Monday, 1 July 2019

Going different ways


Over the weekend much ado was made of the newly announced EU-Mercosur trade agreement. Naturally remainers got busy telling us this is a major benefit to being in the EU. The same people who've been in full hyperventilation over chlorinated chicken from the USA are now dizzy with excitement over a deal of a similar scale without the first idea what's even in it.

To be quite honest I've no idea what's in it either. I can take a few educated guesses and when I go looking for certain features, I won't be at all surprised to find them or be surprised by the wording. One wonders, though, if this would even be noticed were we not leaving the EU. The only media coverage is typically superficial and the only civil society input comes from green NGOs who claim that this deal (or any deal) will lead to deforestation. There is then the obligatory complaint from the agriculture sector which doesn't want new competition. Whatever hobby horse you're riding, this will provide new material.

I strongly suspect that in other circumstances this would not have attracted the same attention. Not that it was vast. This deal would have slipped under the radar like so many before it with barely any public debate and would barely register with our own parliament.

There will, of course, be measures under the heading of technical barriers to trade, again converging on global standards as we have seen with all recent EU agreements, taking tract verbatim from WTO agreements. The EU boasts that this will create a market of over 700m consumers. At this scale it is beginning to rival global multilateral efforts, and indeed undermine them. The EU is muscling in on WTO turf, putting itself at the centre of the trade universe. Naturally this will make it harder for the UK to diverge and reduce the incentives for doing so (assuming there are any).

So here we have a mammoth deal going through with major implications for a number of sectors and not only is our media not especially interested, our parliament isn't either. It is discussed only as an adjunct to the Brexit debate. Anonymous officials toiling largely behind closed doors have put together a globalisation accelerant and nobody seems to care unless it can be used to make cheapshots in the direction of leavers.

Brexiters rightly point out that this deal has taken over twenty years which is a valid criticism given that so much could have been brought on stream a piece at a time were the EU not so invested in mega-treaties, and had it done so through the global multilateral system, it might well have made it more valuable. Instead it has chosen to bypass multilateralism. By the same token though, this also busts the notion that we can repair a no deal Brexit with a series of mini deals. That is not how the operates. The EU-Mercosur deal took twenty years and will take at least a decade to fully implement. We could be in the same boat negotiating a new relationship with the EU.

It is mainly the remainers, though, who cede the ground on this score. There is no possibility that a deal of this scale could ever be anything approaching democratic nor would it ever likely be scrutinised with the same ferocity as the UK government seeking to close a deal. The histrionics over chlorinated chicken makes the point. Brexit puts trade back where we can see it where decisions are questioned and there is a public debate, albeit narrow and poorly informed.

It is generally accepted that one of the drivers of Brexit was the pace of change and the way in which decisions taken by Brussels and Westminster further expose the regions to the ravages of globalisation, where the bottom line is given precedence over the social impacts of trade, and those most affected have no voice in it. With Brexit repatriating the decision making, the choices may be tougher, but at least trade is back in the Overton Window. Over time we will relearn the art of using trade as an economic tool.

It would seem the EU is in a rush to score whatever deals it can in the wake of Brexit. Not least to offset the impact of Brexit but also to rub our noses in it. Especially when the Tories sold Brexit as a free trade enterprise and an antidote to EU protectionism. they are adopting a notches on the bedpost strategy where any deal is a good deal. Though the balance of leverage is in their favour, it may well backfire as the cumulative impacts further provoke populist sentiments in the regions of Europe. Sentiments which are far from unique to Brexit Britain.

The basic point being that the larger the deal, the more people it has direct consequences for, not all of them positive, where monthly export figures alone don't give you a picture of what's happening. Decisions are made far from where the impact is felt, and made by an unelected few with loyalties to no-one. No skin in the game trade practitioners who just like the jet-setting lifestyle and just as prone to professional fads as any other. When UK has finally resolved to tame the impacts of globalisation, the EU has gone in the other direction. On a long enough timeline, it is more than likely the British public who are right about this, not the EU commission.

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