The world's worst interview?

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As a general rule, and assuming that they’re serious, people applying for jobs tend to try and demonstrate why they’re the right person for the job. Most people’s experience would confirm that demonstrating that one understands the requirements and highlighting how one’s talents and experience match those requirements is not a bad strategy if one wants to convince the interviewers. In what must surely be a contender for one of the worst interview pitches in history, Liam Fox, the UK’s candidate for head of the WTO, tried, instead, the novel approach of highlighting precisely the requirements which make him a singularly inappropriate candidate for the job.

Apparently, according to the Guardian, “Fox said the organisation needed a scarred political heavyweight capable of talking directly to major countries about the value of a rules based free trade order.” Scarred, maybe, but for a lightweight who has been sacked from his last two jobs and who has been a significant part of a campaign to destroy the idea of a rules-based order, it looks very much like an appeal to appoint someone else. And just in case they weren’t entirely convinced by that, he added that he hoped the EU “would back the candidate most in line with their values and aspirations for global free trade that the EU has”. I think we can be confident that the EU will do precisely as he wishes rather than back a candidate who has spent years trying to undermine everything the EU does. His only chance is if the other candidates are even better at talking the interviewers out of appointing them.

Extracting the uric acid?

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Perhaps Liam Fox was (is?) a good GP. Most people are good at something, although his recent political career has only taught us what he’s bad at. Assuming that his forte is indeed the practice of medicine, it isn’t exactly a solid basis for running the World Trade Organisation, the job for which he has been nominated by Boris Johnson. The man who gave us that phrase about “the easiest deal in history” will not immediately convince many that he has the knowledge and experience to oversee trade deals around the globe. It leaves me wondering why on earth the PM has put his name forward at all.

It could be that he genuinely believes Fox to have all the necessary attributes for the job and to be such an obvious candidate that the rest of the world will fall at his feet thanking him for his perspicacious nomination (as opposed to merely falling about laughing). It’s entirely possible that he hasn’t bothered even to read the man’s cv, given his known lack of attention to detail. It might be that he wants to destroy the WTO; destruction of the established order seems to be the PM's goal in life (or at least, the goal of his puppet master). Maybe he even thinks that the Peter Principle should apply – one of the corollaries as I recall is that for every job there is someone somewhere who is incompetent to do it, and sooner or later the two will meet. It’s also possible that he's made the worst nomination he could think of, in order to be rebuffed so that he has another opportunity to tells us all how nasty those foreigners are in the way they treat “this great country of ours”.

Or he could just be taking the p*ss. Occam’s Razor suggests that might be the most likely reason.

Reducing standards won't work

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On Tuesday, the international trade secretary told us that he wants the UK to be a "21st Century exporting superpower", and the story was inevitably linked to the ‘freedom’ that Brexit will give the UK to negotiate trade deals around the world.  Personally, I have more than a few doubts about whether exporting is the inherently good thing as which it’s usually painted; in environmental terms, it seems to me that there’s a lot to be said for more local production and consumption.  But, for the sake of argument, let’s accept the assumption that exporting is always a good thing, and that the UK economy should aim to do as much of it as possible.

Currently, exports make up 30% of the UK’s GDP, and he wants to get that up to 35%.  That sounds like a lot, but it leaves the UK lagging behind a country such as Germany, which really is an exporting superpower, with exports accounting for 41% of national output.  It’s worth considering how and why Germany manages to export so much more than the UK.  Firstly, of course, it can export freely to the other 27 member states of the EU and take advantage of the relatively easy trade offered by the 50+ agreements which the EU has signed with other countries.  These are all advantages which the UK also currently enjoys (although the same trade secretary actually wants us to walk away from all of those in order to negotiate less comprehensive agreements).

The question which needs to be asked is why, if the UK enjoys all the same benefits of trade agreements as Germany, it is unable to leverage those in the same way and achieve the same level of export success?  Clearly, it is not membership of the EU per se which prevents that (and if EU membership isn’t the problem, it follows as surely as night follows day that leaving the EU won’t solve the problem).  The underlying problem must be simply that goods and services produced in the UK are not competitive; and the question is why that should be.

Brexiteers such as Fox might well argue that one of the reasons for the lack of competitiveness is the extent to which EU rules constrain British manufacturers to produce to a particular set of standards following a particular set of rules.  Freed from those constraints, UK suppliers would be able to be much more competitive on price.  It’s a simple analysis, and one with which I can readily agree.  The problem is, though, that the analysis is not just simple, it’s too simple.  There is a major flaw in assuming that goods produced to a different set of standards will automatically lead to higher sales simply because they are more competitive on price.  That flaw is that any market which adopts a particular set of rules to maintain standards – and we’re talking here not just about standards governing the quality of the goods themselves, but also those governing environmental factors and the health, safety and conditions of the employees – is not simply going to allow goods produced to a less exacting set of rules to flood into that market.  For sure, the UK post-Brexit can abolish all sorts of rules currently enforced by the EU and produce goods more cheaply as a result – but who’s going to buy them?

This is the issue at the very heart of the impasse in negotiations between the EU and the UK over borders and trade: the EU wants to maintain the integrity of its market, whilst the UK is demanding, in effect, that it should be allowed to compete on price by not complying with the EU’s standards.  The Brexiteers don’t often put it in such terms, but Rees-Mogg was pretty explicit when he argued that standards which were “good enough for India” could also be good enough for the UK.  It’s a world view which starts from the assumption that business regulation should be driven by the lowest common denominator.  The corollary is that any improvement in standards over time can only come about by global agreement rather than by agreement within individual trade blocs such as the EU. 

Effectively, the Brexiteers are demanding that the EU reduce its standards to whatever the UK decides they should be.  They want the whole EU to become a ‘rule-taker’, with Britannia setting the rules.  There is only one way in which a disagreement couched in those terms can end, but Fox’s optimism on the post-Brexit future for UK exporting is based on the wholly unrealistic assumption that another outcome is certain.  Despite his desire to improve export performance, there’s only one possible result of a blind determination to exempt the UK from the rules and standards applying in the markets to which it exports.  And that result isn’t an increase in exports.

Some big boys did it

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The Bloomberg Editorial Board produced an opinion piece a few days ago, urging the cancellation of Brexit, arguing that “It isn’t too late for the U.K. to change its mind about this whole misbegotten venture”.  The suggestion that Brexit is a ‘misbegotten venture’ isn’t exactly uncommon in the rest of the world, although there are always those, such as Trump and Putin, who see it as an opportunity.  For them, if not for the UK.  But there have been a series of thoughtful articles in recent months in overseas publications wondering exactly what Brexit tells us about the UK – and the answers never seem to agree with what the Brexiteers tells us.

Bloomberg did acknowledge that reversing Brexit would require a second referendum and that that isn’t exactly a straightforward proposition, but suggested that the other EU members could aid the process by making it clear that they’d prefer the UK to stay and that the Article 50 notice could be withdrawn and/or the date extended if that would assist the UK government in arranging a new vote.  Some EU governments have already made encouraging noises in that direction, and I’m confident that the EU would be willing to agree on both those points if there were any signs that the UK government wanted such an outcome.  But there aren’t, and any suggestion that the EU were attempting to prompt such a move would be immediately portrayed by Brexiteers – with their usual complete disregard for mere facts - as an attempt to ‘force’ the UK to vote again until ‘Brussels’ gets the answer it wants.  The idea that the EU ‘forces’ countries to re-vote has, after all, been a basic mantra of the Brexiteers from the outset.

Bloomberg does offer another alternative, which is “… offering non-voting membership of the single market, with all its rights and obligations, for as long as it takes to arrange a limited free-trade agreement of the sort that Europe has reached with other non-EU countries”.  It’s a reasonable suggestion, although there’s no obvious reason why it should be restricted to circumstances in which “… EU governments have come to think Britain is more trouble than it’s worth, and would now prefer it to go”.  It’s equally applicable if they would prefer us to stay, but recognise the unlikelihood of that and simply want to ensure an orderly exit.  It’s an obvious, sound and sensible interim approach which makes more sense than an immediate rush to the door.  It’s never going to be as good, in economic terms, as continued membership, but as a halfway house it would buy the time to work through the implications properly.  I’m not sure, though, that the EU actually needs to make such an offer – it seems to me that it’s an option that has been on the table from the outset.

And that brings us to the nub of the issue.  It’s not the EU which has ruled out such an option; it’s the UK - by insisting that it wants all the rights but none of the obligations implied by such an option: a form of super membership better than that enjoyed by any other member.  And the fact that the EU27 won’t allow the UK better terms than they themselves enjoy is all down to the 'intransigence' of those 27 EU members.  That’s the basis on which the new Foreign Secretary has warned the EU that if they don’t back down, the UK is walking towards a no-deal ‘by accident’.  It’s not an ‘accident’ at all – it’s the probable outcome of deliberate UK policy.  In similar vein, the Trade Secretary has now talked about ‘no-deal’ being the likeliest outcome as a result of the EU’s 'intransigence'.  There’s certainly a lot of intransigence around, but it’s coming from the Brexiteers with their continued demand for free unicorns or else.

As the pound slumped on Monday, some ‘senior Whitehall sources’ were quoted as saying that if the UK crashes out with no deal “we will make it clear whose fault it was”.  And there, in a nutshell, we have the Brexiteers' latest core strategy exposed: ‘It wasn’t me, Miss, some big boys did it and ran away’.  It's no wonder that the rest of the world is scratching its collective head in amazement.

Defying gravity

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There was a story in yesterday’s Western Mail about discussions between Liam Fox and Japan, which reported that Japan has promised to back the UK’s bid for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after Brexit.  (I haven’t been able to trace an online version of the story in the Western Mail itself, but it appears to be a syndicated story from an agency, because the same story with the same wording also appeared in the Daily Express.) 

It’s clear that Fox, like most of the Brexiteers, believes that it is better to have an agreement with countries a long way away than one with those nearest to us, as though that can somehow make up for the loss of opting out of the more local agreement.  It completely ignores the gravity model of trade, but that should not surprise us given that Fox’s own cabinet career has itself been remarkably resistant to the normal rules of gravity.

As the New Zealand Trade Minister explained in this report, one of the drivers for the agreement is that “CPTPP has become more important because of the growing threats to the effective operation of the World Trade Organization rules”, although I’m sure that isn’t quite what Fox and the rest of the Brexiteers have been telling us about the WTO option.

However, it was the final paragraph of the Western Mail/ Daily Express report which really struck me:

“Eliminating tariffs and quotas between members and involving mutual recognition of regulations and rules on cross-border investment, CPTPP is seen as a swifter and more effective alternative to forging separate trade deals with individual member states.”

Now there’s a vision.  A free trade area encompassing some of the world’s biggest economies coming together to agree a common set of regulations and rules, which will apply to an increasing range of goods and services over time instead of a patchwork of individual bilateral agreements.  It’s such a brilliant idea, I can’t think why no one has thought of it before.  It’s a pity that there’s nothing similar closer to home, in Europe say, that we could join instead of going half way round the world and pretending to be on the Pacific Coast.  Oh, hold on a minute…

Two speeches and a confession

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There are two types of obstacles to ‘frictionless trade’, which is the stated goal of the UK Government in the negotiations with the EU.  The first type is tariffs, and although it can take months and years of negotiations, abolishing or reducing tariffs is the easy part.  If by ‘free trade’ the government actually means ‘tariff-free trade’ (which is the way things look at times), then an agreement ought to be perfectly possible, even if the desired timescale is more than a little optimistic.  The second type of barrier is about rules, regulations and standards.  Ensuring that goods and services from one jurisdiction are being produced on a ‘level playing field’ before allowing them to be freely sold in another jurisdiction is one of the issues which leads to the creation of a so-called ‘hard’ border.  And it isn’t just about things like quality of the finished goods, it also includes things like whether different countries have different standards for environmental protection or health and safety – lower standards can reduce costs and therefore provide a potentially unfair advantage.  Regulatory alignment is much harder than tariff alignment, and takes longer to achieve - the best way of avoiding such problems is to adopt a common set of rules and regulations, arrived at by agreement.  (We could, perhaps, call it something like a ‘single market’.)

But given two different sets of regulations, does it necessarily follow that there need to be controls and checks on goods and services crossing from one to the other?  The UK Government’s position appears to be that it does not, and that if the EU imposes such checks it is the EU erecting new barriers to trade.  This seems to be the general gist of Liam Fox’s speech this week.  He explicitly referred to the possibility of ‘Europe’ “erecting barriers to trade where none yet exists”.  It chimes with one of the regular themes of the Brexiteers that we don’t need border checks and controls, and if we end up having them, it’s not the UK’s fault, it’s all the faulty of those nasty vindictive Europeans.  There is a sense in which the core message there – leaving out the name-calling – has an element of truth about it.  If you have two countries or groups of countries with different regulatory regimes covering goods and services, and if one of those regimes sets high standards whilst the other sets out to abolish as many standards as it can, which of the two is the one that it going to want to impose controls over goods entering its territory?  Not the one with low standards, naturally – if someone else wants to send them goods produced to higher standards, why wouldn’t they let them in?  But seen from the other perspective, why on earth would the more highly regulated country want to allow in goods produced to lower standards which can undercut the prices of its own manufacturers?  So there’s a sense in which it’s true that it could be the EU that will end up insisting on border controls.

And that brings us to David Davis’s little contribution yesterday.  Despite all the hype from the outset about ‘freeing UK businesses from unnecessary EU rules and regulations’, he seemed to be saying, in effect, that far from reducing standards, the UK will in fact set higher standards.  There will be no race to the bottom in terms of regulations and standards.  It’s a U-turn that, if he’s really serious about it (and I have my doubts), many consumers will surely welcome.  And if UK standards really are better and higher than the EU equivalents, there should be a lot less difficulty in allowing UK goods and services into the EU, which was the thrust of his argument as I understand it.  Hold on a minute, though.  If in this wonderful new world that he now seems to envisage, UK companies are committed to more regulation and higher standards than their competitors in the EU, doesn’t that give those EU companies an unfair advantage, allowing them to undercut UK prices?  In those circumstances, isn’t it the UK which needs hard borders to protect itself from unfair competition?  

Two speeches, but not really a lot more clarity or honesty.  And the confession?  That came from David Davis when he referred to an ‘Anglo-Saxon’ race to the bottom.  What is that, if not an admission that Brexit is really all about England?

Trade deals and fantasies

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The reason quoted most frequently for not staying in the European Customs Union – or indeed, any customs union – is that it would prevent the UK negotiating its own trade deals.  And that much is true; what they’re not so good at explaining is why exactly the UK needs or wants to be able to negotiate its own trade deals.  They just present it as an inherently good thing and are rarely challenged for clarification.

The EU already has trade deals with many non-EU countries, and the UK benefits from those.  The plan, insofar as there is one, seems to be that the UK will negotiate with all of those countries to ‘roll over’ those trade deals, so that the UK expends a certain amount of effort to keep exactly the same terms which exist today.  It’s a sensible approach, given the amount of time available and the even greater amount of effort which would be required to do anything different.  It does, though, take us not even the tiniest step forward from today (and if any of those countries were to decline to play ball, there is the possibility of taking a step backwards).  It merely 'rebadges' existing EU deals as independent UK ones.

Then there are the countries with which the EU does not have trade agreements currently.  With some of those, the EU is already in negotiations lasting many years to achieve an agreement.  For it to be worthwhile for the UK to seek to negotiate separate deals with those countries, there has to be a belief that the UK market of 60 million can get a better or faster deal than the EU market of 500 million.  On what basis could that be?

Well, one advantage which the UK’s negotiators would have is that the EU is trying to meet the requirements of 28 states (soon to be 27), all of which potentially have different interests; ensuring that those are all met is time-consuming and complex.  Direct negotiations with only one state could conceivably be quicker and easier (although whether a state in a rush to reach a quick deal would take into account the needs of all its parts rather than just those of the south eastern corner is a danger which we in Wales might like to consider very carefully).  Of course, avoiding one part of a customs union seeking a deal which gives it a relative advantage over another part of the same union is one of the reasons for the EU rule preventing such individual trade deals by its members.  The alternative would be customs and border posts across the EU.

A second route to a quicker deal would be to concede more to the ‘other’ side in any negotiation; indeed, given the much smaller market that we’re talking about here, that might even be essential.  Whether making concessions to Trump’s America for a quick deal would turn out to be a good thing or not is rather a different question, but I can certainly see how an independent UK trade policy might lead to a series of different deals over a (still longer than the Brexiteers are willing to admit) period.  

The underlying question which remains is whether those deals make up for the inevitable loss of trade with our biggest trading partner.  In the fantasy scenario of those leading the UK, this question doesn’t even need to be asked; we’re going to keep ‘frictionless’ trade with the EU alongside the exciting new deals, so it’s not a problem.  It only becomes a problem when they have to face up to the fact that negotiating formal generic trade deals (as opposed to individual sales) and retention of that ‘frictionless’ access are mutually incompatible, for the reasons noted above.  Fox and friends are absolutely right to argue that if the UK wants to do its own separate deals, it has to be outside the customs union; the fantasy is believing that being outside the customs union does not disadvantage trade with the rest of the EU.

What happened to all those EU constraints on trade?

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In what will clearly be good news for some businesses in Britain and the people who work in them, around £9 billion worth of trade deals with China were signed off yesterday during the Prime Minister’s visit.  During the same visit, the International Trade Secretary suggested that deals such as this show that we shouldn’t be ‘obsessing’ with Europe, and should be looking wider afield.  Up to a point, I agree with him.

Here’s the point, though: they don’t have to be alternatives.  All the deals signed off yesterday were signed by the UK whilst still a member of the EU and within EU rules.  It’s true that the specific deals signed off yesterday aren’t the same as a generic deal covering terms; but the whole point of a generic deal is surely to enable specific individual deals.  If there is already significant scope for improving trade with China within EU rules, in what way would that wider deal ‘replace’ what is lost in terms of trade with Europe?  Only someone 'obsessed' with leaving the EU would see these as alternative, rather than complementary, approaches.

Delusion and reality

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One of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away. For Brexiteers, the hard reality that they are not going to persuade anyone to give them any new concessions by threatening to simply renege on existing financial obligations has been a long time coming, but there does seem to be an inkling of progress towards a more realistic position.  It’s not agreed yet, of course, and we don’t yet know the final figure.  It will almost certainly be higher than the headline figure being quoted, but a bit of skilful negotiation on both sides might be enough to hide the final total in a plethora of rebates, discounts and conditional payments.

There has also been talk for a while about progress on protecting the rights of EU citizens.  If it weren’t for the innate dislike that some people seem to have of all foreigners, this should have been the easiest of all to resolve.  All they ever had to do was to extend the rights of UK citizens to match those of EU citizens.  Again, progress has been hindered by an unwillingness to give the citizens of the UK more rights.  I think it’s called ‘taking back control’.

That leaves the one that the UK imperialists always thought was going to be the easiest of all to settle, and that’s the question of the border with the Republic of Ireland.  There was never any rational basis for assuming that it would be easy, but a failure to understand that the republic is an independent state, with full membership rights of the EU, rather than some sort of vassal state of the UK has blinded them to the fact that the EU 27 were always going to be more likely to unite behind a loyal continuing member than to abandon that member's interests in pursuit of a deal with a troublesome departing member.  The treatment being meted out to Ireland by some sections of the press well displays the lingering imperialism and exceptionalism which has dogged the UK for generations.

In purely logical terms, I have some sympathy with the position adopted by Liam Fox, which is that the nature of the border required depends on the nature of the trade deal between the EU and the UK, and might therefore be better dealt with in phase 2.  Or rather, I would have more sympathy if the UK government had not, during phase 1, removed from the table all the practical options which would allow an open border to continue, demanding instead that the EU come up with a proposal to avoid the logical consequences of Brexit for the border.

The key word there is practical, and how it is interpreted.  It has long been clear that the real objective of the Brexiteer ideologues isn’t simply to remove the UK from the EU, it is to abolish the EU and replace it with a purely economic relationship based entirely on trade.  How else can anyone interpret the demand for a trade agreement as good – or better – that the one we have, but without membership of the single market or the customs union?  Now if somebody believes – as I suspect that Fox does – that Brexit is just the first step towards that goal, and that the UK crashing out with no agreement on a future relationship will help to bring that about, then the position being adopted actually makes some sort of sense.  But to repeat the opening line, one of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away.

An immigrant from another galaxy?

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Somewhere, in a galaxy a long, long way from Earth, there may be a planet on which the pronouncements of Liam Fox make sense to someone other than himself.  Maybe he even came from there and is merely struggling to escape the linguistic and political norms of his home world.  As explanations go, it may sound incredible, but it’s probably less incredible than trying to square his words with the norms of this planet.

Take this gem from his speech in Cardiff: “We want to realise a new relationship with Europe, based on free trade and prosperity."  Obviously, that is a relationship which is different to the one we currently have, which is based on working together to ensure … er … free trade and prosperity.  A relationship which he and others told us we should opt out of.

Or this one: "We know that when we leave the EU, we will not have an EU commissioner, MEPs or a seat at the European Council.  That is a political decision that we have consciously taken following the instruction from the British people at the referendum.  It is a political response to a political decision.  But it would surely be wholly inappropriate if our political decision was to be met with an economic response…”.  Only on another planet could taking a deliberate decision not to be involved in setting the rules governing the operation of a free trade area be seen as a solely political decision, and nothing to do with economics at all.

But perhaps the best bit of all is his claim that if “…barriers to trade and investment were introduced across Europe, that would damage the economic potential of all European citizens and those well beyond Europe too [and] would ultimately be self-defeating ...”.  At least, on this one, I can agree with him, in principle at least.  After all, the idea that introducing barriers to trade and investment might just possibly be economically damaging was, as I recall, fairly central to the arguments of those campaigning against Brexit.  But just remind me a moment – whose decision was it to opt out of membership of the organisation which was trying to guarantee that there would be no such barriers?  To read his words, once could almost believe that it was those 27 wicked European states which had conspired together to expel the UK rather than the UK taking a conscious (albeit misinformed) decision to opt out.  (Although I’m not sure that I’d really blame them if they had considered an expulsion…)

Like so much which comes from the Brexiteers, much of what he says is ultimately a demand for more British exceptionalism; for the right to enjoy more of the privileges of club membership than the members themselves whilst rejecting the club’s rules and declining to pay a membership fee.  And it’s all done without a touch of irony or self-awareness, and an assumption that everyone else will fall into line.  I’m not normally one for repatriating immigrants, but in his case, I am wondering if his home planet would consider taking him back?