Tuesday 31 July 2018

IEA: crooked is as crooked does.

Interesting to watch the IEA squirming in the wake of the IEA tapes scandal today. They plead innocence saying all think tanks do it - but actually this is on another level. This could even be considered a corporate coup not dissimilar to the ones we once saw in central Africa.

The IEA is Lawson and his cronies. The IEA claims it does not have an editorial position on Brexit. That is a demonstrable lie. They have gone out of their way to keep the lid on the EEA option and control the debate. They have shown themselves adept at it.

But the IEA is just the front house to old Tory money. Lawson has a dozen MPs in his pocket. These are the same bunch of people behind BrexitCentral and they do it because there are business interests lobbying for no deal or hard Brexit. IEA is only too happy to oblige them.

They are pushing the UK toward ruinous fate and they don't care who gets hurt. They are simply doing the bidding of their backers. In this case foreign interests which is tantamount to treason in my book.

This is all done under the guise of free markets and free trade but this is crony capitalism at its worst with corporate interests setting the UK's international trade policy having its own place-men in the DIT and DExEU.

Not for nothing has Mrs May sidelined DExEU because that department is essentially occupied by the IEA and they have been trying to write the Brexit script from the beginning. Number Ten has had to ringfence and isolate DExEU.

It wouldn't be so bad if they were a legitimate lobbying firm but the IEA is masquerading as an educational charity while mounting a cash for access racket much of it centring on the shady Shanker Singham - the pretender who knows zip about trade.

This is not about shaping effective trade policy. This is the IEA's backers using their influence to tilt markets in their favour which is the antithesis of what the IEA notionally stands for. Its founders would be spinning in their graves.

Methinks Singham is at the centre of this having connections in Washington, thereby acting as a funnel for donations, which is why the toryboys blow smoke up his arse and thicko Tory ministers believe their spin about him.

What you will find though, is that any practitioner in the realm of international trade will tell you that the man's theories are total baloney and as an EU systems nerd I can tell you for nothing he knows dick about the EU and the single market.

If we had an effective standards watchdog in Whitehall they'd put an embargo on Singham and anyone connected with the IEA because we had an entire ministry, a crucial one, effectively under the control of private interests.

Now that crooked Steve Baker has resigned along with Johnson, it is doubtful they have the same access, but they still have the ear of Gove and agriculture is very much in their gunsights because they want to flood the UK market with US crap.

We will then see a bunch of glossy PDFs talking down the risks of hormone treated beef and chlorinated chicken, which is fair enough because its most histrionics, but they are not doing it as a matter of public education. This is very much a corporate agenda.

We'll get all the spiel about how consumers should be allowed to choose but they will skirt around the damage it will do to UK exports by way of worsening our EFSA risk profile - meaning more UK goods will be inspected on export to the EU.

These people don't actually give a toss about what it will do to UK exports or agriculture in general. If UK livestock then so does our arable feed production and then our countryside will turn derelict.

Any which way you look at it the IEA are a bunch of crooks. They've been plotting and scheming to push us into a disastrous no deal Brexit from the beginning - and this is why they keep shifting the goalposts. In days gone by this level of sleaze would bring down governments.

The case for not making a massive fucking pig's ear of Brexit

Just over ten years ago now I have a nasty break up with an absolutely dreadful woman. I left the house with what I could carry in a Volvo estate and shortly after that I was camping on the floor of a motorcycle garage in Bristol with no heating for about two months while I found work. There was no hot water and being on the dole meant I was hungry more often than not. And you know what? It absolutely fucking sucked.

Eventually I managed to find more stable lodgings in the spare room of a young couple with a baby on the way. Nice people. Total goddamn hippies though. The sort who use spiky plastic balls in the washing machine because detergent is harmful to the environment. Don't ask me. I have no idea where they got that idea from. And you know what? That absolutely fucking sucked too. They didn't like me at all and I don't blame either. 

After about two months of that I was asked to move out. I wasn't really a "communitarian" and I didn't want to go river swimming with them or meet their vegan friends. I wanted war films, death metal and bacon like any self-respecting person would. That though, was not to be. I ended up sharing another house with a former GP who'd been stuck off. I have no idea why but it might have been something to do with the fact he was a scary paranoid schizophrenic who wore Spock robes and sandals. And you know what? That really did fucking suck.

Eventually I landed a pretty tidy job at Airbus where I was able to move into a flat but for several weeks didn't have a TV, a chair or even a bed. I used an inflatable mattress and a £6 duvet from the local Sainsbury's. It wasn't particularly pleasant, especially not having curtains or basic cooking facilities. 

But you know, that's the sort of shit you have to go through when you've lost absolutely everything. That's what happens when you've been made redundant and your relationship breaks down and everything goes all to hell. That, people, is why a "jobs first Brexit" is the sort of thing one might consider giving some consideration to. 

It is entirely reasonable and perfectly normal to think that the EU is a monstrous antidemocratic quasi-empire with a voracious appetite for destroying national sovereignty. Similarly it is a natural response to want to tell them to stick their £39bn up their moist holes. I get that. I understand the impulse and yes some things are a lot more important than cheap flights and freedom from roaming mobile charges. Especially when the furthest you've travelled lately is a small village just outside Croydon. 

But see, thing is, we still have to eat. Just a few weeks ago I was reminded what it's like to be totally bloody skint and it isn't nice. A cup of Oxo gravy for your main meal of the day is a most demoralising experience. I do not want that to become the new normal. Being a broke-ass blogger is not at all fun. 

Here we have to recognise that the EU is a powerful political and economic force and we live right next to it. It isn't a good idea to piss them off. What will piss them off is if we waltz out the door flicking V's at Michel Barnier, telling them how we're going to keep our money and catch all our own fish thank you very much. 

Y'see, if we do that, we assume automatically the legal status of third country. That means we are subject to the full force of EU customs red tape. We are no longer signatories to any of the European aviation agreements, and kicked out all cooperative systems. We lose authorisations on everything from airline spares to chemicals and medicines. 

For some exporters this isn't insurmountable but some product cost millions to re-authorise and there's a considerable amount of time consuming red tape to get through in order to do it. That's easier if you're a corporate - but not so much is you are an SME. We will very rapidly find we need various fixes and solutions that require some kind of cooperation from the EU.

Now, keep in mind we have just utterly shafted the EU by leaving a £39bn shaped hole in their financial plans. What do you suppose they might say to that? Moreover, with international law being what it is, the EU cannot make any unilateral concessions to the UK outside the framework of a formal agreement. It may be able to provide some time limited fixes out of enlightened self-interest but it would make a mockery of the entire system if it extended EU level trade preferences to a non member. They just won't do it. 

So yes, I suppose, this is proof that the EU is an inflexible tyrannical monster - but it will be a mess of our own making. That it is difficult to trade with the EU from the outside should come as no surprise - least of all to Eurosceptics who have spent the last twenty years telling us how African producers can't export to Europe. 

The immediate consequence of this is that with the ports in a state of gridlock there isn't any point even trying to ship goods to the EU. That means factories will have to scale back their production and dump their stocks on the UK market. Initially that sees a collapse in prices but soon after, UK produce loses its economies of scale and we start having to pay through the nose for basics. 

Soon after that, we see consumption of luxury items declining along with the jobs that go with it. People simple won't have disposable income. We then face the secondary issues of tariffs imposed on UK produce along with UK processing plants being frozen out of single market supply chains. Fishing boats won't be able to land their catches in the EU. 

Here we should also note that by losing all of our formal trade agreements with the EU, we also lose access to those we had with other countries until such a time as UK bilateral deals can be negotiated - which could take anywhere up to eight years. 

We should also be very keen to note that the UK government is suffering from a considerable competence deficit. If you at all remember the massive pigs ear it made of the FMD/BSE crisis, imagine how well it will perform when just about every regulatory system, has imploded along with out antiquated customs systems. 

Now you could argue the toss and say none of this will happen. Fine. Stick to your guns if you will but the best researcher in the business disagrees with you, and so does the European Commission. Even just rubbing two braincells together it is possible to arrive at the conclusion that severing 43 years of technical, banking, customs and regulatory cooperation is going to have something of an effect. It is also fair to say that millions of jobs depend on being able to export and many of our production lines depend directionless trade. 

There will be some who vehemently disagree with this analysis but they most likely will be ideologue Tory Breixters and not officials, trade negotiators and analysts who actually do real jobs. But let's park that for a moment. We are still having a furious national debate as to whether a particular approach to Brexit will lead to food and medicines shortages or not. There is something of a clue there. The truth will lie somewhere in between. It won't be Armageddon, but it will be a continual stream of bad news, and that will deter investment into the UK. 

Any way you cut it, terminating all formal relations with the EU is going to hurt. But then the central argument for not making a massive fucking pig's ear of Brexit is that we don't have to make a massive fucking pig's ear of it. We don't have to gamble everything. 

The Leave Alliance, of which I am a part, is the only campaign to have produced a workable comprehensive plan. Our recommendation is to leave via the EEA. And this is not because we are soft brexiteers. We took the view that a vision without a plan is just a pipe dream. In beginning the analysis we first had to ask if the vision was achievable and relevant. That's where we first hit problems. The classic eurosceptic free trade mantra hasn't kept up with the times.

This is largely because free trade does not exist and has not existed for some time. A free trade deal is not free trade. It is regulated trade - and we find that in the era of globalisation the driver of intergovernmental trade talks is regulatory harmonisation.

Being that we have, unlike other countries, spent three decades in a harmonised ecosystem, a lot of our trade has evolved to suit that system. So in departing from that system we must offer a viable alternative. That's where things get messy. This is because of the emergence of global standards and regulations which we discovered have enormous influence on what we'd always assumed were just Brussels regulation. This changes the game entirely. It limits the potential and the economic utility of deregulation.

That then certainly leaves a number of Tory Brexiter ideas out in the cold. We could leave the single market and diverge but this is at a point in history when all of the countries we have eyes on are converging on the global standard with a view to trading with the EU.

We then looked at the constraints of the Brexit process where Article 50 puts time constraints on us. Looking at the extent of EU integration there was never any possibility this could all be done in a hurry. From there we took the view that Brexit is a process, not an event. It became clear that forty years of technical, legal, social, political and economic integration could not be unravelled overnight - and in a great many instances, undesirable to do so. So how do we separate the good from the bad?

We then had to do something that Tory Brexiters have not. We thought about what the EU point of view might be and the red lines it would likely hold us to. It became clear that an FTA would be entirely inadequate as either a destination or a means to manage the process.

We therefore needed a framework. A transition. Given the preparations we would need to make, it would have to be a longer term transition. We are still of the view that Mrs May's "vassal state" transition is not long enough. So it became clear that we needed a departure lounge that avoided any cliff edges. Being that the EEA is an available framework covering all the relevant subject areas, it presents itself as the obvious way to manage it.

But then we enter the extensive discussions about the respective limitations of the EEA. Certainly it is suboptimal, but preferable to the alternatives. As a longer term destination though, the UK would probably find such a solution to be too restrictive for our size.

But then there are plenty of avenues available to us after we resolve the immediate issue of leaving. We could either look to negotiate a new relationship and declare our Efta membership temporary or throw our resources at developing Efta.

Since the referendum our understanding has evolved and we have come to appreciate the EEA agreement for what it is. An adaptive framework with country specific protocols. We can use the system to evolve the relationship. By adding our weight to Efta - a respected entity in its own right, with members able to forge their own trade deals as well as having an enhanced preferential relationship with the EU, we can improve the EEA and re-balance the power equation.

We also took the pragmatic view that if we took the step into the EEA there would be no real incentive for the EU to start a new process and a new comprehensive framework for the sole benefit of the UK. Why bother when we can adapt what we have?

In doing so we would be leaving without a vassal state transition which could end up lasting a decade or more, and we would accomplish the first job of leaving the political union while minimising the economic damage. In respect of that, this would honour the eurosceptic view that we want the best available trade with the EU, just not ever closer union and the final destination of the EU. Given the kind of technical integration which is mutually beneficial, it makes sense to keep the EEA.

But this then raises the vexed question of freedom of movement. Our view has always been that leaving the EU is the primary goal and immigration is a secondary issue and we deal with the issues in that order. Take the win and then address the FoM issue.

Here we find that under Article 112 of the EEA agreement there is a mechanism available to us and a precedent which would begin a political process to adapt freedom of movement. So would this be sufficient? Obviously this does not appease the hard liners - but what we find is that we need a full spectrum policy of varying measures because modern immigration control is not done at the borders. We need an entirely new policy on immigration.

At this point we would be better looking to negotiate with our Efta allies for an EEA wide reform of FoM, where combined with voices from inside the EU, we could be kicking at an open door. The point is, though, that we were never going to resolve all of the issues all at once and it will take continual pressure to keep the Brexit momentum going. What concerns us most is securing the first step - leaving the EU safely.

By taking a harder line we risk either being in a perpetual state of transition only to move to a threadbare FTA, sacrificing substantial trade for ineffectual immigration controls which don't really address what people are really worried about. We do not, therefore, see EEA as "soft Brexit". Rather we see it as the most efficient, clean, smart Brexit, taking into account the polticial obligation we have to Northern Ireland and the desire to remain open to trade with the EU. It works and it beats the alternatives.

Now I know all this technocratic stuff is boring, and people are becoming immune to these dire warnings but it comes down to one simple observation. We can have most of what we want without even risking a cliff edge disaster. If it doesn't work out we can always quit the EEA but I'm betting we wouldn't want to.

In the end you can choose not to believe me, but if I'm right, our manufacturing and services take a major hit and soon after tax receipts collapse triggering another round of major cuts to government services and public sector layoffs. The initial three million jobs lost could escalate to five. And it very well could be your job.

Now you may be one of those bloody minded people who thinks absolute sovereignty is worth it. But you haven't thought it through. It only takes a few missed mortgage payments to be out on your arse and pretty soon you'll be living in a spare room in a house with a couple called Lucy and Baz who wear tie-die t-shirts and Indian pantaloons who have Thursday night poetry readings (with tambourine accompaniment) while their crusty mates snort ketamine off a manky old frisbee. 

Meanwhile your days are a special kind of hell where you spend your days walking between job agencies talking to patronising orange tanned recruitment consultants with immaculately polished claws - all of whom are called Jacqui or Nikki for some inexplicable reason. The rest of the time you'll be sat in the park waiting on giro day because drinking cider and shouting at pigeons is preferable to going back to your dismal magnolia bedroom with no lampshade to read a Dean Koontz novel to the sounds of your moronic housemates listening to 90's era psychedelic trance music.  

I promise you that after three months of that you won't care about sovereignty - and if Field Marshall Rommel himself blitzkreig'd his way through Tunbridge Wells you would welcome it with open arms waving your little red swastika flags to usher in the new regime.

The basic point is that when things get shit they get really shit. And things you didn't think would happen to you... happen to you. Recessions are not fun and depressions less so. We all knew Brexit was a risky business and taking a hit to be out of the EU is worth the risk in my view, but nowhere does it say we have to piss away a £270bn a year trade agreement. 

There's a very real risk that if we leave the EU without a deal and the economy goes south you will have to interact with people and be polite to them because you need their help. You'll have to live with other people and pretend to be interested in whatever tedious shit they're trying to get you into. I've been there. I still have the nightmares. I would take the warnings more seriously if I were you.   

Monday 30 July 2018

IEA: A dagger in the soft underbelly of democracy

So what does the IEA tapes scandal tell us about Brexit, specifically the ERG? Well this goes right back and it touches on the TPA and Vote Leave Ltd. It's all the same Toryboy clique...

As ye should know by now the TPA isn't actually a think tank or a tax watchdog. It was set up by one Matthew Elliott as a fundraising sock puppet. That's why Elliott was made Vote Leave boss. He's good at shaking down old Tory money.

And wherever Elliott goes, the same handful of stooges go with him along with half a dozen Toryboy teenagers (see Bennett, Grimes, et al). Elliott likes his young Toryboys. There's a good living to be made running sock puppets. BrexitCentral being the latest iteration.

Many of these sock puppets are based out of Tufton Street. The offices of 55 Tufton Street in Westminster are home to no fewer than eight right-of-centre organisations including Vote Leave and the TPA. Also Hannan's failed enterprise.

There's a revolving door for these groups which is why Darren Grimes is now at the IEA. An old boys network - and Toryboys look after their own. Whenever an MP needs to look like they have prestige they set up a Tufton Street sockpuppet. That's what Owen Paterson's think tank was along with Steve Baker's Cobden Centre, which he co-founded.

Add the IEA - which is just around the corner in Lord North Street - and the outliers and you have a sprawling addition to the Westminster bubble. They attract hangers-on like the Freedom Association and, one-man-and-a-dog outfits like the Bruges Group, which is little more than a PO box. They speak with a single voice because the money only flows if you sing their tune and promote their stuff.

They always intended to be in pole position if ever a referendum was called and so hijacking the Brexit agenda was quite easy for them. The IEA is basically the mothership - backed by Lawson and others and it goes hand in hand with the ERG.

Toryboys, however, are a treacherous greedy species. That's why Elliott and co decamped to The Legatum Institute when it looked like its sponsor was throwing money at it. This is when we started to learn more about Shanker "snake oil" Singham.

And though various hacks take the credit for it, eureferendum.com was the first to have a proper nosey. It was easy to see the disaster capitalism agenda at work. That then snowballed and we started to see a lot of negative press about Legatum - which they didn't want which is why Legatum dumped its entire Brexit team. And where else would the dross end up? Right into the IEA sewer.

Being that the IEA had no trade expertise of its own and no clue as to how to even approach the subject, they viewed Singham as their star signing, despite his reputation already having been tarnished as someone who knows bugger all about trade.

But then he isn't actually in the business of getting it right. He just tells Tories what they want to hear. Being that Steve Baker and IEA Toryboys think he's the dogs unmentionables, they gave him direct access to DExEU. While Baker was there it was an extension of the IEA.

And this explains the hostility to the EEA option. The smartest way to leave the EU. This also explains the damascene conversion of the Bruges Group and Owen Paterson to the WTO option cause. It coincided with Singham's arrival on the scene.

You see, if we maintain regulatory harmonisation with the EU and we don't have the ability to diverge on standards then DExEU Ltd (subsidiary of IEA) can't sell UK trade policy to the highest bidder. Enter the girlies...

This is where you need a slick PR team softening up the public and manipulating Brexiter sentiment. This is why they hire presentable but ever so slightly dim dollybirds like Low Fact Chloe, Hugh Bennett and Kate Andrews. This is combined with the efforts of BrexitCentral.

This puts a presentable front on what is essentially a corporate heist. This is why they keep their output on a very superficial level, belching out all the "respect the will of the people" toss. Their ability to evade substance is actually quite admirable.

They have managed to weave a narrative that the harder the Brexit, the more it respects the vote. And being that Torykip tend to be grunting bigots who can't be told anything, the IEA have essentially enlisted an army of eager retweeters to do their propaganda bidding.

The short of it is these people don't give a toss about Brexit or democracy. Brexit is just a vehicle to exploit and a window of opportunity to make a lot of money. It's a cosy living and it carries prestige within the bubble.

There should be more scrutiny of this little network but the senior staffers of the Telegraph and Spectator are all in some way related to Vote Leave/IEA people and their bullshit suits that of the Speccie and Barclay Beano. Staunch free market dogma.

What has given them a free pass is the shrill tinfoil hattery of Carole Cadwalladr whose splattergun hackery has eroded the believability of much of the story and made it synonymous with the continuity remain campaign seeking to "undermine democracy".

Being that the debate has polarised and has become massively more tribal, we even find Brexiters throwing money at Elliott to bail out his fall guy Grimes. Anti-establishment Brexiters chucking money at the Tory establishment to bail them out while grunting "drain the swamp". Go figure.

As it happens I don't think the VL accounts fiddling is much to write home about. The only difference between leave/remain is remain didn't get caught because nobody bothered to look. The real scandal is the IEA acting as a broker to sell UK trade policy to the highest bidder.

And you know what? The latest revelations, I bet, are only the tip of the iceberg. I strongly suspect the IEA is taking money from the palm oil lobby and others have suggested big tobacco and private health. It's a sordid den of thieves. Ironic that the IEA is the home of libertarian minarchists who have decried crony capitalism for years - and now it turns out the IEA is the living embodiment of it - and the worst offender in Westminster.

Sunday 29 July 2018

The death of the West, one lawnmower at a time

I don't know who said it but someone recently said "Thatcher's greatest achievement was to convince people that a mortgage and a Mondeo on the lag from Costco makes you middle class". I would go with that. But it was more Blair's accomplishment than that of Mrs Thatcher.

The latter half of the Blair administration will remembered as the great credit binge. Cheap borrowing for nation states and consumers alike. I remember it well. At the time I was with a girlfriend who was obsessed with home improvements so I spent many of my prime years going back and forth to the local DIY shop and spending money we didn't have.

It was also the era of retail parks. It was the done thing to waste one's weekends circling for a parking spot at a nearby out of town retail estate to spend money on Christ alone knows what. Everybody was doing it and there was temptation aplenty. We thought we were rich. And compared to the rest of the world, we were. But at what price?

It was in 2007 I realised the game in play. This wasn't wealth. There was no tangible reason why my hometown of Bradford was suddenly awash with cash. As much as the Labour government was spending like a drunken sailor, so were the public. Household debt mounted to record levels. This is where the seeds of Brexit were sown.

Back then if you were savvy and knew how to handle debt as an asset then you could amass a healthy property portfolio, not least because you could run yourself a welfare farm, carving up decent properties into micro-flats where housing benefits would mount up and pay for your retirement. You were, of course, screwed if you missed the boat, and now we find the millennial generation are frozen out of the property market.

The biggest casualty of the 2008 financial crash was social mobility and many are still paying the price for the debts they mounted while being trapped in rental properties paying well over the odds. This of course triggers the generational debate between frugal baby boomers who tell you they existed on fresh air while hoarding every penny and spoiled millennials who expect to have what their parents had while spending money on daily luxuries that weren't even available to their parents.

This debate has spawned a number of lazy stereotypes, some of which are true and some not so much. That's really one for the sociologists. My point is that we have now arrived at a political deadlock where those who did well in that era wish to preserve what they have and vote accordingly, leaving a rump of people in perpetual economic exclusion to eke out a living on insecure contracts.

This in part explains Brexit. In more basic terms, as explained to me by another Yorkshireman... If you have money, you vote to remain. If you don't, you vote to leave. But this article isn't really about that. It's about lawnmowers and other stuff.

Back in those days of plenty, the great millennium credit binge, consumer habits changed substantially. That was the age of 9p noodles, £12 DVD players, computer printers for peanuts and a throwaway culture that didn't know the meaning of make do and mend. The entire retail model was based on shifting huge volumes of consumables on credit.

What is was, though, was a heist. This is why we are now seeing Donald Trump waging a retaliatory trade war. I realised the game in play back in 2007 when I was in need of a lawnmower. Flush with available credit I went shopping in search of the ideal machine. Traditionally one might have purchased a recognised brand like Qualcast. A known British prestige brand (actually owned by Bosch) but still a European brand. Not this time though.

What I bought was a no-name Chinese piece of junk. What suckered me in was the novelty of being able to afford a petrol driven lawnmower. You know, like posh people have. This goes right along with perceptions of class on the basis of stuff you own. An MFI kitchen (on credit), a mortgage and a Mondeo in the drive.

And the thing about this lawnmower was the chassis might as well have been made of blancmange for all the structural integrity it had. Over only a few uses, the pressure from pulling the ripcord while holding it down with the footplate very soon warped the outer housing so that it was no use at all. It was a rip off. A clone made from cheaper, inferior materials built to a far lower standard.

And this is why only a fool opens their borders to Chinese goods. Free trade dogma has it that if you open up your borders to competition then everybody wins. Everybody has cheaper stuff as competition drives down the price. But that's only fair if there is a level playing field. You can only really have free and fair trade with like-minded operators.

What we've done by liberalising trade with China is to open the floodgates to cheap crap built to stolen specifications in one of the greatest wholesale intellectual property thefts of all time. There was never any possibility that domestic firms could compete and now we're in a place where it's nearly impossible to find high quality.

Fast forward a decade and the paradigm still exists only we shop directly from Amazon, where you're very often ordering directly from a Chinese distribution centre, circumventing taxes along the way - where we often find the item is, putting it politely, not as described. So not only have we destroyed UK brands and, driving down overall standards, we've destroyed UK retail in the process. Exactly as China intended. This is all part of the scam. A recent article in The American Conservative spells it out.
A federal judge recently issued a $1.5 million fine to a Chinese wind turbine company, Sinovel, for stealing key intellectual property from a Massachusetts technology company, American Superconductor (AMSC). 
China’s growth into the world’s leader in manufacturing has been largely dependent upon stealing the trade secrets of foreign companies. The details of the Sinovel case demonstrate the severe damage associated with this crime. Sinovel had a $700 million contract with AMSC for the use of its software. However, Sinovel stopped paying for the software in 2011 when it owed AMSC over $100 million.
At that point, Sinovel no longer needed the software because two of its employees had bribed an AMSC tech who had stolen the company’s source code. He was offered close to $2 million, along with a variety of other enticements. The theft devastated AMSC’s stock price and reduced its market value by roughly $1.4 billion. It also forced the company to slash its workforce by 70 percent (roughly 700 employees) and relocate its headquarters to a much smaller venue.
China’s intellectual property (IP) theft costs the U.S. economy between $225 billion to $600 billion annually, according to the Commission on the Theft of American Intellectual Property. Trump cited that estimate when issuing a $34 billion tariff on Chinese goods that went into effect earlier this month.

Of course it never suited UK politicians to counter this attack. Politically it was convenient for them. People felt wealthier and it made the politicians look good. In thrall to the cult of GDP, who could complain at booming retail sales? It also helped inflate our export figures. China would send us ships full of knock off tat and we'd send back containers of waste plastics, notionally as a raw material for recycling, but actually ending up  in Chinese landfill. In 2014, 2015 and 2016 the UK exported 800,000 tonnes of plastic waste a year. In 2014 and 2015, 500,000 tonnes of that went to China and Hong Kong, while in 2016 it was 400,000 tonnes.

We should be under no illusions. China, and to a large extent India, have been waging a silent economic war on the West and thanks to our boneheaded enthusiasm for trade liberalisation come what may, we have allowed them to do it to us. 

This is what makes the Ultra Brexiter Tory policy of unilateral trade liberalisation so utterly horrifying. It's an open invitation to predators to asset strip the UK. This is all the more concerning when Tory "think tank" the Institute of Economic Affairs is selling access to ministers to foreign corporate lobbyists. Moreover, it's one thing to gut the UK of retail consumables. It's another thing entirely to open up our markets to fraudulent and dangerous medicines from China

I've been watching international trade forums for some time now. I know its denizens quite well and they all suffer from the same disease. Spreadsheet sociopathy. Trade liberalisation is a great thing on paper but even its advocates can be found delivering speeches to UNCTAD and the WTO earnestly telling us "We need to do more to ensure that those who are made casualties of globalisation are not left out". Which is a tacit admission that trade liberalisation is devastating to industrial communities.

We therefore have to ask before signing any deals what we actually value and who actually gains from liberalisation. If it means a race to the bottom in standards then the consumer doesn't benefit from it and all we do is hand over lucrative UK industries to Chinese and Indian criminals. 

In fact, for all that the EU is often described as "protectionist" it hasn't actually been particularly good at protecting us from predators and though we might welcome FTAs with allies like Canada, signing up to a similar deal with India when there is virtually zero chance of them sticking to their promises and their treaty obligations does not sound particularly clever. 

It really comes down to the question of what sort of country do we want to be? What are we building here? I'm all for repatriating trade and taking back control, but certainly not to accelerate globalisation making us entirely dependent on imports. It's bad enough there is so much systemic risk in just leaving the EU. Trade can just as much be a tool of social policy as industrial policy. It is a question of what we value. 

The millennium credit binge changed attitudes and behaviours in the UK and not, in my view, for the better. It has made us wasteful, spoiled and greedy and the consequence of that is the hollowing out of British conservative values while we hand over our capital assets to China. 

And if this sounds like a case for protectionism, yes it is exactly that. Free and fair trade on a level playing field with our allies is a good thing. Wholesale sell-your-own-granny liberalisation is not a vision I want any part of. Yes, protectionism means some things stay expensive, but what if some things should be expensive and what if it isn't good to have a throwaway society where people do not place a premium on the things around them? What if it's better to have inefficient farming to keep our countryside the way it is rather than becoming a sea of plastic greenhouses and Chinese solar panels tended by an immigrant slave class?

In respect of that, leaving the EU of itself is not enough. If the faceless technocrats in Brussels cannot be trusted to safeguard what we value then that goes double for the free trade fetishists on the right of the Conservative party who are evidently interested in conserving precisely nothing. 

I am of the view that our country is a precious inheritance and we are for a time custodians of it. The role of politics is to preserve the best of it for generations to come - be that landscapes, communities, coastlines and industries. Politicians of yore had no business handing over decisionmaking to Brussels - and the very last thing we want to do is open it to unfettered globalisation. The Tory right would have us take the brakes off.

We are now entering a new age. Make no mistake we are in a trade war and by leaving the EU we will be fending for ourselves, but it's not a trade war started by Donald Trump. This has been a sustained attack on the West over decades and because trade has slipped out of the public lexicon - thanks to offshoring it to Brussels, we have been blind to the threats. 

This, therefore, is the very worst moment in history to set upon a Tory free trade experiment which amounts to unilateral disarmament in a war we don't even know we are fighting. It could very easily do more damage than anything Corbyn's mob could imagine. There is something far larger at stake here. If the worst Corbyn manages is to mess up the railways and nationalise electricity and water then that is hardly a crying shame. Compared to the zealful designs of Tories with a head full of free market dogma, the evil that is Labour might well be the lesser of the two.

Friday 27 July 2018

Same old story...

Me for the Farmer's Guardian...

For all the noise made about the so-called Chequers plan, there isn't much point in poring over the details of it. It is essentially a tacit admission by Mrs May that the UK does need the single market, but she refuses to remain a member of it thus seeks to reinvent it, omitting the bits that will land her in political hot water.

It turned out to be a complete waste of time since it enrages her back-benchers who have once again shifted the goalposts - and there is nothing the EU could agree to in any instance. It's cherry-picking. Politics being what it is though, the government has to go along with the pretence that it's a viable proposal until the EU explicitly rules it out.

The problem is that the EU is not going to do that. Michel Barnier has made robust observations in the form of questions to be resolved by Mrs May. The subtext, though, is less than subtle. It's a no from them. He's just not going to come out and say it.

To rule it out would trigger another round of hopeless bickering in Downing Street, further weakening Theresa May and risking a walkout. Instead the EU will play it safe having concluded that they simply won't going to get a workable proposal from the UK and that the time is best used preparing for a no deal outcome.

The problem is that the proposal seeks to carve out a goods only single market, which doesn't really solve the problem for the UK. The sale of goods and services often go hand in hand and the single market is an interwoven system relying on a number of mechanisms from mutual recognition of conformity assessment to recognition of qualifications. It's more than just a waiver on border inspections.

This is something Number Ten has never really grasped. There is a near total incomprehension of how the system works which is why they don't understand the EU's apparent intransigence. They can bend the rules and they can fudge a few things but they will not break the rules for the sole benefit of the UK or do anything that would weaken system integrity.

What Number Ten has attempted to do is to leverage the Northern Ireland backstop as a whole UK solution - a Trojan horse which the EU has already declined. It is already having to bend a few principles just to make the backstop work.

The short of it is that if the UK government wishes to enjoy the benefits of the single market then there are obligations and costs that go with it. Frictionless trade is not possible without full regulatory harmonisation. Unless Mrs May has a eureka moment in the bathtub this process is going nowhere.

It would take a fundamental shift of philosophy for the EU to accept the proposal especially when such a proposal would require a unique body of law and new institutions to govern it. When it already has the EEA why would it commit such resources?

Meanwhile we are unlikely to see a shift in Mrs May's philosophy either. She painted herself into a corner with her Lancaster House speech, ruling out the single market, and in so doing made it almost impossible to row back on her words. She has doubled down on leaving the EEA every time she's been asked.

Being that neither side is politically capable of shifting, and without a change of administration here in the UK, there is a vanishingly small chance of concluding a withdrawal agreement. Since there is a high probability of an ultra-Brexiter taking Mrs May's place were there a leadership contest, and with the ultra-Brexit propaganda machine running round the clock, there doesn't seem to be much hope.

It now looks very much like we will reach a crisis point where everything depends on the realpolitiks in the final hours. Somebody has to blink - and it won't be the EU. Should we then crash out we will be back here again with the EU insisting on the original financial settlement and the Northern Ireland backstop just to reopen talks.

There really is only one way out of this mess and that is to rejoin EFTA and retain the European Economic Area agreement. The UK will see a major cliff edge without a comprehensive framework for trade and a bog standard free trade agreement just won't cut it. Eventually that reality will dawn on the government - but we may have to learn the hard way and crash out before it does. It will be an expensive education.

Tuesday 24 July 2018

There is room for optimism... sort of.

In a way, the appalling drivel from Brendan O'Neill yesterday served a function. And being a polemicist he might well have intended it to serve that function in that it is roughly representative of what the average Brexiter thinks. A recurrent theme is that the EU is not being especially accommodating and is totally inflexible.

What we are seeing though is the EU safeguarding its own sovereignty and we are just experiencing EU power from the opposite side of the table. It has a system of rules and third countries have to respect them. the EU is capable of fudges for politically sensitive issues like Northern Ireland and Cyprus but does not see why the UK has unique circumstances, nor does it see a case for special treatment.

From a purely technocratic perspective I understand and respect the EU point of view. It is a technocracy run by technocrats and we should expect it to behave as one. Expecting pragmatism from the EU is like expecting an intelligent comment from Kate Hoey. It just isn't going to happen.

Moreover, while we talk of the UK's unpreparedness, the EU wasn't really prepared by for this either. Article 50 was never intended to be used and it's a singularly dreadful piece of treaty law. But it is what it is and it will abide by its own rules.

And that's the real problem here. The situation is not yet acute enough to put the EU into fudge mode. The EU never responds in a timely fashion but emergencies do get it moving and taking shortcuts with the rules. I think that is where we have to get to before we start seeing sense.

Over the last few days I've seen a steady drip of article in favour of the EEA option in the Telegraph, Times and elsewhere. That tells you they are starting to panic and the penny is finally dropping among some of the dimmest in the legacy media. It therefore exists as a political artefact.

This brings us to the matter of EEA membership. It is understood by both sides that when we drop out of the EU we are also out of the EEA, but it still exists in a legal grey area where it could be the first port of call for disaster recovery. It could be reactivated were there the political will. I expect the UK would have to settle the financial question first but that was always going to be the case.

As mentioned before, there is no possibility that "no deal" can stay "no deal". We will have to rebuild formal relations with the EU. And when it dawns on us precisely what is affected and how, and leading Brexiters can no longer grunt "project fear", traditional opposition to the EEA will melt faster than icecream in this weather we're having.

If there is a political agreement to secure EEA membership we can then have some intermediate fudges which are more generous than we could otherwise expect. Whatever arrangements exist for the so-called vassal state transition can be implemented as a framework to negotiate re-accession to the EEA.

The point being that there is no end point of EU-UK relations. It will be a continuum for as long as the EU exists. Brexit does not make the EU vanish into the ether much though we may wish it did. If we crash out we still have to sort something out and it necessarily has to be a deep and comprehensive relationship.

This is not to say that a crash out is not a disaster, but there is no reason why it has to stay a disaster and there will be more room to manoeuvre politically when the Brexiteers stand utterly discredited. There are the tools available to salvage the situation. We just need to be in a space where politics takes precedence over red lines and rules.

Moreover, it was always going to be the case that the toughest decisions would be made in the final hours. There is still time to avert a crash out. We just have to go through the motions of watching the Chequers deal fall flat. Attitudes may shift when presented with a binary choice between a crash out and the EEA. With Mrs May having "taken back control" of negotiations, she may turn yet, humiliating though it would be for her.

This is all speculation and your guess is as good as mine, but we have the time and the space over the summer recess to further erode the standing of the ultras. We may lose this battle, but for as long as there is breath in my body, we shall not lose this war. I am not surrendering to a pack of Tory crooks.

Additional: If the Guardian has the nerve to ask for donations for the crap they produce then so do I. Please give if you can

Monday 23 July 2018

The sad death of Brendan O'Neill

If you want a masterclass in state-of-the-art stupidity you could do no worse than the latest dribble from Brendan O'Neill in the Spectator. This is not the work of an intelligent individual. It's someone who's giving up thinking for the duration and is content to follow the flock.

For one who regularly coins the term "chattering classes" and you could not find a more conventional, boring, predictable take on Brexit - having taken zero time out to attempt to understand the issues. Every consequence of Brexit is project fear, it's all the EU's fault and every job is expendable.

Course, you'd have to be a well pampered, unencumbered (dare I say middle class?) hack to casually brush aside decent paying manufacturing and tech jobs. People in the real world, though, have a lot riding on the outcome and will have taken the time to understand why their jobs may be threatened.

As it happens, should we crash out without a deal, the UK becomes a third country with no formal relations with the EU. As the EU Notices to Stakeholders point out, on Brexit day the UK has no special status within the Union and certifications and authorisations for all manner of products and services are rescinded.

This means my former Airbus colleagues will go into work as normal to design repair solutions for in service aircraft only to find their work is not authorised and is uninsurable. Since many are self-employed contractors there will literally be no work for them to do. Similarly if aircraft lack the necessary permissions and market participation rights they will not fly.

What escapes O'Neill is that we were in a treaty system. We decided to leave it - and now we want to mitigate some of the consequences of that choice - as is entirely reasonable. We want to have alternative arrangements in place before we actually leave. Now that we are leaving the PM has, to a point, understood that regulatory cooperation is required for the continuity of trade.

In this the UK feels entitled to concessions and waivers to EU and international law. The PM has effectively demanded that the EU unilaterally breaks its own rules for the sole benefit of the UK. What are they supposed to say to that? This is a legal system in which the UK played a considerable role in designing, and now the rules are inconvenient, we are demanding, as an ex-member, that the rules should be changed. Arrogance only a Tory is capable of. 

As to the "threat" that there could be civil unrest, I rather imagine that, if through no fault of my own, my job stopped existing and was unable to pay my mortgage or support offspring, I would be somewhat irritated. 

Moreover, if indeed airlines are grounded, causing a shockwave to the secondary and tertiary sectors who depend on Heathrow operating at full capacity, all those people on decent shift pay will suddenly find themselves on involuntary sabbatical. They won't be pleased to say the least. Angry even. Indeed, were I a Shropshire farmer operating on already narrow profit margins I would be looking to cut off Owen Paterson's balls. 

After a few weeks of that credit card payments are missed, mortgage payments defaulted, and direct debits bounce all over the shop. One assumes that Brendan O'Neill has never had any adult responsibilities thus cannot conceptualise what it's like to lose a job your family depends on.

O'Neill goes on to describe those of us concerned with supply chains as akin with "those crazy survivalists in the US whose cupboards are stuffed with tins of beans and soup for the coming war with the government". "Britain’s anti-Brexit middle classes are wondering out loud if they should stockpile medicine and water".

Again this is an insight into O'Neill's lack of adult responsibilities. My sister, for example, is quite concerned that there should be a stockpile of insulin for her diabetic son. As we are leaving the European Medicines Agency, having made insufficient preparations to run our medicines regulator as an independent entity, there is a good chance product approvals will run into similar problems thus cannot be sold legally even in the UK. 

Of course, common sense will prevail, eventually and we will sort something out - even if it's a temporary agreement with the the EU, but acute diabetes attacks can't wait a fortnight until trade negotiators can sort something out. Given how shambolic everything else has been, would you take the reassurances of this government?

Nor is it unreasonable to stockpile food. We saw during the fuel protests in 2005 how rapidly shelves were cleared of pretty much everything thanks to panic buying - and with fuel rationed, it was some time before stocks were replenished. That's probably not going to cause much of an upset to a south London resident, because London always gets what London wants. It is, however, something of a problem for rural communities who face lengthy drives into the nearest town.

It is entirely conceivable that, when all produce is subject to standard third country controls, lorries will back up and be out of commission - and pretty soon you have a backlog of manual customs declarations because the software can't cope with the new customs regime. It isn't designed for it.

Meanwhile questions remain over diesel and gas supplies and access to the electricity interconnectors - so unless the government has a hell of a plan B there is no absolute guarantee that we can keep the lights on. The chance of outages may be remote, but it has been known to happen. A mishap at sea in 2008 damaged an interconnector which saw spot prices skyrocket. It only takes something small to throw the whole system. 

This is certainly not the handwringing of grief stricken europhiles. You know who it is who thinks about these things? The lorry drivers, the cooks, energy buyers, pilots, customs officials, doctors, hospital managers, parents, small business owners and yes, corporate bosses. Everyday people who produce things. Adults... ie not people like Brendan O'Neill. 

And who does O'Neill blame for this? Not the the Tories. Not the Tories who triggered Article 50 without having held a consultation or having agreed a coherent negotiating position. Not the Brexiteer Tories who steadfastly refused to have a plan or even acknowledge these issues must be addressed. Not the Tories who have whinged about EU membership for all of my adult life who in the end haven't the first idea how the system works. Not the Tories whose supreme arrogance holds that the EU's frontier controls should not apply to them after exit. No, it's all the EU's fault.

It's the EU's fault for not driving a horse and cart through its own system of rules. It's the EU's fault for not breaching WTO principles. It's the EU's fault for not granting the UK the sole authority to decide the lowest bar of European market entry

In the mind of a simpleton airspace is something that just sorts itself out. Customs formalities can be eliminated by just signing a waiver. Certifications and authorisations? Who needs them? What on earth could the problem be? Why are all these highly qualified officials making such a fuss? Bloody jobsworths! 

This is the asinine kippery which has dominated the debate for more than three years, believing that though the EU has taken over the technical governance of just about every sector, unpicking forty years of systems integration is all undone at the stroke of a pen. Who needs fancy book learnin'?

Still, when you're a man-child like Brendan O'Neill who will never be responsible for anything of consequence, it's all so easily dismissed. The livelihoods of millions are just a pawn in an internet culture war which most of the working class is only dimly aware of. The politics of the chattering classes is about to shit on their lawn. 

The EU is not making this difficult. They've been up front from the beginning. Even as an ardent critic of the EU I can admit to that. They have made their red lines and principles known and have set out the choices. We can have frictionless trade but there are obligations. If we want fewer obligations then we can expect fewer rights. They've even given the UK the time and the space to devise a legally workable alternative. Instead the UK has dithered, bickered and refused to engage in the reality of our predicament. 

When we should have had an open and frank discussion we have seen mendacious propaganda attempting to polarise the debate, whipping up hysteria at the very suggestion of practical concessions. There was a time when it was common for eurosceptics to speak with misty eyes about rejoining Efta. Now the narrative has shifted to the point where anything that isn't a total demolition of EU relations is somehow a betrayal of Brexit. O'Neill is an accessory to this deception.

It's been interesting to watch a man who was once a thought leader become the most conventional and conformist voice of all. A man who doesn't deviate from the Tory establishment script, refuses to investigate or enquire, displaying no innate curiosity, having learned precisely nothing about the functioning of the EU amidst three years of intensive debate. It all bypassed him completely.

These are pathetic sheep bleating about something they haven't the wit to understand. Thus, they all huddle together making much the same noises, unable to express anything approaching intelligent sentiments. O'Neill here has suffered a death from the neck up. He has chosen to disengage his brain at a pivotal point in modern British history, choosing instead to engage only on the most superficial level and details be damned. It marks the death of a once promising thinker. Rest In Peace, Brendan. 

Trade: we cannot trust India

As all eyes in the UK are focused on Brexit, many are asking what form will our future trading relationships take? This is where the UK will run into trouble. We may be a ranking economy but in terms of market size we don't have the same clout as the EU and we will have to choose our relationships carefully.

This is where reality will collide with fantasy. Our Conservative government is presently obsessed with "free trade" without really knowing what that means. The basic assumption is that a free trade deal is essentially the elimination of tariffs but modern trade is considerably more than that.

A typical trade agreement will now have mutual obligations to converge on standards and will seek to promote the mutual recognition of standards and qualifications in order to facilitate cross border trade. Very often this includes the visa relaxation for trade in services. The UK may want to export its cars to India while India wants to export IT managers and developers.

There's a problem here though. A big one. Britain is particularly sensitive to immigration right now even if it is limited to skills-based immigration. Some just don't want foreigners and others don't want the competition. And I can see why on the latter point. Indians work harder for longer for considerably less in the UK.

But there's an even bigger problem. India is not presently a good country to do business with. Central to any supply chain is trust. Efficient logistics depends on eliminating customs formalities such as inspections and audits. That can happen when both parties trust each others inspectors and standards but that is unlikely given India's track record especially in the food sector.

Food adulteration acute. This is the process in which the quality of food is lowered either by the addition of inferior quality material to bulk out the weight or by extraction of valuable ingredients. It includes intentional addition or substitution of the substances but also biological and chemical contamination during growth, storage, processing, transport and distribution of food products. In India it is an epidemic.

Far worse than this is fake and adulterated medicines, often lethal, which again is a serious concern. As much as procedures are not followed and standards auditing is poor, local officials are very often easily bribed and paperwork is often forged. They may get away with it for internal trade in goods but it won't wash with international trade - and UK customs officials will likely place India on high risk listings meaning a higher rate of expensive and time consuming spot checks and inspections.

Meanwhile, Western consumers tend to be fussy about animal welfare standards and labour conditions. We want to know that the clothes we wear are not made by child slave labourers and that workers get a fair day's pay. The UK would likely demand that India commits to the conventions as set out by the International Labour Organisation.

The problem there again is there is no reason to believe the Indian government will actually uphold and enforce these standards. Similarly on trade in services the UK would be opening itself up to a wholesale theft of intellectual property. India is also unlikely to honour commitments on data protection. 

All the while it is difficult to see what broader geostrategic game India is playing. India is determined to built up its own defence capabilities and is keen to produce its own fighter jets without relying on the West, and much of their defence spending is on Russian equipment, which is usually an indicator of where loyalties lie. There certainly isn't much hope for UK defence exports. 

All in all we could very easily get the impression that India doesn't like us very much and in some respects I don't blame them either. But actually if India wants to claw its way into the modern trade arena it will face these same questions from others. As China evolves further into a market economy they will likely start making demands of their own in terms of standards and with a growing middle class there will be similar ethical requirements built into trade deals. That would be ironic since China plays equally dark games.

Ultimately production standards and their enforcement are not bureaucratic hoops to jump through. they enhance life quality and improve the profitability and reliability of supply chains. Without good technical governance importers will buy from India, but only once if they are being ripped off. Scammers are also endemic to India. 

Reading around the subject we I have seen that Indian officials very often have fake qualifications bought off the black market so there is little possibility of recognising Indian safety systems and inspections as equal and the lack of security at ports often means goods are substituted or simply stolen. 

India may have secured a reputation as a rapidly developing country but in some circumstances India is regressing and securing a reputation as dodgy dealers. It will, therefore, struggle to be treated as an equal by the West. Worse still, one suspects the Indian establishment doesn't even care. They are only interested in trade insofar as they can exploit it for criminal gains. This does not bode well for future relations. 

Over the last two decades we have seen an explosion of global governance and international standards and increasingly the World Trade Organisation is becoming the focus of global trade regulation. The WTO has no real power as the system works on the basis of good faith. the WTO can greenlight certain retaliatory measures against predatory trade practices and is respected as a neutral body.

That though could soon collapse if faith is eroded in the system. Western media tends to focus on Donald Trump's unilateralism and continued attempts to undermine the WTO, but both India and China are doing it in far more subtle ways. Effectively if China or India sign an international agreement with a number of domestic obligations, the chances are it's not worth the paper it's written on. That will ultimately erode faith in the system.

Typically an agreement will come with data reporting requirements on everything from wildlife habitat sustainability through to metrics on deforestation or air pollution. What we find is the reported figures are very often fraudulent where governments will turn a blind eye to the grubby practices of timber firms and palm oil plantations. One scam is to have criminal gangs start illegal clearance fires in rainforests so that the local authorities can certify the land as available for commercial exploitation. 

It is little wonder then that even the EU has not been in a rush to develop a comprehensive formal trade relationship with India. The European Food Safety Agency often reports that Indian seafood is not fit for export. Illegal fishing is also a major concern. Similarly there is zero basis to trust India on financial services. If ever a deal is negotiated there is a strong chance consumer groups will pressure the European Parliament to reject such an agreement. 

There is no polite way of saying it but India is a corrupt country from top to bottom. It is a caveat emptor society ever keen to exploit the unwary customer. This is why UK consumer groups will raise the alarm if the Conservative "free trade" brigade even think about cutting corners on standards. If parliament gets a say then they will likely shoot it down. 

I don't really see much scope for enhanced trade relations with India in the near future and many of these issues apply also to Malaysia, China and a number of African countries. Ghana and Malaysia are making marked improvements by engaging with the global system and there is a sense they are acting in good faith. Not so for Nigeria and certainly not India or the Middle East. Half the point of free trade agreements is to improve the quality of trade and enhance the reliability of supply chains. This is not possible if the fundamentals are not sound.

The UK can do a lot by way of technical assistance with foreign aid, but there we find there are still transparency issues and though we can supervise supply chains, they revert to type the moment our backs are turned and dishonest practices start creeping back in. As mentioned before, the key component of any value chain is trust and in many cases governance is so corrupt that any attempt at creating lasting value chains is utterly futile. 

Free trade may sound like a laudable goal, but in reality it's just a slogan, and if there is a path to a "global Britain" it is a long and slow, incremental one where we can expect no miracles. We must proceed with caution and patience. Trade with India looks superficially promising but there is a long way to go before we can say we trust them.  

The EEA is the only intelligent Brexit

The UK can get most of what it wants by agreeing to the EEA. It creates a stable framework which can be introduced in stages as each country specific protocol takes effect, creating space for continual negotiations - allowing us an independent trade policy almost immediately.

The first priority is to deal with the administrative act of leaving the EU. Subsequent issues can be refine and negotiated precisely because the EEA is an adaptive framework. The issues can be ironed out over time. It's better than a perma-transition vassal state.

The EEA would provide a great deal of legal certainty for business, ensuring that the regulatory environment for trade remains intact - allowing them to remain in the UK and resume their investment plans.

Because the EEA is an adaptive framework there is scope for negotiated opt outs and managed divergence in those areas where the UK doesn't do that much trade with the EU. In most cases it would be unnecessary as the EU and UK will conform to the global standards and rules.

This would take roughly three to five years to arrange but that;s our fastest way out of the EU short of severing all formal relations with the EU - which nobody gains anything from apart from the disaster capitalists on the Tory benches.

Once the core of the EEA is agreed we then look at introducing controls on FoM via Article 112 - which starts of a political process whereby a new settlement can be agreed. That though is a secondary issue in that the mandate was to leave the EU. We must deal with that first.

In the future we can then host talks with other Efta states with a view to broader reforms of the EEA to allow members more scope for divergence in their areas of interest. Efta+UK is a power in its own right and could be more assertive than it is.

Right now it looks like there isn't going to be a deal but we still have time to raise the alarm. The only people who believe the WTO option is viable are Tory cranks. We can turn the weight of public opinion against them.

It should be noted that if we do crash out without a deal then it certainly can't stay that way. We will have to rebuild formal relations with the EU somehow, and even at that point the EEA is the most intelligent recovery plan.

The chief benefit of the EEA is it significantly reduces the workload of Brexit not least the legal engineering involved in technical regs. We have enough to be getting on with since EEA still repatriates trade, aid, fishing, agriculture and a number of other competences.

Though the EEA is nominally an off the shelf solution it still ends up being bespoke and there will have to be a lot of renegotiation just to make the system work in light of the UK's unique circumstances. We need a comprehensive framework and only the EEA comes close.

The short of it is that no FTA is ever going to be comprehensive enough and an FTA still means becoming a third country so there is still a cliff edge there and we will lose a lot of EU trade unnecessarily due to an increase in costs and customs red tape.

Moreover, the EEA avoids the need for a NI backstop. It is a whole UK solution whereby we can adopt the Union Customs Code and work out a chapter for rules of origin, thus avoiding the need for a customs union - which would be total overkill for the little it does.

If there are then special needs for NI, which to me seems unlikely, we can negotiate an NI annex in the EEA but this would not leave it as part of the EU customs territory. Objections to this would be unreasonable.

The UK has had plenty of time to come up with an alternative proposal but has failed to produce anything coherent and certainly nothing the EU can agree to. The EEA is really the only realistic mode of exit if we want to avoid wrecking the UK economy.

Moreover, the UK would be a proud participant of Efta and it would be an excellent platform from which to launch our future trade strategy. It would also quell calls for Scottish independence and preserve the Union. The SNP leader has also called for an Efta solution.

If we crash out then we will only end up back here again, and the EU will not reopen trade talks without first signing off on a financial settlement and installing the proposed NI backstop as it currently stands. We therefore gain nothing by crashing out.

At that point the EU will then drag its heels while it cannibalises UK market share and the political limbo will see a gradual bleed of investment into the UK. We then get eaten alive in future EU trade talks.

This is why the EEA is the most sensible since the backbone of the trade aspect is already agreed for the most part which would remove the opportunity to cannibalise UK trade or freeze us out of specific sectors. If we end up negotiating from scratch we're the weaker side.

The EEA is only 27% of the EU acquis. It leaves trade governance intact and most of it is based on global treaties and standards we would adopt anyway so there is little point in wailing about being a "rule taker" which isn't actually true anyway. The UK will have a say.

The EEA is the closest there is to a clean Brexit because everything else is a very long and messy process which will do enormous and unnecessary damage. Moreover, the EEA is designed for continual re-evaluation so the process of Brexit can be flexible and continuous.

More to the point, because the EEA is an adaptive framework everything in the agreement is negotiable to an extent. The best way to "cherrypick" from the single market is to actually be in it.

Saturday 21 July 2018

Britain is about to get a kick in the complacency

Attempting to raise the alarm over no deal Brexit with a view to preventing it is pointless. One quote on Facebook this evening is pretty typical of the attitude I frequently encounter. "Most Brexit issues is something that could be resolved in a day with a bottle of tippex, a biro and a photocopier". Similarly we see warnings described as akin with millennium bug hysteria. The Tory spin machine is in full effect and is gambling on everything being alright on the night.

For an ordinary voter it's easy to see why there might be such disbelief. That which is governed by the EU pertains mainly to invisible government. Those systems and functions you would never know are there until they go wrong. Our inter-dependency with EU systems is something which has been engineered over decades behind the scenes with no real media attention.

When it comes down to it, this stuff is not all that interesting. The public don't really expect to play a part in such things and is only really interesting from a professional perspective. Nobody really cares how power stations work or who owns them just so long as the lights stay on. Few know about gas pipelines and sub-sea cabling and interconnectors and virtually nobody is interested in aviation treaties and airspace management.

Moreover, single market systems have been established for so long that few ever remember things being all that different. For as long as I've been alive we've had all mod cons and fully stocked supermarkets. Nobody ever really stops to ask why or how. Similarly medicines and pharmaceuticals approvals are seldom ever in the news unless there is a major breakdown or a corruption scandal.

Should we drop out of the EU without a deal, becoming a third country overnight, a lot of this will simply stop working - or continue working but only half as well. There is actually a bizarre irony here. We eurosceptics have been warning for decades that we risk becoming so far enmeshed with the EU that we have no control - yet they seem to think we can unplug overnight and everything will be fine. Then there's the hypocrisy of the remainers who have claimed in all this time that we never lost our sovereignty but they are the ones now warning of the dangers should we leave without a deal.

As much as the public is about to get a shock, the apparatus of industry and government is likely to be surprised too. We've heard various testimonies from industry bosses, many believing things will be manageable. Even civil servants have expressed undue confidence.

As to exactly what will happen, nobody is quite sure. Senior voices within the EU have doubled down on their commitment to having no border in Northern Ireland which means there will have to be unilateral waivers - but legally this is not sustainable and any measures will be temporary.

We may see a patchwork of agreements standing readily if only to minimise the impact on the EU and to avoid civil emergencies. The stoppages may won't happen overnight as many expect. It will take some time for direction to filter down to front line services and customs offices. That's when the fun starts as we find we have neither the systems nor the software to manage - leaving exporters with invalid paperwork and customs officials unable to issue new documentation.

If there has been any kind of contingency planning then it is possible that we won't see tailbacks on the motorways which Brexiters will claim as a victory, but this will be a result of lorries not even setting off from warehouses. Whether or not the airports are hit by Brexit overnight remains to be seen. It can't not have an impact.

Whatever turmoil there is will be as much to do with not knowing what the new legal circumstances are. This is something very easy to get wrong and the flow of information from the government is not likely to improve. All we have to go on is the EU's own notices to stakeholders. We are looking at a mass failure of government communication - not least because they have no idea.

It really goes one of two ways. Either it's an overnight calamity which gets progressively worse or it's a slow motion implosion over many weeks and months. Job losses will be the trailing indicator so it will be a while before we start seeing the fullest of the fallout.

How long it takes to salvage anything of it really depends on what happens politically. The EU will not be forthcoming with any rescue deal until the matter of payments, citizens rights and Northern Ireland are resolved. Things may be so dire that whichever administration is in power will immediately sign up to the presently rejected backstop for Northern Ireland. The rest is anyone's guess.

Here we may see attempts to leverage the NI backstop as a whole UK solution, this time with pressure from EU member states, but again much will depend on the politics of the situation and how the EU leverages our predicament. It will not be generous and France will likely be happy to stick the knife in and twist it if it means cannibalising UK market share.

Much is going to depend on who is in power after we crash out. If May is still Prime Minister on exit day she will have no choice but to resign. We are then in uncharted waters as the Tories fight like rats in a sack. Whoever wins will inherit a poisoned chalice and will be faced with continued post-exit talks with the EU from a much weaker position. We can expect an early general election.

From there politics takes over. Rune-reading is largely futile when so much is in flux but I think it is safe to say that we approaching the death of the Conservative Party and there will be a bloodbath. Those Tories who joined Labour for £3 just to vote for Corbyn will get their comeuppance. For the first time in a long time Tories will be punished for their supreme arrogance.

But then everyone is going to get something of what they deserve. The Remainers who lied through their teeth about the Norway option will live to regret their lies. The Tories who were too meek to speak up and went along with the ERG herd will have to account for themselves. So too will media personalities on the right who blithely told us none of this could happen. Moreover this will be punishment for those individuals who side with their own tribes come what may.

There is now a crushing sense of inevitability to all this. It will open the door to years of political turbulence that will trash politics as we know it. And that is no bad thing. Politically Britain is fragmented several ways and nothing on the ballot paper is deserving of a vote. We need a clear out. We won't see economic revival until we see a return to political coherence.

This, I believe is the primary purpose of Brexit. I do not share in the Brexiter sunlit uplands narrative nor do I believe Brexit holds "exciting opportunities" for the economy. Far from it. More than likely it will be an accelerant to may of the underlying trends we've been seeing for the last few years - pruning many of the zombie industries.

We've seen a hollowing out of the high street with cherished and prestigious brands going under, all the while we see our towns dying, libraries, police stations, pubs, shops, bingo halls and banks vanishing. We see half-baked state funded initiatives to revive the high street but there is something more fundamental going on that our existing politics cannot fix. Our current political settlement is concerned only with propping up a decaying status quo - delaying the inevitable and storing up problems for later.

We are approaching a new age and a new industrial revolution with the traditional models of work collapsing, along with modes of saving like private pensions. Automation and internet have opened up a new world that we don't quite know how to live in or finance. All our politics ever could do is hold the line and prop up the old order.

It's easy to see why people don't care much about the prospect of losing crown jewels like Airbus when increasingly they are multinational companies with no loyalty to their host nation and no longer hiring locally. Many such companies are sustained with subsidy and government contracts as part of a vast job creation scheme to keep the middle classes sufficiently mollified. That model is already living on borrowed time as European industries are now facing real competition - not least from China.

For those nostalgic for years gone by, Brexit is unlikely to be a corrective. The working class culture many pine for is probably gone for good along with the jobs that sustained it. The days of mass employers are coming to an end and somehow we have to make the new paradigm work. This is why we are seeing socialist ideas returning to the fore along with universal basic income. This is all to be decided in the coming months and years. These are questions even the EU will have to grapple with.

Cuts to public service in recent years have proven unpopular, and ordinary people lament the loss of their communities, and the remainers answer has always been to try to stop Brexit and instead invest in the regions. The problem being that as much as the trends are irreversible, the current settlement is primarily the cause of it. While there is no turning back the clock, we cannot go on like this.

Over the course of the last two years I have explored on this blog a number of social factors contributing to Brexit, and my observation informed by growing up in the north of England, supplemented by commentary from Paul Embrey there is something to be said for the human need for community, identity, tradition and family, all of which are attacked by the transience of modernity and the turnover of people - which explain the demands for controlled immigration. This, though, is another global trend.

Governments all over the world are trying to reconcile the demands placed upon government, not least health and social care, and immigration has been their sticking plaster. That too must come to an end. Much of the burden we place on the state is because of a middle class reluctance to spend their own money (tied up in assets) on their own care. The NHS is a vast middle class subsidy locking in high property prices and gradually freezing the young out of ownership.

This is where Brexit, of any flavour, is going to force unpopular decisions in respect of care costs and the NHS as a whole. Mrs May might well have lost her majority over the so-called dementia tax, but it's coming all the same along with a raft of other measures that will enrage the middle classes and the left (which is increasingly the same thing).

The remainers have tapped into the notion that the ultras mainly want Brexit so they can demolish the NHS - which might well be true - and another reason why the left have attempted to turn the NHS into a national religion. It is key to holding the status quo together. On that score, I'm very much ambivalent. I'm not exactly thrilled at the idea of it falling into the hands of Rees-Mogg's vulture capitalists but all the same the NHS gravy train has to end.

The fact is that our government will do all it can to avoid the difficult questions. Just look how the Tories caved in on the Dementia tax and have recently pledged to firehose yet more cash at the NHS. They are held hostage to a vocal opposition to any kind of NHS reform which doesn't actually represent majority sentiment.

We are, therefore, never going to restore any kind of social and economic justice unless we take a wrecking ball to our politics and rebuild it. If they can't make the tough choices then we have to force the issue - and this time they can't borrow and spend their way through it.

Earlier in the week I detailed a broader dysfunction at the heart of politics and it was unrealistic of me to every expect our politicians to be competent enough to manage a thing like Brexit. We have lost touch with the art of governance and statecraft and that skillset has been absent for a very long time. One might ask how things function as well as they do in its absence but it only takes a thing like Grenfell to demonstrate the systemic failures not only of regulation but the response to the disaster - which was open season for fraudsters who shouldn't even be in the country.

It would seem that for the last decade at least, probably longer, the EU has been propping up a system decaying from the inside out. Brexit has finally exposed it. Without that crutch we find our politics is no longer fit for purpose and is likely to bring us to a disastrous withdrawal made a magnitude worse by a failure to understand they systems and processes and a total failure to plan. The rot is far worse than I ever imagined.

For that reason, knowing what I know now, it wouldn't change my vote at all. Britain has a long road to travel and things are going to get a whole lot worse before they get any better. But with things being as they are, a collapse of governance was a future certainty. If it wasn't Brexit it would be something else. It may be that we are past the point of no return and that what's broken is not fixable. I don't know. What I do know is that without a kick in the complacency, re-engaging the public in the politics they have neglected, the destination is the same anyway.

The Brexit Taliban are dead men walking

The most idiotic thing about the Brexit ultras is that their game is not going to work. For sure they can crash us out of the EU but they won't be in power long enough to bring about their Singapore on Thames nonsense.

The first thing that happens after crashing out is the EU cooks up a string of emergency time limited agreements just to avoid hassle on its own borders and to avoid actual civil emergencies. It will then simply wait til the UK is begging for any kind of deal.

That then is going to come with a raft of terms and conditions worse than anything we could be negotiating right now with ECJ supervision over a whole raft of EU law. The point being that no deal cannot stay no deal.

Having smacked the aerospace, pharmaceuticals and manufacturing sectors hard, there will be no safe Tory seats in the country. The middle classes will be fuming along with a seriously disgruntled working class who find their hours cut.

The narrative as it stands is that if the Tories don't deliver a hard Brexit then the headbangers will defect to Ukip, but this is assuming Ukip is even organised enough to field candidates. They'll just assume someone else will do it for them.

It's true that headbangers will be pissed off if May delivers a softer Brexit, but a lot of remainers will vote to prop up the Tories just to keep Corbyn out. That won't apply if we have a no deal Brexit. The Tories will be finished.

At that point the threat of Corbyn will be somewhat moot in that he will likely not enjoy an outright majority and will have to form a government with the Lib Dems. Moreover we will be too piss broke to do anything Corbyn wants to do.

It will take a Tory party split for them to ever be considered electable again - but by the time they take power again we will have signed up in full to some or other EU agreement, and they won't get to piss around with tariffs. By then the free trade fad will be over.

All the ultras are really doing is smashing the country against the rocks for no gain, destroying the Conservative party and handing power to a dysfunctional coalition for a decade or more that will be more socialist than anything we've seen since 1948.

If the plan was to bring about a global free trading Britain then they've chosen a pretty foolish strategy that will more than likely have the opposite effect. Britain will become more insular and more protectionist and we will see cackhanded attempts to nationalise things.

Politically I think we've crossed the event horizon, and they are going to have to learn first hand why free trade delusions are obsolete - and that will be a costly lesson we will all pay for - but afterwards the cause of free market liberalism will be dead in the water.