Monday, 16 January 2017

Don't bet on a worthwhile deal from President Trump

Let me put this as simply as I can. There is not going to be a comprehensive deal between the UK and the USA. You have two mature and embedded regulatory regimes founded on entirely different cultures. They are broadly incompatible. UK law is largely proscriptive where government prosecutes those who break the rules. The USA has a different system whereby you are at liberty to release virtually any old toss on to the market only you run the risk of civil cases that can wipe you out completely.

This is the reason why comprehensive agreements have failed since the war and this is why TTIP struggled to complete and the areas where convergence or mutual recognition can be achieved are minimal. Complex and well established regimes are not easily overturned and US protectionist instincts will fight tooth and nail against any modification to their own regulatory code.

All this leaves you is some scope for superficial preferential agreements on tariffs which are neither here nor there and assuming the UK isn't entirely gullible we will resist anything that directly damages our own farming sector.

There is next to no chance that a framework can be established before we know what the Brexit settlement looks like and in all likelihood any deal will require continued regulatory harmonisation with the EU. That is where our best interests lie because third countries without regulatory codes are adopting EU inspired global regulations. America is the freak and will always resist harmonisation efforts on legacy systems. The US is big enough and diverse enough not to really worry about trade. Its main interest is arms exports and we are already a favoured customer.

We may get a symbolic deal with the USA but it won't be comprehensive and it will be concluded as a face saver and a chance for Trump to snub the EU. It will not substantially add to trade volumes and given how the UK is keen to take any deal going for propaganda reasons there is every likelihood that we will voluntarily take a deal that does not favour our interests. There is certainly no danger of a sweeping realignment with the USA because it would damage our trade with the EU.

Much of the media think the fullest extent of trade is chipping away at tariffs and it doesn't really comprehend the process or the significance of regulation as an aspect of trade facilitation and they talk about trade as though it were a bartering session rather than a forensic and analytical process involving hundreds sector specific technicians and specialists supervised by high ranking diplomatic officials. The visible politics of such trade is largely divorced from what actually happens.

In order to keep our trading options open we have to stay as close to the global standard as possible and pretty much treat the USA as though it doesn't exist because it is not going to assist us in multilateral efforts nor is it going to open up its borders to anyone. Moreover, bilateral concessions on regulations (lowering standards to allow entry) are counter to the spirit of achieving global standards and can only be allowed as temporary waivers at the WTO.

If we want to increase trade with those who cannot meet the standards then we have to make the investment to ensure that they get the technical assistance in order to comply. This is why foreign aid is an essential part of foreign and trade policy. If that then is insufficient then we have to lodge initiatives at the global regulatory bodies in order to secure regulatory reform rather than deregulation. If we get into a battle of tit for tat deregulation then the entire system breaks down, defeating the point of having standards at all.

I hope that in some way illuminates, but if it doesn't it at least gives you some indication that it is more complex than it would appear and if you read a snot-nosed toryboy eulogising "free trade" with America, you know you're dealing with your common or garden prat.

As to the notion that the single market does not cover services, ergo we need regulatory independence, much of our service provision benefits from liberal travel arrangements - which we are more likely to secure from the EU than we are any other country. Sure it would be nice to have preferential agreements with Australia but in or out of the EU, our closest neighbours still matter more than an underpopulated desert on the opposite side of the planet famed mostly for spiders, sharks and soap operas with too many primary colours.

To avoid being suckered by non-thinkers please steer well clear of The Spectator, Brexit Central, City AM, CapX and the Telegraph. These people know fuck all and seemingly they wish to keep it that way.

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