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Westlake Legal Group > Posts tagged "trade"

Roderick Crawford: We have interests in the rest of Europe, but must be free to run our own foreign policy

Roderick Crawford works on conflict resolution in countries such as Yemen, South Sudan and Iraq, and on Brexit-related matters. He is a former editor of Parliamentary Brief.

One could be forgiven a sense of déjà vu as we enter the second round of accelerated talks, this time in London. The high hopes of breakthrough at the start of last week’s talks were dashed as they broke up on Thursday last. The same sticking points remain: the legal structure of the agreement, level playing field commitments, including state aid, and of course fisheries. Specific details have not been released, so it is hard to comment on why the progress on getting agreement on underlying principles has failed to materialise.

Though working through the underlying principles of the agreement should help identify where the barriers to agreement lie, a look at the overarching principles of the negotiating positions of the two parties may throw better light on the lack of progress.

Last month, Der Spiegel ran an interview with the Anglophile former German Ambassador in London, Peter Wittig; he provided a revealing glimpse into the EU’s perspective on the negotiations. Asked whether, in effect, the EU should accept a hard Brexit and let the UK go, he says, no:

‘We should continue to endeavour to tie Britain as closely as possible to the European Union. Europe can only survive in the competition between the USA and China if it is strong and united. I always thought it was good that the Federal Government was the voice of pragmatic reason in all these difficult negotiation phases. I advise everyone not to think about the short-term effect, but to keep a strategic eye on where Europe should be in five, ten or 15 years.’

The quote is interesting because it is part of an intra-German conversation from a friend of the UK expressing pragmatic views on the big picture in which Brexit sits. While the UK has been caught up in its own arguments and political storms – and of course running ourselves down – we have lost sight of the impact of Brexit on the EU: it has been considerable.

The EU has lost its only global city, its only global finance centre, its most dynamic services economy, 12 per cent of its consumers – more when weighted for income – and its only universities ranked in the world’s top ten. It has lost a major pillar of good governance (the UK was a consistent upholder of the EU’s rules-based system) and a source of sound counsel.

As the EU looks to develop its common foreign policy and defence co-operation, it does so now from a far weaker base. The UK was one of two EU permanent members of the UN Security Council, one of two nuclear powers.

It had the only blue-water navy capable of working with the US; China has just achieved a two aircraft carrier capability – the UK will soon be there, too. It has a battle-tested professional army and air force. The UK alone had the capability of power projection across the world – albeit with limitations – and the will to do so. The Foreign Office, despite its shortcomings, is still world class and the UK’s influence is, arguably, stronger across the world than any single EU member state.

The EU is diminished, while the fault lines on which it sits become more unstable. To its east, Russia is reviving in confidence as its actions in Ukraine, Syria, and its challenges to the West demonstrate. Turkey has become a regional player, outside of the NATO fold, and looks to a future untied to the EU. The Middle East and North Africa are unstable, and a source of potential and probable mass migration to the EU driven by demographics, economic and political failures and climate change.

The UK looks out across the North Sea to Norway, Denmark and the Netherlands, and across the Channel to Belgium and France; to our west lie the USA and Canada. It is an envious position to be in, though not one deserving of complacency: we still want a secure and stable EU. We are committed to the peace and security of Europe through NATO; in these respects, our interests and obligation in NATO, we are tied in.

One of the problems in the current negotiations is that the EU has re-written history to build up its own role in keeping the peace of the last half century. One of its foundational myths is that it has been the EU that has kept the peace in Europe. It even claims responsibility for the Belfast Agreement.

But its claims to success are absent of evidence. It is the transatlantic partnership that has kept the peace in Europe; it was the Northern Irish, London and Dublin – with US support – who brought about the Belfast Agreement. The EU forgets its role in the break up of Yugoslavia, and the subsequent wars and civil wars ended only with US engagement. Its diplomatic bungle over Kosovo, when it resurrected the July 1914 ultimatum to Serbia, ended likewise – and at great cost in civilian lives. The EU has not kept the peace in Europe.

The EU’s ambitious partnership proposal is overly ambitious, based as it is on inflated ideas of its own story and present capability; the ideas of uniquely shared values and interests ignore that they are shared with the English-speaking world and beyond. When the myth is removed, and the reality of the EU’s position is seen — its risk levels, its lack of investment in NATO and its own level of defence preparedness, and its poor relations with its neighbours — it is hardly an attractive partner; more of a liability.

The EU, quite understandably, wants the UK as closely tied in as possible to its defence and foreign policy (and economy). The UK, quite understandably, does not. Present commitments through NATO provide sufficient security to the EU’s members and help balance much, though not all, of their security concerns. The UK will do more, through co-operation bilaterally with members and freely alongside the EU too.

The EU and UK can co-operate to secure shared interests, but ultimately, though the UK wants a stable and secure EU and stability and security for its member states, there are differences in interests. The UK must be free to run its own foreign policy, champion alliances that may take precedence over that with the EU and policies that the EU will oppose — even the freedom to support member state interests against those of the EU institutions. It cannot be tied-in to a punitive governance structure to prevent it exercising such choices.

The overarching principles of the EU and the UK as regards governance of the future relationship are in conflict — we can’t be tied-in and free simultaneously; papering over the differences would breed confusion and likely lead to fresh upsets in the future. The UK cannot afford to accept a single overarching governance structure or claims upon it in the field of the EU’s common foreign policy and defence.

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

Iain Dale: China’s cyber attacks on Britain. How do I know about them? Because I’ve seen the proof.

Iain Dale presents the evening show on LBC Radio and the For the Many podcast with Jacqui Smith.

Wednesday was a sad day for every right-thinking person in Hong Kong, and one that will be full of consequence, not just for the people of Hong Kong, but for the future of international relations and the world’s dealings with China.

China has been flexing its muscles for a long time, but the West has been slow to realise it. It is the new imperial power in Africa. It has in large parts taken over the continent, raping it for its natural resources and embedding itself in different countries. It has only one aim: the furtherance of Chinese power and influence on the continent.

Just look at how it’s behaving towards India over the disputed border region. It continues to threaten Taiwan. It treats its minority Uighur Muslim population in a manner reminiscent of how the Jews were treated in Nazi Germany.

And now it has imposed a new security law on Hong Kong in defiance of the terms of the 1985 Joint Declaration. Laughably, China justifies it on the basis that it was a ‘declaration’ and not a ‘treaty’. They say it is we who have broken the agreement by offering British passports to 2.9 million Hong Kong Chinese people and offering them sanctuary in the UK.

You don’t have to be a lawyer to work out that they’re talking utter bollocks. They know it too – but it will always suit their interests to create a bogeyman for all those who fall for their preposterous propaganda.

I think it is now inconceivable that the deal with Huawei can go ahead. There are now enough Conservative MPs who would be able to defeat the Government in any vote. I doubt whether it will come to that. The Prime Minister was always reluctant to go ahead with it anyway. So surely he will now be pushed over the edge.

There will be consequences, though – and one of them will be that UK universities will be targeted by the Chinese. Many university courses are now totally reliant on Chinese students (and their fees) for their existence. China will probably stop its students from coming to the UK, and that gap in funding for UK universities will be impossible to fill. In 2014-15 there were 89,500 Chinese students at UK universities. Since then, the number has risen by a third to 120,000.

It would not surprise me if the UK experiences a state sponsored country-wide cyber attack in the next few weeks, along the lines of that which Australia underwent a few weeks ago. A huge proportion of the cyber attacks launched against Britain already come from China. How do I know this? Because I’ve seen the proof. I could reveal how, but I’d have to shoot you.

The Government is entirely right to offer sanctuary to Hong Kongers. Initially, it looked as if they would only do this for the 330,000 current British Overseas Passport holders, but they have extended it to 2.9 million people who would be entitled to apply for one.

No one seriously believes that all 2.9 million would come here. There are plenty of other countries in the world that would welcome some of them too, but it’s entirely possible that maybe a quarter to a third might consider coming.

However, it is also entirely possible that the Chinese could do one of two things. They could impose a deadline for people to leave, or they could stop people leaving altogether. That would provoke a full-blown international crisis, but they’re ruthless enough not to give a damn about that.

Britain has very few levers to pull in a situation like this. Using condemnatory language is one thing we can do. Offering sanctuary is another. Bringing to a halt Chinese involvement in our national infrastructure is a third. I don’t see a trade war having much effect unless some sort of trade sanctions are imposed by the international community through the WTO.

We as individuals could boycott Chinese goods, I suppose, but given Chinese imports are worth nearly £45 billion a year, I suspect a boycott wouldn’t make much of a dent. Our exports to China are worth only half that, but there’s little doubt that they would be hit, too.

In the end, we have to do what is right and hang the consequences. What the government has done is right. There may some anti-immigration siren voices on the right who have an issue with us meeting our obligations, but they should be ignored.

We should welcome Hong Kong Chinese people with open arms. They would bring massive positives to our country. The Government now needs to try to work out how many might want to come and on what timescale. We need to think very deeply about this because if we make the same mistake as Tony Blair made in the early 2000s with immigration from eastern Europe, and fail to provide the requisite infrastructure, the consequences could be dire

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Alan Mak: Britain should champion a new Five Eyes critical minerals reserve system

Alan Mak is MP for Havant and Founder of the APPG on the Fourth Industrial Revolution.

The on-going trade dispute between the US and China has put the spotlight on so-called “critical minerals”. We in Britain cannot afford to be passive observers. Instead, we should take an active interest in this key strategic and economic issue, and play a leading role in safeguarding access to critical minerals, both for ourselves and our Five Eyes allies. Ensuring our scientists, manufacturers and technology businesses have a secure and reliable supply of critical minerals is vital for Britain’s leadership of the Fourth Industrial Revolution.

Critical minerals consist of the 17 Rare Earth Elements (REE) recognised by the International Union of Pure and Applied Chemistry, with names such as promethium and scandium, plus other economically valuable but relatively rare minerals such as lithium and cobalt (used in batteries), tungsten (used in defence products including missiles), bauxite (the source of aluminium) and graphite (key to battery production).

The REEs have unique magnetic, heat-resistant, and phosphorescent properties that no other elements have, which means they are often non-substitutable. Whilst used only in small quantities, they are key components in a wide range of consumer products from mobile phones, laptops and TVs, and have widespread defence applications in jet engines, satellites, lasers and missiles.

Although they are more abundant than their name implies, REEs and critical minerals are difficult and costly to mine and process. Converting critical minerals embedded in rocks from under the Earth’s crust to separated elements is a complex and costly process which often involves the use of highly concentrated acids and radiation.

China hosts most of the world’s processing capacity and supplied 80 percentemploy of the REEs imported by the US from 2014 to 2017. On average, China has accounted for more than 90 pe cent of the global production and supply of rare earths during the past decade, according to the US Geological Survey.

By contrast, the US has only one rare earth mining facility, and currently ships its mined tonnage to China for processing. Lynas Corporation, based in Australia, is the world’s only significant rare earths producer outside China. Other critical minerals are similarly concentrated in a small number of producer nations. For example, the Democratic Republic of the Congo was responsible for around 90 per cent of the world’s cobalt production in 2018, whilst Guinea dominates bauxite, with around 35 per cent of the world’s reserves.

As globalisation and industrialisation accelerate around the world, critical minerals have become a highly sought-after resource for the high-technology, low-carbon and defence industries. They will play a vital role in Britain’s future plans for economic growth, innovation and green industrialisation, especially as we renew and expand our manufacturing base in the wake of Coronavirus.

Given the national strategic and economic importance of critical minerals, the UK needs to act now and lead efforts to protect our national supply for the future. Neither we nor our Five Eyes allies can remain reliant on one producer for anything, including critical minerals. Here are four steps we should take:

Establish a New Five Eyes critical minerals reserve stockpile

The Five Eyes intelligence sharing partnership between Australia, Canada, New Zealand, the USA and the UK has been in existence since 1941 and provides the perfect foundation on which we should develop a new critical minerals reserve that would end our collective vulnerability of supply.

The reserve would consist of inter-connected physical national stockpiles of critical minerals, and then extend to become a processing chain that all partners could draw on. The US already maintains stockpiles, and creating others including in Britain would lead to new jobs. The UK is never going to become resource independent, but through international co-operation we can diversify supply and refine, through innovation, the processing of these elements.

Use our international aid budget to secure critical minerals supplies

As the Foreign Office and DFID merge, the UK can align its development goals alongside diplomatic priorities. We should deploy our international aid to unleash the untapped supply of critical minerals in developing countries, effectively funding the start-up of new critical mineral mines and processing plants. This would enhance our supply of these elements and create jobs, transforming communities around the globe through trade, not just aid. China has already implemented a similar strategy in Africa, for example providing Guinea with a $20 billion loan to develop the country’s mining sector.

Create a new National Critical Minerals Council

The Government should establish a new National Council composed of metallurgists, scientists and foreign policy experts to monitor global trends in critical minerals, and advise the Government on rare earths and its strategic stockpile. Given the national security and defence procurement implications, the National Council’s establishment would help to keep this issue at the forefront of future policymaking.

Become the world’s greenest stockpiler by incentivising private sector involvement in critical minerals processing

The Government should provide funding for greater research into how we can improve the processing chain of critical minerals with a focus on how we can tighten environmental controls in this sector internationally.

The UK should establish itself as the world’s “greenest stockpiler” of critical minerals by offering incentives that encourage private sector investment in recycling processes and reward companies that contribute to the UK stockpile. We need more facilities like the University of Birmingham’s Recycling Plant at Tyseley Energy Park, which is pioneering new techniques that are transforming the recycling of critical minerals such as neodymium, which is commonly found in hard disk drives.

The Coronavirus pandemic has taught us the importance of supply chain security, whether for PPE or critical minerals. With our reputation for scientific excellence, global alliances and diplomatic networks, we can help ourselves and our allies strengthen our access to the key minerals that will power our economic growth and innovation potential for decades to come.

This is the first in a three-part series on how to boost our economy after Coronavirus.

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

Jonathan Djanogly: Parliament should be able to scrutinise new trade deals properly. But the current arrangements are unfit for purpose.

Jonathan Djanogly is a former Minister, and is MP for Huntingdon.

Did we come through the Brexit process only for the UK Parliament to have less scrutiny over new free trade agreements than we had during our membership of the European Union?

This is the question that Parliament is going to have to address through the Trade Bill, currently making its way to report stage in the House of Commons.

In fact, it seems to be surprising most people that, seemingly contrary to what was proposed in the Queen’s Speech, the Trade Bill does not actually address future trade agreements at all.

Rather, it provides a low scrutiny mechanism, using Statutory Instruments (SIs), for existing EU free trade agreements (FTAs) to be ‘rolled over’ to the U.K. However, given that we have left the EU, it can be questioned as to whether any EU deals with such third countries should now be dealt with as new trade agreements.

For instance, the U.K /Japan proposed FTA is now being treated as a new agreement, and will not replicate the FTA that the EU agreed with it. Likewise, countries such as Canada seem to be waiting to see what the EU agrees with the UK, before agreeing their own new deals with the UK.

In effect, it is arguable that the Bill, which was perfectly rational when its second reading was initially heard in January 2018, may now simply have missed the boat, in terms of the future relevancy of EU trade deals that we have thus far failed to adopt.

It is also somewhat annoying, to those of us that have been following the generation of this bill for the last three or more years, that most of the sensible amendments offered by the then Secretary of State, Liam Fox, have not been re-incorporated into the current bill now before the House.

Agreement that the SI regime should only last for three years rather than five, and that the Government should have to produce reports for Parliament to explain their proposals at least 10 days before the SIs are heard, are surely not contentious. Accordingly, I have re-tabled the last Government’s own amendments for debate.

There then arises the question as to how we are going to deal with future FTAs with countries and organisations, such as the US, China and the EU. On this the Bill is quiet, despite Fox agreeing to consult on a new scrutiny process in 2018.

For the last 40 odd years, the EU has been negotiating our trade deals. As part of the EU scrutiny process, a vote needs to be taken by the EU Parliament on the draft FTA prior to its signature.

Most other countries have similar approval arrangements. In fact, some go further and allow the legislators to get involved in the provisions of the deal. So, for instance, the U.S. Senate can amend draft trade agreements.

In practice, a parliament holding the threat of a veto means that it is very rarely used. This is because the executive will have good reason to look for consensus on its negotiating mandate, as well as carrying legislators along during negotiations through regular disclosure and discussion.

A wise executive would naturally wish to avoid an unnecessary parliamentary bust up just before signing an FTA. Of course, this is where it all went wrong with the TTIP negotiations between the US – EU. Here, both the US Congress and the EU Parliament were disclosing information to their respective elected representatives, that was not being provided to UK parliamentarians.

As a result, and with the inevitable leaks, the whole debate surrounding thousands of lines of deal negotiations got reduced to accusations of selling the NHS and Brits being forced to eat American chlorinated chicken. One might have thought that the UK government had learnt its lesson from the TTIP experience.

The point to be addressed in the Trade Bill is not whether individual issues, such as food standards, environmental regulations, public services or digital services provision or consultation with the devolved authorities are good or bad things in themselves.

Rather, it is the need for the Bill to provide a statutory framework that requires government to take early stage consultation and ongoing soundings through the course of FTA negotiations. This is in order that business and citizens feel they are being listened to with similar rights to their counterparts in the country with whom we are negotiating. Then, before signing, MPs should get to vote on the deal, as will be the case with the counter-party.

In effect, I would argue that current UK practice on scrutinising trade deals is neither democratic nor practically fit for purpose. Moreover, I would go further to point out that our poor scrutiny process is going to be undermined, in any event, by other countries’ more modern scrutiny practices.

The Government suggest that the Constitutional Reform and Governance Act (CRAG) process, allowing a short delay mechanism before ratification (ie after the signing) of FTAs, is adequate. This is the same CRAG process that was implemented by Labour in 2010 at a time when the U.K. benefited from the EU Parliament veto. By the way it’s also the same process that was described in 2019 by the Lords Constitution Committee as ‘anachronistic and inadequate’.

Secondly, the Government suggests that the Trade Select Committee could be utilised to provide scrutiny for proposed new FTAs. Let us here, firstly, assume that the Trade department and therefore its committee is going to survive a rumoured merger with the Foreign Office. Even so, and despite negotiations with the US and now Japan having already started, no such arrangements with the trade committee have yet been agreed. We know this from an on the record June letter sent from the chair of the committee to Truss.

Of course, the Trade Committee will not have jurisdiction to look at the proposed EU FTA and, following the post- Brexit demise of Bill Cash’s European Standing Committee B, it has not yet been made clear who or how any proposed EU deal will be scrutinised.

I am not suggesting that MPs should be able to impede Government negotiations on FTA’s, and nor am I saying that MPs should be able to amend draft FTAs. However, we need legislation that provides for Parliament to approve FTAs, on a yes or no basis, before they are signed. I have tabled an amendment to the Trade Bill to that effect, and I look forward to the debate.

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

Richard Holden: Here in Durham, Labour ponder tinkering with statues – while local people yearn for jobs, security and pay

Richard Holden is MP for North West Durham.

Chatterbox Café, Marketplace, St John’s Capel, Weardale

Grabbing a sausage bap (on brown, butter and brown sauce) and coffee (black, no sugar) from the Chatterbox Café in St John’s Chapel yesterday, I remembered it was Father’s Day, and that my dad had come up to campaign with me in the very spot where I was sitting last year. So a phonecall and a natter about how him and mum are managing – and I as no longer the least favoured child.

Like millions of other families across the country and thousands in North West Durham, the lockdown has really affected him and my mum. While she’s been doing more shifts as a ward clerk at the local community hospital back in East Lancashire, my dad has had to shield with my grandma, for whom he’s a carer and, therefore, socially distance from my mum, even in their own home.

As we slowly emerge from the global health pandemic element of Coronavirus though, for the country and my constituents, it’s the barrel of its economic consequences that we’re now staring down.

The biggest fall in GDP ever last week was made only too real last Thursday for many of my constituents. Back in my slowly opening-up constituency, I visited the large local employer who’d emailed the day before.

It makes the aluminium parts that go into the wings of planes (which allow a flex of up to 45 degrees – so when you see those plane wings move, it’s the men and women of Consett who’ve made that possible). They take on apprentices, and their highly skilled local workers earn, on average, just under £30,000 a year, with their most experienced workers earning about £40,000.

Due to the collapse in travel, the knock-on hit on the airlines, the further knock-on hit on aircraft leasing and the subsequent knock-on impact, therefore, on aircraft manufacture, they’re going to have to lay off half of their workforce – over 100 people.

Speaking to their plant manager on site on Friday, it was clear that, if it hadn’t been for huge investment in recent years and major efficiency improvements, the plant would now be under threat of closure. As it is, they’re in a position of being able to survive, and they have my commitment to do everything I can to help them secure more work from wherever possible.

This economic challenge that we’re now facing is at least as significant as the health one we’ve just faced. But the Left has barely mentioned it. Most of them are fine – all the polling shows that many of Labour’s most loyal graduate voter base in cities will have been on full pay, working from home.

Indeed, the activist left appear to have been most active at trying to ignite a culture war. Even Labour-led Durham Council has announced they are conducting “a review of all statues and monuments” a couple of weeks ago, as it simultaneously ignored the pleas of local businesses while coning-off previously open disabled parking bays in Crook, Consett and Willington, in order to prevent people from being able to get to the newly re-opened shops last week.

On a national level, after an early barrister’s bounce presenting his opening case, Keir Starmer has started to flap under cross-examination himself. Trying to keep the Labour membership, Labour councils such as ours, Rebecca Long-Bailey and the more extreme elements of the National Education Union happy by refusing to support the Government as it tries to get schools back makes him look increasingly tin-eared to the concerns of ordinary voters.

My constituents are also increasingly concerned about wanting to get ‘back to normal’ in terms of our NHS – with many having seen long-planned operations cancelled – so they want to get hospitals back to normal as soon as possible, too.

But the biggest concern is about the economy and, to my constituents, that means opportunities to work in good, well-paid jobs and local businesses that are able to thrive. Without demand returning, times are going to get increasingly tough. When it comes down to it, “levelling up” is certainly about improving health and education but the driver of that, as Boris Johnson said during last year’s Conservative leadership campaign, is the “other wing that Labour always forget about” – the strong and vibrant economy that pays for it all.

As we’ve seen over the last few weeks in terms of trade deals internationally with Japan, Australia and New Zealand, we’re well on the way. Britain’s approach to the EU, by which we seek a free trade agreement but will clearly take control back of our own borders, money and laws, is the right one to give certainty about what we’re after too. That’s solid, welcomed and good for the long-term.

During the next few weeks or so, though, the Government faces immediate challenges on how we drop a gear to get the economy accelerating again, as we move beyond direct state support from grants and furlough. When they do so, Ministers should consider the businesses small and large, from tourism to transport at the heart of those changes. The primary change we need to make is to switch from saying “what’s allowed to open” to instead specifying “what in the interest of public health needs to continue to be restricted.”

Good jobs are the foundation of a solid economy and society. As Starmer sits on the fence, pulled to a stalemate in a perpetual tug-of-war from both sides of his party, while locally Labour wastes time and taxpayers’ cash on trying to mastermind its own mini-cultural revolution, the overwhelming majority of what we must do is to tackle the impact of Coronavirus on the economy.

Ensuring that we get demand going to save as many jobs and businesses as possible, and deliver for the fathers and families of North West Durham and across our country must be our number one priority. At times like this, we need to remember the words of Iain Macleod, the only other person I’m aware of who entered politics after attending my old grammar school in North Yorkshire, who spoke at the Conservative Party Conference exactly 60 years ago: “The Socialists can scheme their schemes, and the Liberals can dream their dreams, but we in the Conservative Party have got work to do.”

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Dehenna Davison: Why a trade deal with the United States should be Britain’s top priority

Dehenna Davison is the Member of Parliament for Bishop Auckland.

Back in 2016, hundreds of thousands of voters across the North East voted to take Britain out of the European Union’s trade system.

For decades, we have had a front-row seat as our manufacturers, farmers, and fishermen have suffered under rules drawn up in Brussels around the competing needs of 28 different nations and powerful vested interests of certain Member States. Far from being an effort to turn back the clock or shut out the world, Brexit was our chance to reclaim Britain’s seat at the top table and carve out a new, global role.

The Covid-19 pandemic makes this task more urgent. Not only will we need every possible means to jump-start the economy once we come out of lockdown, but the outbreak has also shown what a crucial part trade plays in spreading and upholding global standards by exposing China’s extraordinary influence on the international stage.

That’s why a trade deal with the United States needs to be top of the Government’s international agenda. Not only would deeper links between two of the world’s largest economies unlock a range of direct economic benefits, it would also form the foundation for a new international trading order built on the foundations of the special relationship.

America is already one of the UK’s biggest customers, with British exports in 2019 worth £138.7 billion. According to the Department for International Trade, a good trade deal with America could increase UK GDP by up to £3.4 billion pounds.

Lower tariffs will make British goods, especially agricultural produce such as beef, lamb, and dairy products, more competitive in the US market. The impact of such a boost to farming in constituencies such as Bishop Auckland, where almost half of our land is used for agriculture, should not be under-estimated. The US is the second-largest importer of lamb in the world, having increased in popularity in recent times. Even a three per cent market share could boost annual UK lamb exports by £18m – a huge opportunity for our North Eastern farmers.

Central to the appeal of British produce are our world-leading quality and welfare standards. Our farmers are justly proud of them, and the Government is wise to have guaranteed that these won’t be compromised in any negotiation. They are morally right, and they also give us a chance to make ‘British’ a byword for quality in supermarkets around the world.

But we won’t be able to export our goods or our values if ill-advised politicians keep trying to bind the hands of our negotiators.
I recently helped the Government vote down two critical amendments to the Agriculture Bill which risked killing any trade deal with the US stone dead. These would have meant that goods could be imported to the UK only if their production standards matched or exceeded ours in every particular way.

This was a recipe for disaster. The proposed rules would have been completely unenforceable, and seen the judges once again dragged into politics via a slew of lawsuits over what exactly ‘equivalent standards’ really meant. They may even have been illegal under World Trade Organisation rules.

Even if we somehow avoided all that, they would have set a precedent which would severely curtail our ability to import, with the inevitable consequence of higher prices and reduced choice for British consumers.

Worse still, these proposals would also have reduced our clout internationally. Countries which lock their markets away behind excessive red tape don’t make attractive trade partners. Such an attitude would also have made it much harder for us to strike deals with emerging economies to help them trade their way towards prosperity – a high price to pay for a bout of reflex anti-Americanism.

In reality, if we really want to export our values there could be no better start than a deep and comprehensive trade agreement with the United States. Such a deal could lay the foundations for a new international trading order built on our shared commitments to free trade, democracy, and the rule of law. Future agreements with like-minded nations such as Australia, New Zealand, Canada, and Singapore could expand this into a powerful new international trade partnership, one with the clout to take on Brussels or Beijing.

With our world-class standards and the fifth-largest global economy, Britain has the chance to place itself at the heart of this new system. But only if we let Liz Truss and our expert negotiating team do their jobs.

Of course, Parliament has a vital democratic role to play in our trade policy – that’s why we voted to take back control. But the right time for that is when the results of the negotiations are laid before MPs, where they can be considered in full. Constant interference in the negotiations themselves risks scuppering deals which will play a crucial role in accelerating the UK economy back towards growth, and risks replicating the very protectionist and excessively political system we left the EU to escape.

The UK/US trade deal will lay the foundation for a new, entrepreneurial Global Britain – trading freely and fairly with all four corners of the earth. If we allow the deal to be delayed, derailed or diluted through endless amendments, we will pay the price in our national pocket. That is not what anyone voted for.

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Six months on from last year’s general election, it’s only the LibDems who bang on about Europe

Britain has left the European Union.  Boris Johnson and Dominic Cummings turned round a Conservative poll rating of barely 20 per cent, a hostile Supreme Court judgement over prorogation, Commons defeats, stalemate and resignations to deliver first a Commons majority of 80 and then Brexit itself – less than six months after the Conservatives were reduced to only a bare four MEPs under Theresa May.

Even if he achieves nothing else as Prime Minister, Johnson will be remembered for this nation-changing achievement, more monumental even than Margaret Thatcher’s economic reforms.  Tories should always honour him for it, and for seeing off Jeremy Corbyn.

So what’s at stake in the current trade negotiation with the EU is the form of Brexit, not the fact of it.  Will we be, at one of the scale, more like (say) Norway, circling within the orbit of the EU’s Single Market rules and social market consensus; or, at the other end, Australia (for example), having no trade deal at all, and trading on minimum WTO terms?

Perhaps, at some point in the future, some other Government will lean in a Norway-type direction.  But that is neither what Johnson’s Brexit deal pointed towards, nor what his election manifesto expressly promised.

On Johnson’s deal, the revised Withdrawal Agreement and Political Declaration was worse for Northern Ireland than Theresa May’s version, since it expressly separated it further from the settlement which will apply to Great Britain…

…But better for Great Britain than May’s deal, since that settlement gives it greater potential to shape its own economic destiny as an independent state.

On the Conservative Manifesto, that document expressly committed the Prime Minister to a future relationship “based on free trade and friendly cooperation, not on the EU’s treaties or EU law”…

…And to “not extending the implementation period beyond December 2020”.  Given those commitments, we’re surprised that anyone was surprised that the Government made it clear this week that it keep that pledge.

The thrust of the public objection to doing so came from the now reduced Remainer residue – the diehard remnants of the campaigners that sought a second referendum less than a year ago.

It was that the start of 2021 would be a bad time for more friction in trade between the UK and the EU, because of the effects of the Coronavirus.

But the heart of the economic case for Brexit was always what this site called short-term pain for medium-term gain – in other words, trading off more friction with the EU for greater spending, regulatory and tax freedoms overall.

There is no guarantee that the end of transition will be any more or less disruptive in two years than it will be in December.

In any event, the real objection of those former Remainers to not extending wasn’t the public one.  Rather, it was that ending the implementation period will make it easier for Britain to begin leaving that EU orbit.

In other words, the campaign to extend transition was essentially part of the push to keep Britain within it – and make it more like Norway and less like Canada or Switzerland – or Australia, if there’s no trade deal at all.

However, the sum of the matter is that this ship is already sailing.  The economic arguments for and against Brexit were tested in the 2016 referendum.  Leave won.

Johnson then refined them further, proposing “a new relationship based on free trade and friendly cooperation, not on the EU’s treaties or EU law” in that manifesto last year.  He won.

The question that therefore remains is whether a trade deal will or won’t be agreed before the end of the year – which, given the legal and political exigencies, will mean that the parties need to get a negotiating move on.

And as our columnist Stephen Booth keeps pointing out, the dynamics of this negotiation are rather different from those of May’s.

It wouldn’t be true to claim that the UK wants nothing from a trade deal other than a barebones settlement.  It would like greater access for financial services, for example, and less trading friction than other third parties.

But in the last resort, Johnson seems prepared to walk away from the talks rather than concede “a role” to the European Court of Justice, to quote from the manifesto again.

Furthermore, he has a majority of 80, specifically returned on the basis of his Brexit vision and pledges, whereas May had none at all.

Additionally, the second most intractable problem in the two-stage negotiation has been resolved: the matter of where regulatory and trade barriers will run between Great Britain, Ireland and Northern Ireland.

Which leaves the hardest one of all – the role of the Court.  If the EU is willing to recognise that Johnson won’t budge, which seems to be the case, the elements are in place for a solution.

The EU wants fishing and migrant access, plus no tariffs, given its manufacturing surplus; the UK wants services and trade access, with minimum friction on rules of origin and other regulatory checks. The Prime Minister will have to be very careful on fishing, particularly given the Scottish dimension – and will want a U.S trade deal as a sign that the UK is truly entering a new era.

Michel Barnier seems to recognise that the EU will have to give up some ground on fishing, but although a trade deal looks possible on paper it also looks daunting in practice.  This negotiation is more in the hands of the member states and less in that of the Commission than its predecessor, and so vulnerable to spanners in the works.

Whatever happens, Britain has moved on from May’s Government and Brexit stalemate.  The CBI now says that it “supports the Government’s timetable”.  Keir Starmer is a dog that hasn’t barked on implementation extension.  EU alignment is becoming a niche cause.

David Cameron once suggested that the Eurosceptic Conservative Party was irritating the electorate by “banging on about Europe”.  That fate is currently reserved for the pro-EU Liberal Democrats, currently languishing on some seven per cent in the polls.

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No, Prime Minister. Overseas aid and foreign policy aren’t “one and the same”

Imagine aid spending as an archery target.  At its centre is emergency relief, the core function of aid: relief for people who are victims of flood, famine, earthquake or war.  For example, those rendered homeless by tsunamis in Asia or war in Syria.

The next ring out is basic provision that is not necessarily emergency relief: clean water, say, or sanitation.

Further out still is immunising children against preventable diseases: Rotaviruses or Hepatitis B or polio or  – not itself basic provision, but still close to the target’s centre.

Then comes schools and hospitals.  Eventually, one reaches national-building: securing property, and economic help.  And then climate change adaptation and mitigation.

Our members’ panel survey of five years ago, the last time we looked at the subject in depth, found exactly what one would expect to find.

Being sensible people, the Conservative members we surveyed showed decreasing support for aid as it left the core of emergency relief and travelled to the outer rings of nation-building.

Essentially, they were all for aid that clearly makes an immediate difference, but were unconvinced that cash for securing property rights, for example, either provided taxpayer value for money or should be an aid objective at all.

The percentages may well have changed in five years.  But it is very unlikely that the basic shape of the panel’s view has altered much.

Which suggests that the Government’s absorption of the Department of International Development into the Foreign Office is a mistake.

For the essence of Boris Johnson’s statement today was not that the 0.7 per cent aid spending target is to be taken out of law – a move that we would welcome, because its putting into law was virtue signalling, no more, no less.

Nor was it that the target will be dropped altogether – about which we would be indifferent, if only because there is no magic in yoking one’s aid spending to a fraction of one per cent (or of any per cent).

Rather, the Prime Minister’s intent was to signal that overseas aid is become an instrument of foreign policy: exactly what our panel, when it mulled taxpayers’ money for democracy-building or property rights, was sceptical about.

He told the Commons that foreign policy and international development are basically “one and the same”.  But this is the logic that Conservative members rejected, and one of his own examples helps to show why.

Johnson referred to assistance given to six Balkan countries to counter “Russian meddling” – nations, incidentally, that are waiting to enter the EU’s revolving door in the wake of the UK exiting from it.

Two years ago, Theresa May joined EU leaders in promising regional security cooperation to help tackle common corruption, organised crime, the trafficking of people, drugs and firearms, and terrorism plus violent extremism.

All well and good – but the move was nothing much to do with aid, if the guiding impulse behind the latter is, as it must necessarily be, humanitarian feeling rather than the national interest.

The Prime Minister complained that too many cooks spoil the aid broth, and that it makes sense to bring aid spending within a single department.  But he gave no reason why it should be the Foreign Office rather than DfiD.

Admittedly, some former DfiD Ministers complain that the department’s ethos is focused excessively on its client base and insufficiently on the taxpayer.

But the more one probes the evidence, the more one comes to see that much of the most egregious mis-spending is associated with other departments: BEIS with India and the Foreign Office with China.

One assessment found that only five per cent of the £765 million then spent by former and 16 per cent of the £1 billion then spent by the Foreign Office went to the countries that needed it most.

Frankly, Johnson’s statement was as clear as mud when it came to what the continuing 0.7 per cent of GDP will actually be spent on, and what the costs of shuffling the Whitehall deckchairs will be.

Furthermore, the change creates a brand new cart to put before the horse – that’s to say, the awaited defence and security review, which is likely to see traditional defence interests squaring off against enthusiasts for cyber.

The wider significance of the proposal is that it appears to reflect the thinking of John Bew, the Prime Minister’s foreign affairs adviser, who is contributing to the review.

Bew is the author of a fine biography of Clement Attlee, one of the architects of the UK’s post-war policy, and is essentially a pro-intervention “muscular liberal”.

Since Britain can’t and shouldn’t withdraw from such international institutions as the WTO, NATO, the G7 and the Council of Europe, his presence is a plus, in the round: a necessary check on any drift to isolationism.

And although we disagree with this particular merger, it can’t be said that it comes as a surprise.  It was clearly presaged by the post-election merger of Foreign Office and DfiD Ministers.

Supporters of the move would point out, not unfairly, that it shows the Government isn’t marooned – rendered inert by the pressures of dealing with the Coronavirus.  Johnson has made a decision and is taking action.

Tom Tugendhat wrote recently on this site that bringing together aid, foreign policy and trade “would help to cut the strings that see Beijing’s loans deliver UN votes or silence over abuses”.  The point is worth mulling.

We expect that the proposed change polls in the abstract.  It is part of the transition from the age of the Cameroon modernisers to the era of Dominic Cummings, with its hard-nosed sense of what plays well in Red Wall Country.

None the less, remember what caused DfID to be brought into being in the first place.

The Pergau Dam deal during the mid-1990s sought to combine aid, arms sales and building a dam of dubious value in Malaysia.  The consequent court case discredited the then Foreign Office-led model of providing aid.  We are unconvinced that it is necessary to reinvent this particular wheel.

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Roderick Crawford: Brexit and trade. Here’s a grand bargain to open the way to a final agreement.

Roderick Crawford works on conflict resolution in countries such as Yemen, South Sudan and Iraq, and on Brexit-related matters. He is a former editor of Parliamentary Brief.

Today’s virtual meeting between Boris Johnson, Michael Gove and David Frost and Ursula von der Leyen, Charles Michel and David Sassoli is the first of what is likely to be a number of political engagements to break the impasse and help lay the ground for a final agreement acceptable for the UK, the EU and its 27 member states.

A key issue – probably the key one – that must be resolved is the establishment of a robust level playing field to ensure the fair and free competition that is needed to underpin a free trade agreement (FTA). This is a hard EU red line, but the proposed implementation of it has come up against UK red lines and, in places, crossed them. Without a resolution of this issue, there can be no FTA.

In the Political Declaration, the UK agreed to ‘uphold the common high standards applicable in the Union and in the United Kingdom at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change, and relevant tax matters’.

The EU 27 will not agree to sincere assurances from the UK in this area; the final UK-EU FTA will need to have much more robust level playing field standards than the Canada-EU FTA if it is to be acceptable to the Commission and to the 27.

One answer would be for the UK and the EU to agree ‘common high standards’ drawn from those currently in force in the EU and UK — standards that are directly and not peripherally concerned with trade and competitiveness. These standards would have standing only within the free trade agreement, and, not being ‘common standards’ within the EU and therefore EU rules, would have no role for the European Court of Justice (ECJ) in interpreting them.

They would be common to the EU and UK only in the limited context of this agreement, securing level playing field on the terms set out in the Political Declaration. Normal FTA dispute resolution, as in Canada-EU, ought to be sufficient to ensure that these are upheld, and that there is no regression: if these need to be a little more robust,  that should not present an insurmountable problem, so long as the mechanisms are entirely within the framework of the FTA.

This does not mean a return to the common rulebook, as proposed by Theresa May; that required the continued application of EU rules and a significant role for the ECJ. Rather, ‘common high standards’ would have a legal basis solely within the FTA, and without a role for the court in interpreting them — they would not be EU rules, and their origins, as such, would be severed. The UK would be a rules upholder, not a rules taker.

Amongst these level playing field issues, state aid offers incredibly complex challenges, not least in the post-Covid-19 world of massive state interventions in all our economies. As the EU proposals on state aid are not endorsed by the Political Declaration, the UK and EU will need to find answers outside of EU rules and institutions.

Using common high standards, as proposed above, combined with close regulatory co-operation and robust FTA dispute resolution mechanisms will be necessary, and should provide effective and efficient security against abuses by both parties.

In the trade talks, the elephant in the room is the UK’s substantial trade deficit with the EU. In 2018, the UK had a trade deficit of £66 billion with the EU: a surplus of £28 billion in services against a deficit of £94 billion in goods.

In any usual trade negotiation – and this clearly isn’t one – that would never be far from the minds of the negotiators. Maintaining access to the Single Market for UK services, including finance, adds value to the EU economy as well as helping the UK pay for its import of EU goods.

We have been pretty relaxed about this – other member states would not be – but if our trade carried an equivalent surplus it would have been a major issue for the EU. A healthy free trade agreement needs to be comprehensive and balanced: at its core is not only a proper level playing field, but healthy balanced trade too.

A second impasse is on the overarching governance of the future relationship; the UK is clear that it does not want this, whilst the EU clearly wants a comprehensive agreement covering all aspects of the future relationship.

However, while access to the Single Market should be dependent on open and fair competition, it should not be dependent on security, justice, foreign policy or defence matters. The UK is ambitious in its foreign policy; though it will want to co-ordinate and co-operate with the EU, it also wants to take its own initiatives and forge wider alliances; it will want to champion interests that the EU might not support — or which the EU might oppose.

Freedom to act is essential for the UK — and there can be no retaliation on trade, because the EU considers the UK is in breach on other areas, such as foreign or defence policy. With a review of the UK’s integrated foreign policy and defence review lying ahead, potentially more significant even than that carried out after the end of the Cold War, this is no time to be tying the UK into EU frameworks. Arrangements with the EU should follow, not precede, that review.

There is flexibility in the Political Declaration on the governance of the agreement. Its precise legal form is not set out: specific governance arrangements can be established in individual areas, and the parties to the agreement may decide that an agreement should sit outside of the overarching institutional framework. This is the text that the Government should use to argue that its red lines on governance are compatible with the Political Declaration.

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Gavin Rice: Rebalancing our economy will be key to standing up to China

Gavin Rice is a former Special Adviser at the Department for Exiting the European Union.

Before the crisis caused by Covid-19 struck Europe, many in Britain may well have regarded Donald Trump’s obsession with China as odd.

The bellicose, tough-guy President’s determination to conduct punitive trade wars with the emerging superpower has been dismissed as economic illiteracy or just plain childishness.

Yet we now live in a very different world, and the coronavirus has thrown a harsh and unflattering light onto the conduct of People’s Republic.

The suppression of information about Covid-19’s outbreak in Wuhan has caused understandable outrage and the Government is now moving quickly towards a wholesale review of Sino-British relations.

A harsher and clearer light is now being shone on China’s buy-up of UK assets, its control of foreign debt, its domestic human rights abuses, its complicity in corporate espionage, and the acquisition of Western companies by proxies of the Chinese state (the purchase of 13 per cent of Norwegian Airlines last week is a prime example). Questions are being asked about our reliance on international supply chains.

But the reality is that Covid-19 has merely exposed a truth not hitherto universally acknowledged, and that is the fact that for decades China has not been playing by the rules. Her admission to the WTO in 2001 was supposed to herald a new era of international co-operation, liberalisationm and fair trade practices. As China is welcomed into the rules-based international order, the theory ran, the more she will respect the principles of free trade and an international level playing field.

The theory was wrong. While the Anglo-Saxon world sees trade through the prism of Smith and Ricardo, holding that free trade and fair competition leads to optimal benefit for all sides, China sees things rather differently. Trade is viewed as a method for expanding and extending power and influence, and for acquiring resources.

Moreover, the distinction between the interests of companies and those of the state does not exist. One need only look how China’s Belt and Road Initiative is playing out in South East Asia and the Pacific Rim: when debts to Beijing go unserviced, China acquires assets in bridges, roads and ports, and hence control over its neighbours.

Trump is not the only one to view trade as a competition. While a small degree of modernisation has occurred, for decades China’s central banking elite have artificially manipulated the value of its currency, the renminbi, to keep the exchange rate down and its exports cheap. As dollars, pounds, and euros from Chinese exports flow in, they can only be exchanged for renminbi (also known as yuan) at a rate approved of by the central bank. When extremely low labour costs and widespread state subsidies are factored in, it’s small wonder that Western economies cannot compete.

The Covid-19 pandemic has thrown into question our economic foundations, which currently rely on global supply chains for maximum cost efficiency. In 2018-19 imports from China totalled £44.7 billion, while Britain’s exports to China were worth only £22.6 billion – a deficit of £22.1 billion, with the UK surplus in services dwarfed by a deficit in goods. The threat of global disaster (such as a pandemic) has revealed a complete reliance on surplus nations to manufacturer goods; policymakers are now talking of the need for “supply chain resilience” in earnest.

But perhaps it is now time to look again more closely at the bigger picture. The UK survives on an enormous current account deficit – that is to say, the country imports far more than it exports, factoring in both goods and services. In 2019 this ran to the tune of 4.6 per cent of GDP. Liberal economists say this does not necessarily matter; the gap in the balance of payments will be made up for in other ways. Countries running a deficit compensate for it by benefiting from foreign direct investment (FDI) or overseas purchases of their assets – the capital account.

But is this a good thing? The UK has become a significant net debtor nation, with liabilities overseas far outstripping overseas assets. We are reliant on foreign investment (or, to put it another way, loans that will need to be repaid) and crucially, on selling our houses to foreign speculators. Is this really a sustainable way to run an economy?

This is not simply the fault of inefficient British producers. As Roger Bootle and John Mills persuasively argue in their 2016 paper ‘The Real Sterling Crisis’, there is a strong case that the pound has for many years simply been overvalued. The role of the City and the international desirability of UK assets push up sterling’s value, crippling manufacturing in the regions, increasing regional inequality and destroying jobs.

Faced with razor-thin sterling profit margins and a yuan artificially forced down by central bankers in Beijing, British exporters cannot compete. Pounds flow out of the North and regions as cheap goods are imported, but they don’t come back – they flow into corporate investments and houses in the capital, thus exacerbating the suction effect of London.

The global disruption due to Covid-19 gives the UK an opportunity to revisit this problem and change direction. In general markets are the best way of allocating resources. But in currency markets currencies do not necessarily float to a value that reflects the economic fundamentals. It has been taken as read for many years that governments should leave exchange rates alone, but the reasoning behind this needs re-examination. China openly fixes its nominal exchange rate; the eurozone does the same less obviously, using austerity to force down the real exchange rate of the euro and shoring up Germany’s surplus.

Perhaps it is time that the UK adopted an exchange rate policy of its own. The current government is already contemplating imposing controls on foreign purchases of UK companies. A supertax or outright ban on overseas buy-up of the current housing stock, as has been imposed in New Zealand, could reduce demand for sterling. A staggering 75 per cent of new properties in London are purchased by foreign domiciled individuals and companies.

There could be an inflationary uptick but, as Bootle and Mills point out, the dip in the pound after the 2008 financial crisis only increased inflation slightly, and indeed this was the first time in ten years that inflation fell within the Bank of England’s 1-3 per cent target. Deflation is the real threat to the corona economy. Finally, the devaluations of 1931 and 1992, when Britain crashed out of the ERM, precipitated significant boosts to GDP growth.

Whatever shape the Government’s new approach towards China takes, it should have a rebalancing of the economy as its flagship. Reshoring may be a gradual process, but a scenario in which we rely entirely on China to make cheap goods while running a perpetual deficit cannot be sustained in a post-Covid world. We should never have allowed things to get there in the first place.

Some orthodoxies may have to be abandoned, and post-Brexit we may have to be more willing, like our neighbours, to act robustly in our own interests. Taking a long, hard look at the ruinous effect of the value of sterling would be a radical place to start.

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