Friday, 18 August 2017

America: a nation at war with its media


I watched a video on Twitter today of a very attractive black girl. I mention that she was black largely because she was talking about race. She said that she doesn't feel threatened by the KKK. She points out that the KKK have been of a similar size and scope, holding the same meetings all throughout Obama's presidency. She is most likely correct.

So why is it suddenly an issue? Simply, because the media wants it to be. Why? Because Trump is president. And if there is one hallmark of the Trump presidency it is his war on the media in the name of ordinary Americans who can see the divisive motives of US left wing media.

We have had our own version here were the left mobilised to paint Ukip as though they were the second coming of the Gestapo. Here I must admit to contributing to that a little. I was of the view that a Ukip led referendum would lose - so I did what was in my power to push them into that corner.

In the end, it didn't need my help. Being completely oblivious to how politics works, Ukip walked into every trap. It is not a racist party but it is a party of working class people with blunt and unrefined views. Without any media management ability and lacking sophistication, it largely destroyed itself.

But in a way, what made it successful, to a point, was its unwillingness to play by the media rules - to be brash and uncensored. But the left also saw that as an opportunity to weave a narrative that fascism was on the rise.

The main reason it hasn't boiled over as it has in the USA is largely because Britain is a smaller country thus the clashes are small and so barely newsworthy. Douchebag vs Douchebag on the streets of Newcastle doesn't rate. But with the same dynamic on a similar percentage in the USA, it's big enough to make a splash on YouTube. Nevermind that the Charlottesville right wing protest had attracted morons from all over the USA.

But now the narrative is embedded that fascism is on the rise, all thanks to Trump - and that America is more divided than ever. This is largely a self-fulfilling prophecy in that the promulgation of this lie is its own feedback loop. That is why we are seeing a USA wide movement to remove statues.

As to the politics of that, there are better commentators than me to talk you through it. Personally I am against the removal of civic monuments. The moment you cave in, there is no telling where it stops. Some or other invented reason could just as easily lead to the removal of the Statue of Liberty.

But this to me puts me firmly in the Trump camp. The media is on nobody's side but its own, seeking to distort and defame for its own entertainment. Its monopoly position is driving the USA, once again, to civil unrest, but this time over entirely imagined oppression.

For all that we can cite the thinkers of the past on matters of free media, I imagine they never envisaged anything quite like the internet or monopoly mass media long departed from the values of the fourth estate.

A healthy society is one where there is a media which at least recognises its own obligations to intellectual honesty. USA media has long since given up any such obligation. This above all is what motivates the alt-right. The more dishonest and devious the US media becomes, particularly in whitewashing genuine threats to public order, the stronger it becomes. That is also particularly true of European media as it sighs a collective meh at increased frequency of Islamist atrocities.

And so it would seem that the USA has to resolve its own conflict - not between the people and their president, but between the people and their media - a battle in which the president, ineloquent and uncouth though he may be, is on the side of the public, not the press.

President Trump has condemned the KKK and racism. Not in good time, but as far as the presidential record goes, the words were spoken. That is what history will record. Media inquiry though was entirely disingenuous in asking if he had ulterior motives for not mentioning specifically one or other particular splinter group - playing their sick little games.

In spirit I side with Trump on this, although for this fight America needed a smarter, cleverer, more eloquent leader. It is America's loss that they have such poor leadership in such a crucial battle. It means that this presidency will not win the battle. It will take another movement to dislodge US media bias - and until then, we cannot expect America to be at peace with itself.

I suppose I should say something.

So the news of the day is that our friends at the Toryboy IEA think tank have published a post-Brexit trade report. Never have I seen a report so universally panned. And rightly so.

It's actually nothing new. It's the usual garbage about unilaterally abolishing all UK tariffs - because protectionism is baaaaaaad, m'kay.

But then of course if you do that then you actually have nothing to trade with. It's a bit like nuclear disarmament. We could scrap all our Trident submarines but then we'd be in no position to barter for gradual nuclear decommissioning.

Aaaand, as per, it overlooks the fact that we already have a number of FTAs via the EU where tariffs are zero, including all lesser developed countries. The remaining non-agricultural tariffs average 2%. Dropping the remaining tariffs to zero pretty much wipes out UK farming.

Today, not being on form, I really can't be bothered to go into the details of it but even by Toryboy standards this is piss weak. This is what happens when you're too busy sucking on Lord Lawson's flaccid little member to read a book on trade.

But then I am reminded that the report is not actually aimed at us mere mortals. This is just scripture to reinforce the flagging Tory right - once more telling them what they want to hear. As usual, this is not about intelligent policy-making - this is about preserving ministerial access - and in so doing, driving Britain off the cliff.

Wednesday, 16 August 2017

Brexit: they know not what they do


I want to see an orderly Brexit. I don't especially mind if things end up not changing very much on the ground. It's easy to get carried away with the revolutionary potential of Brexit, but without any real vision behind it, I think, short of a crash and burn Brexit, things will stay pretty much the same.

I can live with that - and it's not all for naught. At the very least, ad the end of the process we will not be a member of the EU. After a feat of legal engineering, the UK will be a distinct customs entity with the EU having no direct jurisdiction over the UK. The shared acquis will about to about a quarter of EU membership, much of it for the purposes of trade continuity - and rules we would adopt by way of international obligations anyway.

This satisfies my requirement that the UK is immune from the EU's dogma of "ever closer union", and we would have a district foreign and trade policy. We might then expect that we will still have a form of freedom of movement, with notional limitations, which will anger many, but the formal construct of EU citizenship will have ended - thus ending the encroachment of the EU on non-trade related policy. In all the ways that truly matter, we would be an independent country and further divergence would indeed be possible if ever there were the impetus.

What stands in the way of this entirely acceptable settlement is a feedback loop in the bubble, where remainers and Brexiters share equal blame. This article by Jonathan Portes and Anand Menon is a lovely example of that working in practice.

They note that: "some Leavers, either for principled or tactical reasons, see an extended transition period on these lines as a betrayal. Jacob Rees-Mogg, for example, claimed that “If we are subject to the rules of the Single Market and the regulations of the Single Market, and subject to the fiat of the European Court of Justice, we are paying for the privilege and we can’t do free trade deals with the rest of the world, then we are in the EU.” This is clearly wrong in legal terms—it is quite conceivable to be in both the Single Market and the Customs Union without being an EU member state. Which does not, however, prevent Rees-Mogg’s view being widely held".

Now why do these two morons think might be? Well, just look at the previous paragraph. 
The problem here is obvious—any “off the shelf” model looks, in economic terms, very like existing EU membership. And in political terms it looks even worse: during the referendum campaign, both Remain and Leave dismissed—crudely but not inaccurately—the “Norway model” as “pay but no say.” And indeed EEA membership implies not only accepting free movement, but also acceptance of EU law, and continued payments to the EU.
As EUreferendum.com notes (for the billionth time), one of the great lies perpetrated by remainers and "Ultras" alike is the claim that pursuing the "Norway" (Efta/EEA) option would require us (the UK) to continue obeying EU laws, with "no say" in their creation. That never was true, even within the constraints of the EEA institutional arrangements. Something this blog has also detailed countless times. Nor indeed would we pay anything like what we pay to the EU presently. We would pay for those services we use and the ventures we participate in, and possibly the EEA grants mechanism, but that is the fullest extent of it. 

The "pay but no say" meme is without a doubt the singular most irritating feature of this whole debate. In significance it is as big a lie as the egregious £350m - but in effect is worse because it lives on. Between this and the continued muddle as to the function of the customs union, there is no clarity in the debate - which above all is the retarding factor. This is ultimately what makes the hardest Brexit more likely. Sloppy, disingenuous hackery from people who really should know better by now.

Tuesday, 15 August 2017

Once more round the bend


I know, I know, I'm supposed to be blogging every last twist in this carnival of incompetence. I just can't this week. The will is there but my hands shrivel with repetitive strain as I set about writing the billionth explainer on customs systems and why the government doesn't have a clue. Honestly, my brain is going to capsize. But with today's release of a position paper on the customs union, I ought to say something.

Firstly, this is completely out of sequence with ongoing negotiations, and if anything this is for domestic purposes, submitted to the EU so it can be taken as an official government position rather than the daily noise of speculation.

Secondly, it is total garbage. We are still seeing a conflation of the customs union with customs cooperation. It seeks to retain single market frictionless trade without making any mention of the single market. Dishonesty and ignorance in equal measure.

Encouragingly, the document has already been eviscerated on Twitter and though the media is still behind the curve, along with our politicians, even if there is some disagreement on terminology, nobody is convinced that this is a serious proposition. This latest drivel indicates that we should prepare for the worst. If the government hasn't understood the basics by now, it is never going to.

In this I have become somewhat jaundiced with the whole debate. This is far from the first time there has been a flurry of activity - and though each time we get a little closer to collective understanding, there are still opinion gatekeepers who, with applied ignorance, reset the clock to zero. As bad as that is, even if there were a unified consensus view in the Twitter thought engine, it is speaking mostly to itself.

What I have noticed is that if explainers are pitched at the remain inclined then they get a lot more mileage - but the state of the debate is so binary that anyone voicing serious concerns grounded in reality is still branded as a remoaner. Consequently this debate is going nowhere.

I could use this post to eviscerate the content of the position paper, but doubtlessly we will see the definitive demolition job on EUreferendum.com later today. No doubt we will revisit this again and again and again.

Saturday, 12 August 2017

Remaining doesn't fix anything


I'm feeling slightly guilty for my lack of blogging productivity. There are Brexit related stories but as ever it's only rumour, gossip and speculation. I'm not going to invest the energy in reacting to it when the bottom line is that we still don't know anything of the government's plans and there is still no chance of them getting a grip. 

Supposedly things are going to pick up next week when the government publishes its position papers which I suppose I will have to churn through but one already suspects that whatever they have dreamed up will be something the EU cannot and will not agree to. In a week where many are comparing Brexit to the battle of Dunkirk, I rather expect it's going to end up looking more like Stalingrad. An ill-conceived strategy, under heavy fire, bogged down and forced to retreat. 

The lack of clarity and a plan will see this going round in circles, held back by Tories who haven't grasped the basics and never will. That means a lot could happen in the next few months. 

We could end up crashing out of the EU, or there could be a move to oust May and possibly even another general election. A vote of no confidence could set that ball rolling. I don't know. Your guess is as good as mine. All the while there are those in some quarters watching to see how the disarray can be exploited to keep us in the EU. I think that would have to be negotiated with the EU and I expect there would be a price tag. 

Doubtlessly this would be celebrated by the remain crowd but I actually don't think it would do them much good. The current disarray over Brexit is the product of a collapse of political competence. This isn't a sudden development. Brexit, being the first major political challenge for a very long time, has exposed how utterly weak our politics is, with our media not far behind. 

Should we end up remaining in the EU then it will be an admission that we are not remotely equipped to pull off something like Brexit. As much it would enrage half the country I think it would be demoralising in more subtle ways. The only catalyst for change will have been quashed, leaving us to persist with this utterly broken system - to be ruled over criminally inept quarterwits. 

In some respects I think that could even be worse than a no-deal Brexit. For sure the shelves would stay stocked and the lorries would keep moving and the pound may recover (slightly) but I wouldn't see political confidence returning to the UK. Brexit has exposed the UK as a politically spent country. 

We were told that Brexit has divided the country, but again I would point out that those divisions were already there. I can only see those divisions becoming more sour should we remain - and without an impetus for change, our political class would seek to gloss over it and return to their business as usual. They were already held in deep contempt before the referendum. Imagine what would happen then.

I don't want to speculate but we would be forced to confront the reality that our government is incapable of delivering change. At that point disaffection would turn into outright hostility. We would still have a major political crisis on our hands and one that could turn deadly. Looking across the pond we can see that America is not a happy country and on the brink of something ugly. I think that could happen here. 

The ultimate conceit of the remain brigade is to say that Brexit has unleashed political turmoil. You could only say that if you weren't attuned to what was going for the last decade. This hasn't appeared out of nowhere. The referendum just opened the pressure release valve. 

The fact that remainers say this stuff is actually indicative of the mindset. I've seen Twitterers posting pictures of the 2012 Olympics opening - nostalgic for Britain's image as a progressive modern country - now dragged into the dirt by unthinking plebs manipulated by a big red bus. But that is remainer narcissism all over. 

The 2012 Olympics were crass. A Blairist veneer of "cool Britannia" - choreographed by Danny Boyle - a fawning self-congratulatory display of leftist emotional incontinence. If you ever wanted a totem of British vanity and self-absorption, that was it. Not surprising that those who believed that bogus self-image would be shocked and surprised by Brexit. 

As much as there is a political disconnect in the UK, there is also a cultural one. The government and the BBC projects a metro-leftist value system - one it imposes on the rest of us. Their values are not our values - and the EU is an extension of that. The self-image of the EU as a progressive and benevolent entity is one that very much suits the narcissism of our own rulers. 

This is not without harm. In the rush to broadcast their right-on credentials they will leap on any bandwagon going. More often than not this results in a number of financial obligations we can ill afford. We sign up for targets on renewable energy, we sign up to conventions of foreign aid, we commit our forces to misadventures like Libya. 

And what has that delivered? Farm land plastered with solar panels, useless wind turbines, colossal and destructive waste on foreign aid, and an accelerated migration crisis which is still murdering thousands of people every year. 

Course, if you're a shallow liberal europhile then all this is fine. Renewable energy is universally good, as is immigration - and foreign aid is above criticism. It's usually a remainer who will tell you how proud they are of our aid spending - because it's oh-so-progressive and compassionate (regardless of how much is wasted and how many people it kills). But, hey, it's a binding target so it's not up for debate - so you better learn to love it. 

Ultimately these people are people who see no connection between intent and consequence. The same people who believe you can wave a magic wand and legislate poor people into wealth. The same people who push for increases in minimum wage and then are surprised when their local supermarket is 100% automated. 

What makes people so angry is that those who make these policies and sign us up to these rules are the ones least likely to be affected by it. The ones who suffer the direct consequences in higher energy bills, problem immigration, higher taxes and fewer jobs are those who have the least say in it. And of course if they do get angry, well it's because they're just working class racist thick plebs who lack sophistication and compassion. 

What makes Brexit necessary is to deprive our politicians of the means to impose yet more burdens upon us. The public cannot afford any more of the same and the country cannot afford it either. Moreover we want accountable politicians and we don't want them signing away powers. We don't want binding targets we can be sued for not meeting. We don't want EU funded astroturf NGOs dragging the government to court on the basis of junk science - because we are the ones who pay the bill.

This is why remaining in the EU is so bloody dangerous. The politicos will carry on telling us how we need to "engage in Europe" and will go on with their right-on bidding wars, doing exactly as they please, driving up our bills and piling on the national debt. All the while, the many issues not connected to EU membership go unaddressed. If we remain in the EU the cultural and political gulf that exists between our elites and the public will widen. 

Though I have not been impressed with Theresa May and her "Brexit means Brexit" mantra, her conference speech last year was the right tone, if not actually the right policies. I think Theresa May does get it. She is right about citizens of nowhere, and the fact that the "liberal" left went into full hyperventilation mode tells you she was over the target. May understands that the government very seriously needs to pay attention to what Brits are actually saying - and any conservative party that wants to stay in government needs to start offending wet-lettuce metro types. Too bad she's chickened out.  

Ultimately right-on opinions are socially convenient. Nobody calls you a bigot or a racist or a luddite if you go with the flow and duck the issues. There is even social reward for conformity. That's why the weak minded and the moral cowards tend to be remainers. It takes guts to say that climate change targets (irrespective of the science) are bad news. It takes guts to say that yes, there are social problems from immigration. It takes guts to challenge the consensus on foreign aid. 

The politicians duck it because talking about these issues means saying inconvenient and uncomfortable things. All the while, the cynical and morally debased left go out of their way to paint anyone expressing unrefined and inconvenient views as "far right" to the point where no politician dare break the liberal consensus. There is no faster way to end a political career. The consequence of this is that predators remain free to roam the streets of Rotherham and the anger intensifies. 

While that is not directly connected to the EU, the EU is paralysed by a similar political correctness and metro-liberal agenda. This is why conservative Eastern Europe is starting to pull away. Meanwhile, because the EU suffers from the same disconnect, it assumes the feedback it gets from EU funded astroturf NGOs is genuine public sentiment. The tail is wagging the dog and policy continues to widen the cultural gulf between the government and the governed. 

The EU genuinely thinks the peoples of Europe are clamouring for it to do more on climate change and toughen up recycling targets and gender equality measures. It is subject to is own insular obsessions. Politically correct fads. Meanwhile it is ignoring what people actually want - ie sorting out the ever more acute migration crisis and reforming the trade policies make it worse. It is incapable of responding. 

But go go ahead remainers. Kill Brexit. Tell seventeen million people that their vote didn't count and that change isn't going to happen. Tell the politicians carry on as they were. Keep brushing it under the carpet. Keep wagging the finger at uncouth working class people. Keep piling on the debt, keep ramping up the bills, and see where that gets you. Go on, I dare you. You'll be the midwife to something far worse than Ukip - and I might even vote for it - if that is what it takes. 

Friday, 11 August 2017

A new remain party? You should totally do that.


There is talk among remainers about setting up a new party with a single aim of returning us into the arms of the EU. The basic problem with this is that single issue parties are the home of monomaniacs, bores and bigots. They also tend to be at the furthest extreme of their particular brand of politics.

For remainers that could go one of two ways. It would either be a vessel hijacked by political failures like Nick Clegg or it would languish as a minor party of middle class snobby liberals who can barely conceal their contempt for the working class.

For this I'm going by a recent Bristol for Europe meeting in which the room was full of educated professionals who spoke of the need to make the little people understand why the EU is so wonderful and to build an inclusive movement.

The basic problem there is that you can't really build a broad alliance with people that you actively despise. The seething contempt for the elderly, the assumption that leave voters are stupid and uneducated, and the belief that Brexit was basically a dislike of foreigners is actually boorish in a way that even Ukip could not muster.

If remainers actually did congregate into a visible movement it would look just as sad and obsessive as Ukip did - with a similar lack of self-awareness. Like the kippers, if you taunt them enough, pretty soon the mask slips and all the bigotry and venom comes out all at once.

Course these days it is far more acceptable to sneer and abuse ordinary working class people so it gets a free pass from the media, but ordinary voters would notice that foaming europhiles are complete douche-bags. 

The worst thing about remainers is that they genuinely do see themselves as superior intellects and believe that the little people have an obligation to listen to them. This came over loud and clear during the referendum which is why I suspect remain managed to lose.

From my interactions on Twitter I have come to learn that Remainers are capable of mobilising in ways the right never can. All the remainer gurus have a following of acolytes and admirers and have built an impressive echo chamber for themselves. Were one not mindful that Twitter is a broadly left wing bubble, one might get the impression that public opinion has changed.

On the whole I think it probably has drifted toward remain, but not by much and it could just as easily drift back again depending on how the EU is perceived during Article 50 talks. More likely if there is a public facing movement of foaming europhiles.

Another aspect of remainers I notice is an overbearing smugness. The worse they are the more followers they seem to attract. They mistake this for broader popularity but like the leave side, the pool of followers is interchangeable and transferable and largely persuades nobody. Brexiteers have gone quiet because it's best to just leave them to it.

In all respects a renewed remain campaign would over play its hand. As much as they have a blind spot for their own self-righteousness they also have an extraordinary naivety. Brexiteers are the ones generally regarded as stupid, and for the most part I would agree, but when it comes to the inner workings of the EU the ignorance spans the divide evenly. This is where they make exploitable mistakes.

What remainers lack is any sense of scepticism. In their binary minds the EU is a wholesome union of developed nations - entirely transparent with minimal corruption and entirely democratic. To them the EU is not a physical thing, rather it is an ethereal concept that sits over and above the grubbiness of the nation state. This is why they avoid me like the plague. If they step to my house they get an education.

The other thing that betrays their naivety and total lack of scepticism is their insistence that we should defer to experts. I have always been of the view that experts should be challenged, questioned and probed. Brexit especially has reinforced this in that we have a small army of academics wading into the subject, usually law professors, who actually know very little outside of their narrow specialism - and erroneously believe their specialism affords them the necessary prestige to speak on any and all issues. To assume that someone who has institutional prestige is necessarily infallible is possibly the most bovine a person can be.

Of course the opposite of that is the Brexiteers who tend to disregard anything anybody says for any reason. That is when scepticism becomes anti-intellectualism and contrarianism (See Brendan O'Neill). It's up to sane people to meet somewhere in the middle.

Basically remainers are awful and stupid but a wholly different kind of awful and stupid to the Brexiteers. Both mindsets are dogmatic, crushingly tedious and blinkered - and the more exposure they get the worse they become. For that reason alone, I would welcome a remain party. The more we see of these insufferable, selfish, patronising arseholes, the better.

Thursday, 10 August 2017

Always bet on Tory incompetence


It is hard to look at Brexit with any sense of optimism when there is such a fundamental lack of competence at the heart of government. If they were at all attuned to the the inherent risks in the process we would now be seeing government policy coalescing around the EEA option. Instead we are locked into the idea that only a bespoke FTA can be called the one true Brexit.

This raises questions as to how quickly this can be done. There is an assumption that our existing alignment makes this a quick an easy process. One wonders how anyone could think this since there is no evidence of the EU having ever made anything quick and easy.

First of all we would have to negotiate a framework for negotiations. We would have a long list of areas for discussion on anything from pharmaceuticals to aviation. Like the current "negotiations" this would not be a case of negotiating anything. Rather it would be a sequence of capitulation.

When it comes to the sale of medicines in the EU, you are part of the EU system on EU terms or you are not. If you are not you are then treated as a third country where there is little scope for preferential treatment. There can be limited process specific mutual recognition agreements to lubricate third country interactions - such as conformity assessment, all conditional on a number of factors, but this does not amount to unfettered market participation as before.

The same applies to the REACH system for chemicals. You are either in it or you are not. The same applies to the Single European Sky. You are either in it or you are not. So then the whole process becomes a series of ultimatums. We can either accept the rules of the system or we accept massively inferior market access. The latter meaning bespoke provisions, largely stacked in the EU's favour at a pace set by the EU.

Since the UK is likely to kick up a fuss about any involvement of the ECJ we are then forced to design a unique set of protocols for dispute resolution and a system of arbitration. This is politically contentious and difficult to agree, and mode more difficult by the absence of competence on the part of the UK. Our muppets don't understand how the system works and if they don't by now then they never will.

The only way this will go quickly is if the UK concedes to every single point and opts for full participation in EU systems on EU terms. That would be the smart thing to do, which is why we can assume that is not going to happen.

Only when we know what the final agreement looks like can we design any kind of plan for implementation whereupon we will need to acquire all of the necessary facilities, people and systems in order for the change to happen.

If asked to guess I would say that just the negotiating alone, assuming all went to schedule (fat chance) without any hitches would take four years - and then we are looking at a number of years before we are ready to "take back control". We would have to do it on a staggered basis with the framework from transition largely being EU membership with no voting rights.

In this we must note that none of this even starts until the Article 50 talks have concluded and so with the best will in the world, we will not be ready to make any substantive changes until 2024 with an open ended completion date. Looking at it optimistically. This all hinges on whether the repeal bill can be made to function. Without the EEA, and without knowing what the final administrative framework looks like, we can't say with any certainty whether it will.

What you have at the end of that is a gigantic mess leaden with complexity and uncertainty where there is absolute no guarantee of "frictionless" trade. We still need a customs agreement and though we can guess what that would look like, you can count on the Tory right making it more difficult than it needs to be.

The gist of it is that if we don't crash out without a deal and we don't choose the EEA then we are looking at a very long and very slow process, the nature of which we can only speculate for a destination nobody can yet define save to say that it will fail to deliver the benefits of the single market.

This is all predicated on the assumption that the Tories do not make a monumental pigs ear of it, meanwhile we cannot say what is likely to happen in domestic politics which could possibly derail or delay the process. Whether lame-duck May can hold out until the next election is an open question.

Th shortcut to all this is to simply stay in the EEA, not least because it massively simplifies the repeal bill process, but also because it avoids the need to negotiate new provisions on trade systems as it leaves economic integration intact. Since we are not going to get better terms by negotiating a bespoke deal there is simply no point in trying.

This would make the Brexit process a lot faster - and we would be out a lot sooner and then able to configure the EEA agreement through protocols and annexes to the Agreement. The immediate benefit of the EEA is that business would then know the new framework and would have a lot less to prepare for and we would see a return to some degree of normalcy.

Sadly though, unless there is a radical shift in political tides, this rabble will dither until we are at a standstill. I'm betting on a crunch point where it's crash and burn - or just call the whole thing off. By that point, if the public have a say in it, then it will be the latter. The Tories are the remainers best asset.

Ultimately what we are looking at here is a clash of perceptions of Brexit. The Brexiteers view Brexit as an event - one in which all the reforms happen all at once and as part of the exit process. This has never been a realistic proposition. There is simply too much complexity for any one administration to cope and too much donkey work to do before you can get down to the more exciting business of reform.

The Tory mantra is that we should look at Brexit as an opportunity, not a damage control exercise. That is the fundamental flaw in their thinking in that this is a process where we must first manage the administrative task of exiting - and that very much is a question of damage limitation. This is where there is no room for big visions and ideology. This is the tedious, dull and procedural part - and if we treat it as a game seeking to win the advantage then we will lose.

The aim of the leaving process is to get us into a position where things are more or less the same, having minimised the economic harm and physical disruption, after which we have the necessary powers to reform and diverge where desirable. That is the advantage of the EEA. The other way means that we are forced to change everything all at once whether we want to or not, whether it works or not. I can't see it being anything other than messy and damaging.

I still think there is a possibility of an EEA Efta solution in that there is an upcoming danger zone where the lack of coherence and a ticking clock will force the Tories' hand. If not to expedite the process then to salvage any kind of credibility. We must endure a crisis or two before that happens.

This is why you won't find me spending too much time speculating as to what a bespoke agreement  looks like. The EEA is the only possible way we can successfully complete the process and if we go down the avenue of a bespoke agreement then it will become bogged down in ideological disarray to the point where walking away is the only means of leaving. After which, Britain is so irrecoverably screwed that any models we dream up now will be wasted energy.

For now the only certainty is extreme incompetence guided by wilful ignorance. That is the only thing that brings any kind of predictability to this process. If you want to know what the Tories plan on doing then just think of what might work and then try to imagine the absolute opposite of that. Then imagine how they could even manage to fuck that up too.

More dishonesty from the Brexiteer Tories


If there is one thing I have learned about dealing with Tory Brexiters it is that any kind of forensic debunking of their witless assertions is pointless. You can explain things, introduce them to new concepts, but being magpies they will peck away the bits they want, twist it, and disregard the rest. It's a sort of rhetorical judo. You just cannot expect honest engagement. This is why I will not be giving too much attention to this nonsense by Marcus Fysh MP with regard to the Irish border.

Fysh says that "Almost nowhere in the world now has checks of goods at the border itself, and these are being eliminated worldwide by the WTO trade facilitation agreement to which many countries are now signed up".

This isn't remotely correct. Demonstrably so. Practical application of customs systems under trade facilitation is in its infancy. Everything presently installed is happening under a trial regime - with ongoing experiments in Ghana, Pakistan, Russia and India, but only on selected routes and product types. It is nowhere close to becoming a rival to the single market. This is based on the e-TIR system with a view to implementing Single Window. Fysh has never looked into this at all. I know for a fact he hasn't. He's just making this baloney up.

Then there's animal produce and livestock. At the moment, goods entering any EU member state from a third country have to enter through a border inspection post. Goods have to undergo a formal procedure at Dublin Airport involving document and identity checks, and sometimes physical checks. The same would apply for goods by road - especially if we were operating to a different regulatory regime and very especially if we had high risk agreements with other third countries.

Fysh fills space by pointing out that there are systems and methodologies we could use to overcome these obstacles, and for a large extent that is true given a decade or so, but without context it is worthless. I could say that, by coating a 747 with lighter-than-air polish, we would cross the Atlantic with 90 percent less fuel and double the payload. Even if the latter is true, it is conditional on the former - which cannot be true under any circumstances.

The challenge we have is to create a framework which covers all the bases in a limited time, then do the facilities procurement, IT systems, the training and the transition. If you want to know how that goes just look at Universal Credit. 

Now I could go into a balls-aching deconstruction but that's a waste of everyone's time. Just read it for yourself. Fysh asserts that the EEA (the system presently in place) is no solution, but concludes that "With wisdom I am sure the Irish and UK governments can find a way to agree on the above frameworks for co-operation in trade and migration, and lead negotiations in a positive wider direction when they resume later this month. I hope great effort will be put into strengthening and sustaining this important bilateral relationship".

So we're junking a system that could (and does) work in favour for some as yet unspecified system in Fysh's imagination, which presently exists nowhere in the real world in the "hope" that we'll be strengthening "this important bilateral relationship".

The immediate problem there is that this isn't a bilateral relationship with Ireland. It's with the EU. Trade is an exclusive competence and the regulatory regime, along with customs law is entirely the domain of the EU. Ireland is a the onlooker. It is not within the gift of Ireland to be making sweeping concessions on third country frontier controls simply because the UK has departed. Fysh of all people should know this in that is a chief reason to leave the EU.

Fysh, says that: "It therefore makes eminent sense in this context for the Irish Government to work with the UK to do whatever it takes in terms of systems upgrades to be able to monitor goods movements large and small, and to push for full customs co-operation, a common transit convention, VAT netting and zero tariffs, as part of an early framework for free trade between the EU and UK. This would keep trade between Ireland and the UK similar to what it is now, and give confidence that there is a robust process for managing potential divergence of standards."

This is absurd. On Brexit the Irish border becomes the EU's external border - not the Irish border. Thus, the UK will have to work with the EU to agree border crossing procedures - not Ireland. The UK becomes a third country and the controls for third countries are already set out in EU law. We must assume that third country controls will apply at the Irish border. Yet nowhere does Fysh mention these points. This is lying by omission - but mainly through resolute and determined ignorance.

As ever it is necessary to point out that the EU already has a system for dealing with third countries and anything beyond that requires an EEA level of regulatory conformity. The further we deviate from it the more complex and expensive these systems become - and at this point, when you're dealing with a population militantly against more border controls, all you're going to get for your trouble is a black market of goods travelling outside of the system, to the point of it being mostly useless.

If there was any actual point in further dismantling Fysh's dishonest gibberish I could really go to town on it, but in the end we are not dealing with rational or honest actors. Morons always have to learn the hard way. Just a pity we will be the ones paying for their very expensive education.

Sunday, 6 August 2017

Brexit: reflections from Croatia


Well, I'm back. And it doesn't look like I have missed anything. The debate has not progressed. For that reason I could not have picked a better time to go on holiday. This is one of the few times where taking a break was a good idea. Croatia has given me some things to reflect on.

Had I been working to my own schedule I would have perhaps chosen a more educational itinerary but the company I'm keeping these days insisted that deep sea snorkelling and kayaking was a better idea. It was. As it happens it was far too hot to do anything else so we stayed near Dubrovnik for the whole time.

If I could say anything of Dubrovnik, is that it's generic Southern Europe. The old town inside the fortifications is the only interesting bit. The rest is all soviet era apartments and hotels. It's heaving with tourists and smells like an open sewer. While one might argue that this is only to be expected from a tourist concentration camp in a heatwave, these such things are primarily a matter of engineering and standards. And that is one thing Croatia is lacking.

Just opposite the guest-house we stayed at there was a recycling depot where plastic bags full of bottles and cans were lying in months old heaps, rotting in the baking sun. There are frequent power cuts, and the landscape is peppered with abandoned developments - which rather suggests a good deal of money laundering is going on on the Dalmatian coast. What one also notices is that the construction techniques wouldn't be signed off by any British buildings inspector in a billion years.

For a Western European it is sometimes easy to get carried away with the idea that Europe is a wealthy first world continent. It isn't. Southern Europe is a basket case where many coastal towns have no economy other than tourism and shut down for the winter months. Croatia especially is still a developing country.

From the super-yachts in the harbour it's clear that there's no shortage of money sloshing around but it doesn't get as far as the local economy and corruption remains a major issue for the country. The only truly modern western structure built to a decent standard is the airport - which is festooned with EU flags. It leaves you in no doubt that you are entering EU occupied territory.

As to everywhere else, you see the Croatian flag absolutely everywhere - even painted on to the cliff faces. There is no shortage of national pride and a strong sense of Croatian identity. Hardly surprising given Dubrovnik's recent history.

In this there is a strong feeling of euroscepticism in Croatia. I spoke to a few of the locals who regarded the EU as something of an economic necessity but it is neither liked nor trusted. Like the Greeks they see the EU as a money pot and one that is tolerated. I rather suspect as the fanfare of accession dies, and lingering problems continue unabated we will see a stronger strain of euroscepticism. In Ukraine the EU has demonstrated that when it comes to fringe interests it will not go the extra mile to protect territorial interests. Croatia could just as easily be hung out to dry.

What I saw in Croatia though was a good deal of untapped potential. It's an ideal climate for fruit growing - figs and pomegranates especially. The many hillsides could be turned over to agricultural use providing an income other than tourism.

I did mention this to the hotelier who was personally against the idea of economic development simply because Croats are gradually being squeezed out of their own city and sooner or later the quiet suburbs would also be bought up by developers. Given how development money has been squandered thus far, there is a tone of cynicism. The planning system is virtually non existent, bureaucratic and corrupt. As the Economist puts it, Croatia is the EU's newest basketcase.

What Croatian needs more than anything is good governance - but not being a member of the Euro it is not a priority, nor does the EU have any particular leverage. Croatia will not reform if it doesn't want to. And one rather suspects they don't. In a lot of ways, my Croatia experience has made me even more sceptical of the EU. It makes big promises but does not deliver.

It also brings home the absurdity of the EU vision of homogenising labour rights and standards throughout. Obviously being a different climate with most of the locals shutting down for the hottest part of the day, there is a different work culture and a different work ethic - and outside of the tourist traps where there are tips to be had, and the hospitality sector, customer service as a concept doesn't really exist.

The same inherent problems found in the third world can also be found in Croatia. The lack of a mature business culture prevents the establishment of dependable supply chains. Suppliers don't get paid and businesses fold. Chuck freedom of movement into the mix and you have a major brain-drain going on, where Croatia is haemorrhaging professionals who seek a better life elsewhere.

This is why you have to laugh when the LSE publishes a piece saying that "Creating a ‘multi-speed Europe’ would divide the EU and diminish it as a foreign policy actor". This does rather overlook the fact that we already have a multi-speed Europe defined by various levels of crisis where the EU is either putting out brush fires or simply ignoring the issues. As much as the vision behind the EU is wholly unrealistic, the European unity that exists, exists solely among Europe's political elites and the basket cases out with the begging bowl. It is not a union of European peoples. That exists only in the imagination of British liberals.

It's easy to see why as well. The other week I was at a Bristol for Europe meeting where the formidable Dr Mike Galsworthy remarked that "there are no foreigners in science". In his little corner of science and academia there are continuous interactions between European intellects, all working inside the same framework. This to me is déformation professionnelle, in that this dynamic also exists without political union - and not even involving the EU.

Ultimately to the well-to-do remainer crowd are not arguing for the EU per se, rather they are arguing to preserve many of the conveniences that the EU affords them - and only them. Dr Galsworthy spoke of how the EU provides a funding framework all under one roof. This to me though is part of the problem. Science should not be filling out bids so that the EU can pick winners. For science and innovation to advance it needs to be out interacting with the commercial world and taking risks, less it become hopelessly dependent on central grants, working on projects designed to enhance the EU's image as a benevolent entity.

The reason this tangent is important is because the modus operandi of the EU has always been to win over civil society by capturing the institutions and funding those most likely to pave the way for further political integration. This is partially why there is such a yawning disconnect between politicians, academia and the public. The EU is a construct that most favours those who already enjoy considerable privilege. This is why populations throughout Europe have been dragged further into political union without their consent. This, above all, gives rise to the sort of nationalism that our metro crybabies so dislike.

Ultimately the nationalism on display here in the UK, and Croatia, is an expression of ownership. It says "this is ours, we live here, the authority should be ours". Having faced attempts at annexation to Montenegro, Croatian identity is stamped all over Dubrovnik. The same dynamic goes some way to explaining why those regions of the UK in receipt of the most EU funds would vote to leave. The EU has a propensity to stamp its own flag and brand on everything it touches.

In a lot of ways the Brexit debate is defined by identity. There are those in academia who self-identify as European because of the circles they move in, whereas we plebs from the regions must simply accept our fate and allow a superheated economy to rob us of much of what we value. Landscapes, community and a degree of control over our environment. For many these things matter more, and the principle matters more than the marginal GDP growth that comes with continued EU occupation.

But all this got me thinking about post-Brexit Britain. We are told we will have diminished influence, but assuming we can negotiate a comprehensive settlement, I don't think the point stands. As far as standards and regulations go, Britain is still going to be an important voice.

The one thing we have mastered is civics. I remember during the referendum that we were told that without the EU we would row back on forty years of regulatory progress where Cornish surfers would once again be swimming in raw sewage. As I understand it, there is still work to be done in that domain but councils very much understand the importance of tourism and special interest groups armed with the internet can bring change about far faster than the EU can legislate. Brits are geared to it. We complain and campaign. That democratic participation thing.

As EU members that participation element is diminished as the agenda is increasingly set by astro-turf NGOs - and rather than lobbying for direct change, they use the EU to bring court cases. Democracy is being shunted into a siding by vexatious judicial activism. This is why we are starting to see "authoritarian" backlashes against the EU and international NGOs. This is commonly described by British media as Europe becoming more illiberal. I don't think it is that clear cut. There is a very real sense that authentic values are being eroded, having the values of our elites superimposed on our democracies and then policed by political correctness.

In the same way that modern radical leftist feminism is turning the clock back for women, the EU's impositions are proving to be a bridge too far for many socially conservative eastern European nations, who, I believe, will turn toward Russia - especially if the EU insists on forcing them to take refugees they don't want. It will feed a radical far right who makes our own far right look like the Women's Institute.

A week in Croatia has been a real eye-opener for me. Culturally, economically and politically there is virtually zero convergence. Britain will remain a choice destination for business and an influential voice in regulation purely because we are a diverse economy in a temperate climate with the rule of law in our DNA. Britain will recover much of what it loses from Brexit long before we see any real reform in Southern Europe.

Right now we are being subjected to a torrent of propaganda from the EU, painting the picture that the EU has a new found spring in its step - and attitudes to the EU have never been more favourable. I rather get the feeling that this is a political class in deep denial. The EU's purpose is unrealisable, politics on the ground is travelling in a different direction and there are shifting tides globally.

For a time, a favourable exchange rate made the UK attractive to Polish workers - and we are told that Brexit will lead to fruit crops rotting in fields. There is more to it than just Brexit. Poland itself is now reaching a stage of development where it is reliant on immigrant agricultural labour for the same reasons the UK is. The young have higher expectations.

Then of course there is the gradual redundancy of the EU. This blog has detailed many times how the centre of the regulatory universe is shifting to Geneva, and in those circumstances where Brexit, and controls on freedom of movement, throw up extra red tape, quite a lot of it is resolvable through technology. The internet has revolutionised airports where data transactions are now done in advance and all that's needed on the gate is the beep of a barcode. In a lot of ways technology and globalisation is surpassing the EU and is ahead of the game.

I won't deny that the systems and mechanisms for cooperation inside the single market most certainly facilitate such developments but in many cases are an inhibitor to wider participation - feeding a growing sense of dissatisfaction in the rest of the world. As the EU is gradually usurped as the leader in trade liberalisation systems and its philosophy increasingly useless and unwelcome, it is difficult to see it having a long term future. Certainly it will have to radically change if it wants to survive.

Monday, 31 July 2017

Light blogging

A kind and generous soul has taken pity on me and is taking me on holiday. Will be back in a few days with both guns blazing.

Sunday, 30 July 2017

The dark side of Tory Brexit


The following post is reproduced in full from eureferendum.com

According to its website, it was set up in 2009, but it does not seem to have been fully funded until recently. The Charity Commission records that the registered charity, the Legatum Institute Foundation, received over £4 million in income in 2015 - up from just under £3 million in 2014 and a mere £2,500 in 2013.

The Foundation is registered with Company House as a company limited by guarantee. But, according to the 2015 accounts (submitted to the Charity Commissioners in October 2016), the bulk of its income comes from the Legatum Foundation Limited, a company registered in Bermuda.

The Bermuda company in turn is controlled by the Institute's parent undertakings. One is the Legatum Institute, a company registered in the Cayman Islands. Its three current directors give their addresses as Convection Tower, Dubai Convention Centre, in the UAE. The ultimate parent undertaking is the Legatum Partnership LLP, a limited liability partnership registered in Jersey.

The Institute itself is part of the Legatum Group, set up in 2006 by the multi-billionaire Christopher Chandler, formerly president of Sovereign Asset Management. This came after a demerger of the family business, Sovereign Global, managed with his brother Richard Chandler. Both New Zealand born, Richard Chandler is resident in Singapore. The Legatum business is based in Dubai.

In the 2015 report to the Charity Commissioners, senior management personnel of the Legatum Institute were listed as Anne Applebaum, Giles Dilnot, Alexandra Mousavizadeh, former newspaper columnist Christina Odone and Shanker Singham, the latter acting as chairman of the Institute's Special Trade Commission, fronting most of the Brexit propaganda.

Applebaum is firmly on the political right, having been an adjunct fellow of the American Enterprise Institute. She has an extensive career as a journalist, working for the Washington Post, the Daily and Sunday Telegraph and the Economist. She was deputy editor of the Spectator and political editor for the Evening Standard. However, she resigned in 2016, having disagreed with the director over the Institute's support for Brexit. She now works for the LSE.

Currently top of the hierarchy is Philippa Stroud, CEO of the Institute. Previously. She used to be Chief Executive of the Centre for Social Justice (CSJ), a think tank that she co-founded in 2004. Prior to the CSJ, she was Special Adviser the Rt. Hon. Iain Duncan Smith MP (then Secretary of State for Work and Pensions) from 2010-15.

One of the directors is Toby Baxendale. He is also on its board of trustees. As to other interests, he was director, alongside co-director Steve Baker, of the now defunct Leadsom4Leader, a limited company set up to support Andrea Leadsom's Conservative Party leadership bid.

Baxendale is also co-founder, again with Steve Baker, of the Cobden Centre, "a home for Austrian School economics in the UK". He also set up the Hayek Visiting Fellowship at the London School of Economics. He has also been a significant donor to the Conservative Party.

The links with the Cobden Centre bring us to Perry de Haviland, supposedly independent editor of the Samizdata blog, Matthew Elliott, who just happens to be a senior fellow of the Legatum Institute.

Elliott, founder of the Taxpayers Alliance and one-time director of Vote Leave, sits with another Legatum senior fellow Tim Montgomerie, founding editor of Conservative Home and former Timescolumnist. At the Cobden Centre, he sits on the Advisory Board with Sam Bowman, research director of the Adam Smith Institute, Ewen Stewart – a managing board member of the Freedom Association - and Douglas Carswell.

Yet another senior fellow Legatum Institute is Danny Kruger, former chief speechwriter to David Cameron, chief leader writer at The Daily Telegraph, and director of research at the Centre for Policy Studies.

Listed as a fellow, along with many others one also finds Graeme Leach, founder and chief economist of Macronomics, a macroeconomic, geopolitical and future megatrends research consultancy he launched in 2016. He is a visiting professor of economic policy, a member of the IEA Shadow Monetary Policy Committee and has a weekly column in the City AM newspaper. Between 1997 and 2013 he worked as Chief Economist and Director of Policy at the Institute of Directors (IoD), where he was also a main board director.

A trustee of Legatum is Richard Briance, the Chairman of PMB Capital Limited, a newly formed merchant banking business and former Chief Executive of Edmond de Rothschild Ltd. Before that, he had been Managing Director of Credit Suisse First Boston Ltd, Vice-Chairman at UBS Ltd and Chief Executive of West Merchant Bank Ltd.

In terms of his other political activities, Briance was a Non-Executive Director at Oxford Analytica from 1999-2010 and he has been a trustee of Policy Exchange.

One of the key figures in the Policy Exchange was Lord (James) O'Shaughnessy, formerly Deputy Director. He then worked for the Prime Minister, David Cameron, as his Director of Policy between 2010 and 2011 and for three years (2007-2010) worked in the Conservative Party as Director of Policy and Research. He has now become a senior fellow at the Legatum Institute.

In October 2016, The Legatum Institute sponsored a report called The Road to Brexit. The foreword was by Duncan Smith, Philippa Stroud's former boss. Also writing for the report were the MPs John Redwood, Peter Lilley, Owen Paterson and Bernard Jenkin – leading members of the "Ultras".

As well as Shanker Singham, there were two other authors, Sheila Lawlor and James Arnell. Lawlor directs the economic, education, constitutional and social policy programmes of think tank Politeia while Arnell is a partner as Charterhouse, displaying ultra views on Brexit.

The picture one gets of Legatum, therefore, is of an exceptionally well-endowed think-tank with fingers in many pies and strongly networked with other think-tanks and the media. With offshore finance, though, this is redolent of foreign interference in UK politics, by a company which seems to attract dubious publicity, and critical appraisal.

The greatest concern, though, comes from reading the Legatum website. Having invested heavily in Russia and developing countries, the business speciality is moving into markets at times of crisis where assets are mispriced. With an eye for emerging trends and undervalued assets, it invested heavily in the telecommunications sector in Brazil, just after the country emerged from hyperinflation. It describes its own "investment heritage" in navigating through choppy markets, following the great financial crisis.

The company takes great pride in its investments in Hong Kong real estate, a market which investors had fled after the signing of the Sino-British Accord, an agreement that promised to give Hong Kong back to the Chinese government. It saw assets mispriced, and noted that "opportunities arise in times of crisis".

This is a business style which has been described as "disaster capitalism", which would benefit significantly from a hard Brexit. Here, a comparison could be made with Hong Kong, where a similar situation might arise in a UK under the stress of a hard Brexit, where many traditional firms have run for cover, or relocated in the EU, leaving many assets under-priced.

Looking also for opportunities arising from deregulation and further privatisation – especially in the NHS, with Legatum having considerable healthcare interests – hard Brexit presents multiple opportunities. This, after all, is a business that openly states that it "finds value where disruptive transitions create unique opportunities".

In this, the Legatum Institute seems to be paving the way for its "parent undertakings", engineering a "disruptive transition" for Brexit, then to reap the profits from chaos. Its task is assisted by useful fools and fellow travellers on the Tory right. What we have often characterised as incompetence, therefore, may be more sinister. There is money to be made out of a hard Brexit.

Tinkering with tariffs is no salvation


Some will be wondering why the frequency of posts on this blog have dropped off. Being it silly season and virtually bugger all to report on, one feel less obliged than others to fill space. I am instead hitting the books. There is no point trying to cut through the Brexit noise. There is now a wealth of knowledge on Brexit in the public domain for our politicians to ignore - and restating points is becoming tiresome and robotic.

Instead I think it more valuable, for moment, to look at some of the challenges ahead for trade policy post-Brexit. As readers of this blog will be aware, I am hugely sceptical of what new FTAs can achieve and there are ways, through existing channels, that we can enhance existing value chains. That brings us to this report from the International Trade Centre.
Kenyan avocado farmers traditionally sell their fruits directly to local brokers. These brokers then sell them on to domestic exporting companies. These firms, many of which are small or medium-sized, in turn sell the avocados to international trading companies operating out of the port city of Mombasa. Only then are the avocados shipped abroad, destined for supermarket shelves.

Farmers sell to brokers on a one-off basis, often at low prices. The general absence of enduring, multi-year relationships with purchasers means that farmers are left with little understanding about market requirements wherever their avocados might end up. Farmers therefore have little incentive to invest in greater quality, nor do they get financial support to do so.

This business model has downsides for SME exporters too. Because the fruit that they purchase from brokers is often of middling quality, they can only sell into lower-value markets or market segments in Asia, Europe and the Middle East. And since these firms do not have a direct link to farmers, they cannot easily invest in improved production methods.

To tap into the most lucrative market niches – such as major European supermarket chains – avocados need to be formally certified for quality. The most prevalent certification for the European market is a private standard called GLOBALG.A.P., which sets out requirements for farming processes and food safety. Complying – and proving compliance – with the requirements of such standards requires farmers and companies to spend time and money. Obtaining GLOBALG.A.P certification, however, opens doors for Kenyan SMEs to build long-lasting relationships with trading firms that sell to higher-end retailers in Europe and offer consistently higher prices.
This adds further weight to the overall consensus that the EU diverts a large amount of trade. The barriers to trade are structural. Brexiteers often cite "punitive" tariffs on third world exporters, but tariffs are really not the issue. Reaminers, however, have got things wrong too. They would cite the EU's Everything But Arms Agreement, which is an argument I also like to deploy just to rattle the cages of ultra-Brexiteers, but it is far from the full picture. For starters, Kenya, for example, is not a Least Developed Country.

One of the talking points of the week has been tariffs on coffee - but one should always be cautious when looking at any headline tariffs in that there are a web of exceptions and special rules where you'd have to do a far more in depth analysis to get the full picture.

The International Coffee Organisation says that "Tariffs in importing countries have been steadily reduced through multilateral, regional and bilateral trade arrangements, and many developing countries now benefit from duty‐free access to major markets. This access is not uniformly granted, though, and some countries benefit more than others, creating an unequal trading system. Furthermore, tariff escalation on roasted coffee is a real concern for exporters, as it discourages value addition and protects domestic industries in consumer countries. Higher taxes on processed products, such as roasted, decaffeinated or soluble coffee increase dependence on raw commodity exports by developing countries and impede diversification".

So while tariffs are worthy of examination, it would appear there is more scope for restructuring supply chains and using our aid budget to invest in quality systems in partner countries. This has to happen in tandem with trade facilitation measures on customs cooperation. This is where Codex Alimentarius does some excellent work. These such initiatives are what the UK needs to be financing. Codex is limited by budgetary constraints.

This is something trade wonks tend to ignore in that their fullest exposure to Codex is its relationship to WTO SPS measures - being largely ignorant of the scale and scope of Codex. Since trade wonks tend to obsess about US trade, the significance of Codex worldwide is misunderstood and underestimated.

But then what is also needed is some considerable business expertise working to reform the structural problems in African markets. Returning to avocados, the ITC found that "In 2014, when the [ITC] project started, the Kenyan avocado exporters associated with the project reported exports totalling 6,143 tons. This figure reached 9,334 tons the following year and 12,141 tons in 2016, representing a 98% increase over the two-year period. Thanks to the new business connections with international trading firms facilitated by the project, SMEs reported 90 new orders during that time, mainly from traders selling into the European market. Higher sales have meant greater job creation at the companies as they hired 49 permanent and 508 casual workers in 2016, a 128% increase from the year before.

This is where domestic efforts can also help. For reasons that escape me, avocados have become a hipster superfood for London's well-to-do. I'm quite sure this is not by accident. Marketing companies are perfectly capable of stimulating demands for all manner of obscure luxury products. A similar effort on Afghan pomegranates probably wouldn't go amiss. It's more profitable than poppy - hence why trade is also a foreign policy tool.

The obvious advantage to this is that British importers get a larger say in the processes and consequently any technical areas for improvement presents an opportunity for UK business to business services.

This is where the Department of International Trade needs to get busy identifying those opportunities and advertising them. It should be using DfID as its special projects arm, inviting business specialists into the process. We also need agricultural specialists looking at the problems. If we are exporting quality system it follows there will be a market for grading machines and agricultural robotics.

If the UK wants to enhance trade then it will have to do more than simply tinker with tariffs. It will have to invest and build up institutional expertise - and considerably beef up our diplomatic resources. In some respects we are already committed to this but there is a disconnect between the DIT and DfID, and though what we are engaged in is good, we need to do considerably more of it. We have a number of projects running concurrently but there is no apparent cohesive strategy.

As much as this is key to our commercial interests it should also be a cornerstone of our overall foreign policy, an objective of which is slowing the rate of migration. Commercial hubs in Africa have their own gravitational pull so it is in our best interests to stimulate jobs and growth wherever we can - and that means building up a global consensus to end a number of destructive EU trade policies.

There seems to be a complacency among Tory free trade proponents that all we need do is sign a few pieces of paper to get the trucks rolling. Evidence tends to suggest that the elimination of tariffs alone still doesn't stimulate trade. It's going to take a much more active foreign policy and a lot of investment. This is why we should be cautious of populists like Rees-Mogg who talk up the merits of raiding the aid budget for domestic spending. It takes money to make money and we cannot take anything for granted.

Thursday, 27 July 2017

Rethinking trade is now a matter of urgency


Twitter is an ecosystem of concentric bubbles each tailored to the individual by the individual. Mine is made up largely of maritime affairs, aviation, international trade, politics and UK diplomacy. Just like any playground it has its in crowds and social dynamics. To a large extent it's a series of self-congratulatory cliques where everybody tells each other how marvellous they are. It's not game I play. I'm not in this to make friends or have my ego flattered. My mission is to learn as much as I can, to teach as much as I can, and call it how I see it.  

In this I am often told I need to be more polite and less abrasive. That isn't going to happen. There are a lot of people participating in this with questionable motives, playing a deeply dishonest game. I am told to play the issues not the man, but the men (and women) in this game are part of the problem. As much as anything it is the politeness causing the difficulty. People like Hannan and Lilico are superficial, lying simpletons playing a dangerous game with the future of the country. All the while the Conservative Home and Brexit Central crowd are reckless zealots - and they too are lying through their teeth. It needs to be called out without fear or hesitation. 

But it's not just the Brexiteers. You have the Ian Dunts and David Alan Greens of this world; self-serving manipulators building a little dung heap of adoring fans for their own gratification - and will knowingly distort the facts in order to titillate and massage a narrative. Both expert manipulators preaching to a gullible audience. Then there are the parasites like Alan Beattie of the FT. People who will raid the work of others but misframe it, omitting inconvenient key details.

There are then the cheats like Shanker Singham and Lorand Bartels. People using their respective institutional prestige to pass themselves off as oracles. Lorand Bartels is a typical one in that he thinks his small piece of the puzzle is the whole picture. His book on regional trade agreements in the WTO system is second to none - and one that hasn't left my desk in weeks, yet still, bizarrely doesn't know what customs cooperation is and tells us that "most countries trade on WTO rules". An expert on WTO law he may be, but he knows nothing at all about the functioning of the EU and its trade relationships. We must be wise to these charlatans.

Then there's the trade wonks. Nice enough people with genuine motives, but ultimately trapped in a single paradigm. From what I can discern, most of them cut their teeth debating TTIP which couldn't be less relevant to the central issue of Brexit. Ultimately these people are mechanics. Practitioners who can achieve when properly tasked, however, are only useful in a very narrow field and they do not see the bigger picture. They are one trick ponies.

What's missing firstly is a sense of urgency and the ability to prioritise. I could sit and chat with these people about trade all day and soak up everything they know. They are an important resource. But the task at hand is not new FTAs. What we are looking at in the context of Brexit is the overall relationship with the EU along with the engineering task of carrying over existing trade arrangements with third countries.

As you know, my position on Brexit is that if we're not looking at the EEA then there is simply no chance of Brexit being anything other than a shambles. As to carrying over EU trade deals, that's a tasks separate to negotiating FTAs and a wholly different undertaking - one which will inform our trade strategy after we leave.

Trade wonks are used to the idea of approaching FTAs from a clean slate or enhancing that which already exists. This is why they love nattering about TTIP more than anything. They are comfortable with what they know and will rinse it for all it is worth. As a dog returns to his vomit. Brexit, however, is a different kind of engineering that doesn't require all that much negotiation - just a nod of approval on a series of questions.

In breaking out of the customs union we are having to adopt EU schedules and quotas. I have only a working understanding of the specifics and not for a moment would I claim any expertise. What we can say though is that any subsequent customs agreement with the EU will likely mean that we are pegged to the EU tariff regime for the foreseeable future. It has to be this way because it's the only way to manage the administrative task of carrying over third country agreements without substantial renegotiation. Since we cannot do it all at once, reconfiguring all of our trade relationships, Brexit is the process of engineering our way out of the EU on paper to get us to a point where we can renegotiate agreements at a time where we can give it sufficient attention and prioritise them.

In fact, that should be the easy bit. Where it gets complex is in the non tariff category. And I'm not talking about regulatory barriers. When you look at an EU trade agreement there is no common model. They evolve over time and each agreement in its own right acquires its own distinct characteristics, be they variations in the dispute resolution system or specialist areas of cooperation like narcotics control or renewable energy. These are cooperation agreements bringing into being a number of joint committees and funding programmes.

Many of these will be administered by EU agencies - so how this works is going to be largely dependent on the level of our continued involvement and whether we share the same foreign policy and trade goals as the EU. Continuity is going to depend a lot on what the final agreement looks like.

In more recent FTAs like Singapore or the EU-Japan agreement currently under way, these are more geared toward regulatory cooperation, effectively giving binding effect to the WTO TBT agreement - and in so doing pulling international organisations like Codex and UNECE into the mix. This means that if we wish to continue these such cooperation efforts we will either have to do it in partnership with the EU or diagonally. What it will mean though is maintaining the single market acquis whether we are members or not. That actually points to the futility of leaving the single market.

But that then brings us to the question of what we do when the process is complete. When our tariffs will be bound and for the most part pegged to the CET, while maintaining a high degree of regulatory convergence with the EU, there actually isn't all that much scope for comprehensive FTAs. They cannot happen in isolation of what partners have already committed to with the EU.

In order to ascertain our trade potential we need to examine Norway in that it is similarly bound to the EU. As I understand it, having undertaken only a cursory investigation, Norway does have a series of mutual recognition agreements on a number of specialist areas - and usually in those markets where it has little EU integration so as not to destabilise EU trade. Britain is going to have to do likewise in those sectors where the balance of trade favours the rest of the world rather than Europe. I cannot say what those will be and I will defer to the wonks on that. That's what they are for.

But what we also see is a high level of activity between Norway and a number of non-state actors on the world stage where it favours research and cooperation agreements and MoUs with global alliances and standards bodies. As this blog has outlined, tinkering with tariffs can get you so far but finding practical solutions to problems that blight existing supply chains can have an equal or greater effect on trade. Committing scientific resources to resolve a fruit fly problem can increase crop yields - and beefing up LDC customs can help eliminate billions in fraud and counterfeiting.

Then there is participation in the standards bodies and global regulators. Again this s something the trade wonks have a distinct blind spot for. We have no shortage of trade wonks who can tell us how things work at the WTO and how the internal politics works but as yet I haven't come across anybody who comments on Brexit who has sat in the International Maritime Organisation or endured a boring seminar on aubergine marketing standards at Codex. The WTO is the more glamorous field which attracts the bulk of intellectual investment. We consequently have a knowledge imbalance.

This is actually a problem because the key initiative for the WTO, around which most of its present efforts are devoted, is the TBT agreement and the TFA. Crucial to this is the development and installation of new standards - which is something the WTO does not do. In this the WTO grants delegated authority to the ISO and IEC along with OIE, IPPC and Codex, all of which have close cooperation with UNECE where we start to see the emergence of a privatised system of regulation interacting with the UN ecosystem.

Much of this is off radar because it's just not that sexy. Who goes into trade politics to discuss the maximum permitted level of grain fungus? But actually, that is fundamentally what trade is now about, where the key negotiations happen, which are every bit as significant as a tariff negotiations. There are inherent savings to be had by establishing common rules and just a standard on tyres or pharmaceutical labelling can add substantial improvements to value chains.

No doubt Britain will find room for FTAs but the point is that it's the big players who will accomplish the most with FTAs and we are better off leaving the EU to it, negotiating proxy access to these such deals while taking a more active and agile role in the formation of standards and regulations.

As this blog has repeatedly discussed, comprehensive FTAs tie up substantial resources, take several years and can often fall at the last hurdle. Britain can't afford to play that game nor can we identify any easy wins because many of our preferred partners are already engaged in EU talks that will bind them in respect of what they can give the UK.

What Britain does have in the post-Brexit world is the right of proposal at the international level without having to clear regulatory initiatives with Brussels. In this we are not without allies - and we have assets such as British Standards who are still said to be a superpower in the standards ecosystem. I'm not sure how true that is but it is influential and respected. We need to make a national priority of making sure it stays that way.

Ultimately, at this level, all the general rules cease to apply. It's not your market size, rather it is your level of participation and what expertise you can bring to the table. This is why waffle about The Brussels Effect is not especially useful.

What we tend to find is that the ability to influence regulation and standards comes from being in on it from the start with world-wide initiatives, having a solid network of intelligence inside foreign standards bodies. The USA especially. If there is anything at all to be gained from talks with the USA it is enhanced cooperation with ANSI and ASTM - hopefully with a view to persuading the USA to bring more coherence to its standards sector. It is presently deeply fragmented and unable to offer a united view.

Ultimately we will have to look beyond FTAs and play a much more savvy game seeking to pioneer regulatory initiatives with a clarity of purpose the EU struggles to bring to bear. That, though, is going to require that we rethink trade and step outside of the well established paradigms. In that regard our current trade wonks are next to useless because they are only fit for a single purpose. It's our regulatory and quality specialists in engineering, food safety, automotive and nuclear who will be the vanguard of British representation in trade.

For that we are going to need a lot more private sector involvement and we will need to encourage the growth of trade guilds and business lobbies - possibly even offering tax breaks for those who are members. We need to tap into private sector expertise and ensure British business interests have a direct line to the top tables. This in my view would be the biggest benefit of Brexit in that there are no EU bureaucratic hurdles standing between business and direct representation on global bodies. As much as this applies to business it also applies to British NGOs and unions.

There is a lot more to discuss on this, but we need to get over the massage that a scattergun FTA approach will wind up on the rocks - and if we want to get anywhere we will have to re-tool and retrain our trade thinkers.

Finally there is one other urgent consideration. For all the time we have been in the EU aid has run as a separate endeavour to trade, which in turn has run in abstract to foreign policy. Trade has become a technocratic offshoot and if we continue with that mentality it will function in isolation of any strategic objectives.

The last thing we want to do is chase any trade for its own sake. Our immediate strategic objective is to slow the flow of migration from Africa and trade is a tool to that end. Meanwhile we have to measure our trade objectives against certain geo-political risks and opportunities. China is presently weaponising trade and we need to be mindful that we are not unwittingly walking into ambushes.

Britain has to get real about trade and it needs and recognise that FTAs are the tool of regulatory superpowers. We are no longer playing that game. Our institutional knowledge is behind the curve. This is a whole other ball park and we are going to need new players. We are going to need to combine trade, aid, foreign policy and diplomacy and set out some clear objectives beyond easy PR wins.

Once we are out of the EU we will be fighting for our survival and fighting to retain and enhance Britain's reputation as a force for good. We have a lot riding on this and we cannot afford to to indulge ourselves in the habits of the past. We need to stop being distracted by decoys and focus on the task at hand. Geneva, not Brussels, is now the centre of the trade universe and we need to wake up to the trend of regulatory globalisation. We must shed our euro-centric thinking and get to grips with the issues or we will find ourselves adrift and rudderless. 

Nothing useful to report

I have a working theory at the moment that the closer one is to Westminster the less one is likely to understand Brexit. Anybody who has understood the size and scope of it sees no alternative but to remain in the single market. Though this is seemingly now the consensus view, even those in Westminster who support this cannot say exactly why and have a shaky understanding of the concepts.

As a whole though the most coherent consensus from Westminster is that "something must be done". It is this lack of coherence that allows the hold outs to continue to press on with their issue illiterate agenda. There is insufficient knowledge in the system to resolutely defeat it and way too much political cowardice.

As a blogger one is supposed to react to every morsel of gossip but this gets us nowhere and adds nothing. As each day passes some or other nobody MP will add their ignorance to the mountain that exists already, bringing us marginally closer to a conclusion but a consensus without a firm decision is worthless. Hence we are drifting rudderless toward the the drop.

Even this is not useful analysis in that it is nothing different to anything we could have said over the last year. At some point you just have to say "wake me up when they know what they're doing". Which could be never at this point. We simply do not have a functioning governing apparatus. It will be left to Brussels to decide for us.

As to the wider debate, I could indulge myself with a long essay on post Brexit trade strategy but if this spirals out of control then we can drop the idea entirely. Our main diplomatic efforts will be damage control and mitigation efforts. There simply won't be the budget or the resource to pursue any kind of active foreign policy.

It would seem that the UK is now politically spent. Bereft of competence. There is nothing left to do now but wait for this sorry mess to unravel. It's the end of the road, the cupboard is bare and there is nothing left to be said. Failure looks certain and then all we can do is clear up their mess.