Saturday, 30 September 2017

America is not our friend

The Bombardier tariff debacle really ought to trigger some wider debate about the USA and its motives. It is assumed that this protectionist hostility is a consequence of Trump's election. It isn't. This is just what the USA does.

The USA has a track record of frustrating the WTO - even under Obama - and it goes way back. It is not interested in harmonisation. Moreover, if TTIP wasn't going to pass under Obama then it is never going to pass at all. So what chance does the UK have?

The short of it is that the USA is big and diverse enough not to be as dependent on trade as the rest of us. It will only really use trade as a foreign policy tool. And on that score, the USA is not our friend, nor is it a friend of the EU.

In this we have to look at the relationship between the EU and the WTO. They are intertwined, especially since Lisbon. The Lisbon treaty pretty much marries the EU to the WTO and most major WTO developments are EU initiatives.

Moreover, the WTO framework forms the DNA of all post-Lisbon EU FTAs. This arguably makes the EU the power broker in multilateral affairs. You could even go as far as saying there is a strategic EU aim to annexe the WTO. Softly, of course.

That I know of, nobody else uses WTO tract as the basis of its FTAs like the EU does unless at the behest of the EU. This makes the WTO the instrument of EU trade hegemony - which also explains why the USA is always undermining multilateralism.

The more the EU converges its trade rules with the WTO, and the more the WTO matures, the more they look and feel one and the same. And that is why Brexit, to a point, presents us with the "double coffin lid". Even on WTO terms the EU is still calling the shots.

So this does present some considerable cognitive dissonance for the Tory Brexit sovereigntists. We have to confront the fact that sovereignty as we know it does not exist as such. We can only really retain the right to say no.

With the USA being fiercely protective of its sovereignty it has a foreign policy objective to frustrate both the EU and the WTO. This then explains why the ultra Brexiters have a fondness for Trump. They have the same attitudes to regulatory sovereignty.

The problem for us, though, is that we very much are dependent on trade and dependent on EU imports for food and energy etc. This is why there is zero chance of escaping the gravitational pull of the single market and SM regulations on goods.

So the choice is really one of how we adopt the rules, what sort of firewall we have, and who gets to adjudicate and on what terms. The most democratic mechanism - and certainty the best (access wise) is the EEA (Norway). Switzerland has to use EU rules with ECJ rule.

The Tories think that they can get a better deal - sovereignty plus "access" plus no fiscal obligations. Not going to happen. This is all on the assumption that the USA is the more attractive market. This is a most dangerous miscalculation.

On trade the USA most definitely has malicious intent and it will be no friend to the UK. America ALWAYS has an America First policy. And though we can say that the EU is corrupt and bureaucratic, it at least has genuine aims of a stable global rules based system.

So this is really a choice between an ordered world with diminishing sovereignty or trade chaos where winner takes all. If its the latter, the smaller fish can expect to be cannibalised. There is wisdom in close trade cooperation with EU.

This though is not an argument against Brexit. The foundation of EU rules are UNECE, ISO and Codex etc as per WTO TBT. We just have to recognise that the EU is a fact of life - and it is not in our interests to unplug entirely as the Tories propose.

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