Wednesday 11 December 2019

Trade deals: still the delusions persist

Ed Robertson is an author at Briefings for Brexit. Apart from that I don't know anything about him but he writes with incredible scepticism about the EU's attitude to trade and accuses them of wanting to retain control of Britain's trade policy after Brexit.  He has gone through the political declaration with a fine tooth comb and an unhealthy suspicion to catalogue any reference to a level playing fields. There are quite a few.

Robertson says the most important drivers of the UK’s future economy outside of the EU will be: 
  • Our ability to negotiate lucrative free trade deals around the world. 
  • The freedom of our Government to introduce any initiative which will attract investment, stimulate our economy and make our companies more competitive abroad. 
He worries the revised Political Declaration will prevent us doing all of this and quotes from the fine print, which says "the Parties agree to develop an ambitious, wide-ranging and balanced economic partnership." ... "underpinned by provisions ensuring a level playing field for open and fair competition, as set out in Section XIV of this Part."

In other parts he finds this sort of reference:

"the Parties envisage comprehensive arrangements that will create a free trade area, combining deep regulatory and customs cooperation, underpinned by provision ensuring a level playing field for open and fair competition, as set out in Section XIV of this Part."

And then he gets to the damning X1V, Para 77:

"The future relationship must ensure open and fair competition, encompassing robust commitments to ensure a level playing field."....."These commitments should prevent distortions of trade and unfair competitive advantages."

"The Parties should in particular maintain a robust and comprehensive framework for competition and state aid control that prevents undue distortion of trade and competition; commit to the principles of good governance in the area of taxation and to the curbing of harmful tax practices;"

This is all anathema to Robertson who sees conspiracy in every word of the political declaration. He ends with a plea that "the next UK Government must push for a quick and basic no-strings-attached free trade deal with the EU.  Striving for a more complex deal will undoubtedly lead to extended negotiations requiring further concessions from the UK, and risks leaving the EU in full control of UK trade."

No strings attached! What naivety this is. I suppose we should give credit to him for recognising that we do need a trade deal. At least he is not calling for WTO terms. It's progress of a sort.  The problem is that once you accept the premise  of needing a FTA, there will be strings and the EU will do most of the attaching. In fact the quicker and more basic the deal is, the more the EU will demand regulatory alignment. Why should they grant access to their market on terms favourable to us? 

His reference to 'lucrative trade deals' is also interesting since the Treasury forecast is that if we keep all the existing EU FTAs and enter into new ones with the Anglosphere and BRIICS countries, this would help GDP to increase in the range of 0.2 per cent to 0.7 per cent (see NIESR report page 23 HERE). 

Considering that leaving the EU would leave us 6.7% of GDP worse off by 2030, thinking this can be offset by 'lucrative trade deals' shows the Brexiteers are still living under some serious delusions.

He seems the kind of man that genuinely believes the EU has 'shackled' us and somehow prevented the poor downtrodden British from realising our global potential. He obviously doesn't know anything of the seventy or so years of relative decline that we experienced before we joined the EU.

The idea that our companies are going to be made "more competitive abroad" by some sort of government action in stimulating the economy is also for the birds. He sounds more like John McDonnel than a Brexiteer and in any case, this is not something the EU (or indeed anyone else with whom we want to sign a trade deal) will ever accept.

The EU do not want to 'control' UK trade policy. They do want to ensure there is no unfair competition. This is usually why negotiating trade deals takes so long. If you open up your market to low cost imports from outside there is bound to be a loss of jobs and the workers you represent will not be very happy. On the other hand, if consumers can enjoy lower priced items why should they be denied that opportunity? Competition is good and drives quality up as well as prices down but unfair competition gives an advantage to producers on one side.

Trade deals are about ensuring inefficiency is reduced but not at the expense of the environment or people's quality of life, including employment rights. The only way to do this is by a level playing field.

Robertson wants to tilt the playing field in our favour since the level one we've been playing on for 25 years hasn't enabled us to do well. The other team are hardly likely to agree to help us if we can't manage to win on equal terms.