if we land the deal we are looking for, trade with the EU will be more complicated, bureaucratic and expensive than is currently the case – as Michael Gove acknowledges. The Government’s own analysis suggests that the cost of pursuing a Canada-style free trade agreement will be 4.9 per cent of GDP in fifteen years’ time.

But won’t this give us lots of exciting new opportunities to trade with other places, especially the US? Some realism on this point would be welcome. Let us put to one side the likelihood of getting a free trade deal with every relevant country including the US; the benefit to the economy of moving from WTO terms to a good free trade agreement is not that dramatic.

The Government’s analysis is that the upside of getting a FTA with everyone else of any significance is only in the range of 0.2 to 0.7 per cent of GDP. To state the obvious, that is a lot less than 4.9 per cent.

I know, I know. Remoaners like me made these arguments in 2016 and 2019 and we lost. We did. But that doesn’t make the economic analysis wrong and it doesn’t mean that the decision to reject alignment in, for example, manufactured goods will be painless. There are people – probably quite a few of them, some of whom voted Tory for the first time in order to ‘get Brexit done’ – who will lose good jobs as a consequence of the decision to ensure we are able to set our own rules.

To be fair, there is much less of the ‘have cake and eat it’ about the Government’s new approach. There is no more of the nonsense that we will the ‘exact same access to the single market’ as we had before. There is an acceptance that there are trade-offs and if the conclusion is that sovereignty matters more than prosperity, this is the right strategy.

There is nothing much on non-tariff barriers, nothing for services, greater divergence between Great Britain and Northern Ireland (let us skirt over the issue of checks in the Irish Sea) but at least the Government knows where it stands, has Parliament behind it and can move quickly. There is no reason why this can’t be done quickly. Right?

Maybe not. At one level, a zero tariffs, zero quotas deal is very good for the EU. After all, they export a lot of goods here. It is not great if your economy is based on services or if your manufacturing industry relies on cross-border supply chains vulnerable to additional friction (in other words, it is not great for us). But surely the German car manufacturers will love it. After all, we are always being told they are on the verge of intervening to help us out.

There are two obvious difficulties. The first is that, in addition to ‘zero tariffs and zero quotas’, the EU are also focussing on ‘zero dumping’. They take a pretty broad view of what constitutes ‘dumping’ but we are immediately in the realm of Level Playing Field conditions. Workers’ rights, environmental protections, state aid. There is nothing new in this featuring in FTAs – the EU-Canada FTA has plenty of it – and that is with Canada being three thousand miles from the EU. The EU will want more extensive requirements on us than they do with Canada. It is complicated stuff, takes a while to work out and some of it will be politically sensitive. There might be some things a UK Government wants to do but won’t be able to because of the Level Playing Field provisions. Some of my former colleagues might argue this raises questions of sovereignty, accountability and democracy.

The second issue is fish. If the issue of fish stands in the way of concluding a deal, it will be the ultimate triumph of politics over economics. The fishing industry matters to those relatively small numbers directly involved both in the UK and the EU. Maybe it matters to our own self-image as an island nation but, economically, it doesn’t really matter much at all. But the fishing vote is geographically concentrated, it appears to have very high (by which I mean ‘unrealistic’) expectations of the benefits of Brexit and there is probably a widespread, sentimental sympathy for it. Finding a compromise on fish won’t be easy.

So where does that leave us? The Government has a mandate to pursue a more distant, less ambitious relationship but even though it is aiming low, it may still miss its target. Reaching a deal on fish and the Level Playing Field Provisions will be challenging. Received wisdom is that both sides will move sufficiently to get something over the line by the end of the year but the parties will find a way to maintain the status quo as we take our time to resolve outstanding matters, thus avoiding a cliff edge.

I am not so sure. Even if the issue of fish can be dealt with, the Prime Minister will need all of his persuasive qualities, a lot of political capital and considerable flexibility to land a compromise on the Level Playing Field conditions. He might question whether the political price he would have to pay to deliver a very thin FTA is really worth it after all. This doesn’t make a WTO exit at the end of 2020 the probable outcome but the risk does look under-priced. The drama of Brexit is not done yet.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Saqib Bhatti: Openness, transparency, freedom. Lodestars for our future on the day when we leave the EU

Saqib Bhatti is MP for Meriden.

Tonight marks a new future for the UK, as we fulfill the promise every Conservative MP made in the election campaign to leave the European Union. This milestone allows us to look ahead and fully focus on the opportunities that Brexit will bring: strengthening ties with partners around the world and investing in future growth.

As someone who has run a business, and also led the Greater Birmingham Chambers of Commerce, I wholeheartedly support the Prime Minister’s commitment to ‘level up’ the UK to ensure that every corner of the country benefits from economic growth post-Brexit. And this message of ‘levelling up’ need not be constrained to the UK – Brexit will allow Britain to look beyond Europe to build and establish new trading relationships across the globe.

The first and foremost opportunity ahead of us is that offered by the Commonwealth – an important institution for our future free trade agreements which boasts thriving markets. Three of the five fastest growing economies in the world are members of the Commonwealth, meaning more potential customers, suppliers and partners for UK business.

We should be confident that there are huge opportunities outside the borders of the EU which the UK is well-placed to take advantage of, thanks to its status as a world-leading regulator and market creator. For investors, open, transparent and stable trading environments are the building blocks of leading financial markets, which is why the UK has continued to receive votes of confidence and inward investment since the referendum. Innovation in regulation and governance has been led by Britain, creating an environment where businesses and investors thrive.

Remember, we were told that Brexit would prompt an exodus of jobs from the UK to European capitals such as Paris, with estimates ranging from 30,000 to 75,000. These claims have proven to be completely unfounded, with EY calculating that only a thousand banking jobs have moved to the continent since the vote to leave the EU. Whilst much of the UK’s attractiveness is due to our pro-business environment and competitive tax system, it is also because Britain’s regulatory regime is seen as far more predictable and trustworthy by international firms compared to those on the continent.

Take the AMF – the French financial markets regulator – which is often seen as imposing protectionist policies, and unwelcoming to not only investors but even journalists who cover them. Last year, it fined Bloomberg News €5 million for publishing an article about French company Vinci based on an incorrect press release – an article retracted within half an hour of publication. Bloomberg argued that the fine was unprecedented, disproportionate and ‘risked seriously undermining the liberty of the press.’

But such actions by the AMF are not a one-off. The regulator led a four-year investigation into investment firm Muddy Waters for daring to question the accounting practices of French retailer Casino. These charges were eventually dropped, leaving Muddy Waters to criticise France as ‘an unwelcoming place for investors who are also whistle-blowers’. Looking forward, the French Government is about to introduce new regulations which will make it more difficult for overseas firms to invest in what it deems to be sectors of “strategic importance” such as Artificial Intelligence.

This unpredictable behaviour from regulators sends alarm bells ringing in those firms considering operations in France. There has been much talk from Paris about overtaking London as Europe’s financial centre, but such a hostile approach to market activity from the AMF only weakens this ambition. Indeed, it’s no wonder that UN trade data shows the UK has retained its position as the top destination in Europe for FDI, with inward investment into Britain by the end of 2018 worth $1.89 trillion (£1.48 trillion), more than Germany ($939 billion) and France ($825 billion) combined.

So if we are to attract investment from our Commonwealth partners and forge new trading links, the UK must maintain our pro-enterprise agenda to cement our status as being a place where both businesses and investors can thrive. This will set ourselves apart from regulatory regimes on the continent that are becoming more insular by placing greater burdens and restrictions on businesses, and which could well influence the future direction of EU-wide regulations. Falling into the trap of becoming too interventionist, like the AMF, will only serve to do more harm than good in the long run. By becoming a champion of free trade and a reliable friend to business, this Conservative Government can harness Brexit to truly unleash Britain’s potential.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com