Friday, 30 September 2016

Another Smash Hit Party-Banger from Liam Fox

If you're put off by my long-winded posts this one is mercifully short.  More good news - the Leave campaign are still playing their top hits to an excited audience.  Last time we focused on Tim Martin's compilation album of all of his smash faves.  The crowd went wild and danced like dervishes to the crazy beat and free-form spoken word delivered by the boss of Wetherspoons UK.  Today, it is the turn of Liam "multiply disgraced, former and now not former Minister" Fox.  He is clearly a fan of Paul's Boutique by The Beastie Boys because he opted to take to the stage in Manchester for a stirring encore of nonsense rhymes

"As a newly independent WTO member outside the EU, we will continue to fight for trade liberalisation as well as potentially helping developing markets trade their way out of poverty by giving them preferential access to our markets"
  
He can fight for trade liberalisation all he wants but he can't give developing markets preferential access to the UK.  Under WTO trading rules you can't treat any other WTO member in a preferential or discriminatory manner.  Non-discrimination is even one of the 5 principles of the WTO.  It is illegal to act in a discriminatory manner with either tariff barriers or with non-tariff  barriers.  That means that to gain access to your market every other WTO nation must pay the same import duties on all goods and services.  It also means that every WTO nation is subject to the same trading rules eg health and safety; environmental protection or technical standards. Discimination or preference is simply not an option.

The more this goes on, the more I feel like a shrill voice in the wilderness. What happened to scrutiny by the press?  Political integrity?  Advice from impartial and knowledgeable civil servants?  Why is Liam Fox allowed to present a load of balls to the world's press, who then print it verbatim without question?

If you're a fan of facts then the WTO actually has more founding principles than the EU.  The score is 5-4.  This sounds like even more red tape to me.  Ghastly stuff.  I want to end on a high so here is a pop video with semi-appropriate song title.  Take it away Annie.


Over and out,

Terry

PS There is a lot more to be said about the WTO and "taking back control".  As you might imagine, the principle of non-discrimination has led to a number of legal cases between one member and another.  Here is an example.  It has also led to some nations amending their domestic law so that they are compliant with the WTO's founding principles.  Sounds a lot like EU Directives, doesn't it? It's almost  as though any agreement between two nations requires the harmonisation of their legal, economic, political and administrative frameworks.  Who'd have thunk it?




Tuesday, 27 September 2016

There's something wrong in paradise

Have you ever been excited about going to see a band but when you got there it was, well, all a bit lacklustre?  Maybe the vocals were off, maybe they were just boring and charmless, or maybe you found their presentation a bit pretentious.  Sin of all sins, perhaps they performed their new long player in its entirety and in sequence, opting not to play any of your favourite hits from yesteryear.  Personally, if I like the band I will pretty much always enjoy the show because liking the band usually means I like the personalities in the band.  I'll overlook pretty much any minor fault on the night.  Not playing my favourite songs, however, is a heinous musical crime on a par with "Imagine" by John Lennon.  Hmm, no, much worse than that.  What was the worst thing ever perpetrated by a 20th century despot?  Yes, exactly, as bad as that! That's why I love the Leave campaign so much: they just regurgitate the hits that we all know and love.  It almost pains me to report that there is something wrong in paradise.


This post is going to be a dissection of a recent interview with a leading Brexit campaigner.  I really just want to highlight once again the muddled thinking that lay behind the Leave campaign.  Despite the passing of four months, burdened with the reality of making this work, they still get it wrong every time in almost every way possible.

No, it's not Ed"Stewpot" Stewart off the radio.  He is deceased. Meet Tim Martin, head of Wetherspoons UK.
Meet Tim Martin, the head of the ghastly Wetherspoons pub chain and leading Brexiteer.  If I was going full-on Morrissey I would say his drinking establishments were vile and hateful.  Maybe hateful is a bit strong.  To be honest, vile is also a bit too much. And ghastly. They're not really ghastly.  They're just shit. Yes, let's stick with that.  Shit. Anyway, Tim Martin gave the Brexit campaign £200,000 and decorated his pubs with Leave beermats and posters in the run up to the referendum.  Coincident with a recent financial report, Mr Martin has taken the opportunity to blast the press once more with his wisdom on trade deals.  He even popped up on Bloomberg news. You can watch a video of his interview here.  It is filled with nuggets of  stupidity that I shall now proceed to dissect. To save you from the horror that I endured I have transcribed the juiciest parts of the interview.  Let's start with the following quote at 2.18 on the timeline:
  
"When we leave the EU the tariffs that we pay on non-EU wine will be eliminated, we hope, so that the price of wine will go down" 

Before we even begin on this just take a look at the Wetherspoons website and see what drinks are on offer. That's right, you see a lot of EU produce on there.  First off, Prosecco is definitely from the EU because it is made in sunny Italy and depends on special grapes found there. Let's look at the vodkas.  No, not drink the vodkas. Pay attention!  Look, we need to stay sober for this. 6 of 7 vodkas listed are distilled in the EU, while the remaining "Chase" vodka is actually produced in the UK (euuww, that's like drinking Swiss whisky or Irish Schnapps).  Why would they sell EU vodkas?  Maybe they want to keep their prices down by avoiding product that suffers from a large import tariff.  Hey, I love San Miguel beer, don't you?  That's lucky because this Spanish-produced beer is the featured lager at Wetherspoons.  Did I mention that it is brewed in Spain?  Let's finish this off by looking at the wines.  Only two (one from Chile, one from South Africa) are listed so I decided to look at the drinks list of a specific Weatherspoons.  Purely at random I chose The Counting House in Glasgow.  In all there are 18 wines listed with 7 sourced in the EU.  I don't know about you, but I'd say Wetherspoons will be hit hard if goods sourced in the EU are suddenly subject to import tariffs.  If I was head of Wetherspoons I might think twice about whether my business interests are aligned with my political goals.

Why is Tim Martin so sure that the tariffs on non-EU wine will be eliminated? Eliminated!  I mean, he doesn't get to decide that, does he?  I'm pretty certain this won't happen whether we have a hard or a soft landing.  The reason is that a post-Brexit UK will have to lay out its stall with the World Trade Organisation (WTO) before agreeing any trade deal with anyone.  Under WTO trading rules no country can treat any other in a discriminatory way.  In essence, you lay out your tariffs and publish them for  all to see.  As you can imagine, clarity is important here.  The tariff on every conceivable kind of good or service will need to be decided, agreed and then set in stone with the WTO.  Every nation in the WTO will trade with the UK under this agreement unless they formally enter into a separate trade deal that supercedes it.  This process could actually take years to complete. Until it is fully implemented nobody will enter into a separate trade agreement with the UK because they won't know if it will be better or worse than under WTO trading.  Personally, I can't imagine that Guatemala will be high on David Davis's list of trade deals so the tariffs on Ron Zacapa Rum will be subject to whatever our WTO agreement dictates for all time.  Now, the UK might decide to scrap tariffs on everything and flood the UK with cheap imports.  This is great news if you are a connoissuer of Guatemalan rum.  It would be great news for Tim Martin and seems to be what he is expecting from the UK government.  There are coherent arguments for that economic path but it kind of knocks all of David Davis's putative trade deals into a cocked hat because then we have nothing to trade with on behalf of exporters.  This path is the very definition of unilateral disarmament. Why would anyone enter into a trade deal with the UK if they already have everything they want without needing a trade deal?  I really don't see this scenario happening because the public are expecting big announcements on trade deals.  Remember, it was a central theme of the Leave campaign.  Boris Johnson even thought about building an enormous ship so he could sail around the world signing international trade deals.  It would have been like that Christmas special of Only Fools and Horses where they tried to smuggle diamonds from Amsterdam in a leaky boat. With not-hilarious consequences.

One interesting thing in all of this is that the UK currently trades under the WTO tariffs set out by the EU.  If we leave the EU and then change our tariff barriers we might find ourselves the recipients of a whole slew of legal cases from other WTO nations. Not surprisingly, they are going to be a bit annoyed if we suddenly make it harder to export to the UK.  It would be perfectly natural for that to be brought to court because it could be argued that the UK has broken a long-standing agreement.  The least controversial path for the UK is to simply adopt the WTO tariffs agreed by the EU.  What happened to taking back control?  Tim Martin has most definitely not considered this as a possible outcome.  Don't worry, he has his top fave hits to fall back on if his new album is a flop.

Wetherspoons seem to be banking on a WTO deal that specifically sets zero tariff barriers on all alcohol imports from all WTO nations.  Hmm, doesn't seem likely, does it?  Maybe Tim thinks he can get there with trade agreements.  Sadly for him, he has literally no idea whatsoever if they will be more of less favourable for alcohol imports.  To lower the costs of his business in a significant way he will need trade deals that favour significant wine-producing countries outside the EU.  At a guess, I'd say New Zealand, US and Australia might be good targets.  If you regularly drink at Wetherspoons then you definitely want to add South Africa and Chile to the list.  Oh, and Guatemala and Puerto Rico if you like cheap rum.  How long will these deals take to implement?  How complex will they be?  Will the abundance of cheap booze be foremost in the minds of the negotiating teams? After all, history tells us that alcohol is always subject to significant taxation at the border.  Can you imagine the Prime Minister giving a press conference extolling the virtues of all the cheap booze that we are about to enjoy?  I'm not feeling hopeful that the outcome will be favourable for Wetherspoons drinkers.  Apart from anything else, the most sigificant cost of any bottle of alcohol is UK tax.   Leaving the EU won't change that.

Later on in the interview (skip forward to 3.32), Tim Martin seems to say that we don't even need trade deals at all.   Everything I wrote in the last paragraph was a compete waste of my time and yours. I left it in for dramatic effect. Sorry about that.

"We haven't got a trade deal with the US, we haven't got one with China, we haven't got one with India, and particulary the US is an enormous trading partner. It doesn't cause a problem, we can trade under WTO rules. " 

Hmm, this interview has taken a staggering turn, hasn't it?  He is actually banking his business on a WTO agreement that specifically sets zero tariffs on imported alcohol from every single country in the WTO that produces any kind of pisswasser whatsoever.   Did David Davis tell him this would happen?  Liam Fox?  Boris Johnson?  A rasping voice in his head?  A man in one of his pubs at closing time?  Let's not forget that to lower his prices he needs an import tariff that beats zero because that is the deal he currently has with the EU.  He will never, ever get that again no matter how many times he says it to the unquestioning automatons at Bloomberg. 

But, anyway, this is all nonsense because leaving the EU won't change our current trade agreement with the US or with India, unless the UK takes the view that cheap imported booze from WTO nations is a top priority.  The EU does have a limited agreement with China so he is right to say that will be affected but not in the sense that he thinks.  In this case, we will be losing access to a trading partner because we are leaving the EU.  Maybe he hopes that one day he will be able to import a lot of cheap Chinese wine and gin and whisky.  Geez, is Wetherspoons really that bad these days? Literally any drink with alcohol in it will do?
 
Right at the end of the interview he starts blabbering on about democracy, as though the EU had no democracy whatsoever, and makes the point that successful economics require democracy.   

"If we get more democracy, which we will get, if we leave, if and when we, when we leave the EU, it will improve our economic performance."

Whether we will get more or less democracy after the UK exits the EU is open to discussion but he could have improved his delivery if a little tear had formed in his eye at this point.  No matter, we can't all be good at amateur dramatics.  He seems to forget that Germany and Denmark and Sweden and Finland are all in the EU. Are they not economically successful?  Have they not made a success of EU membership?  The post-Brexit drop in the value of the British pound means that the GDP of France now outstrips that of the UK.  Is that a sign of economic success?  "Necessary but not sufficient", is the phrase we are all silently mouthing. Perhaps the UK lacks the  personal wealth of other EU nations because of our deficiencies in education and planning and investment and taxation. Take your pick.  Personally, I blame the poor quality of pub management.

I'm just going to end with the obvious point that democracy takes many forms.  There is representative democracy and there is direct democracy and there are multiple ways of weighting votes with second and third preferences, then there is democracy at council level, and there is democracy at European level.  You know what, it is all democracy.  The weakness with democracy is when nobody bothers turning up to vote and politicians are elected with tiny turnouts and can never claim to represent their constituency.  Mr Martin, you can't blame the EU for that.  Maybe if you and your cohorts hadn't gone around spreading anti-EU rhetoric left, right and centre like a muck-spreader gone rogue we'd still have EU democracy to add to everything else.  Besides, if you really think that the EU is less democratic than Westminster then this must be a measurable and definable quantity.  How might that be calculated or measured?  Which properties of the democratic process can be weighted and accumulated and what methods will you apply for your measure of democratic quantity? Which democratic attributes are numerically lacking in the EU relative to Westiminster?  Oh, I see, you just don't like the EU.  Why didn't you just say that?

The same muddle and confusion is repeated and repeated and repeated by the remnants of the Leave campaign.  Playing fast and loose with the truth might be expected during a political campaign but that is over now.  Four months have passed.  This is the time for facts and reality and rational thinking.  None of the Brexiters have demonstrated that they are able to do that.  Nobody at Bloomberg News has demonstrated that, either.  The same could be said for almost every national newspaper and news outlet. There is almost no significant voice pointing any of this out to the people who need to get their thinking straight. My shrill rantings lost in the wilderness aren't going to change any of this rampant idiocy, either.  Bloody heck, what a mess.

Let's finish off with a top, anthemic Leave smash hit.  Now, this one is a proven crowd-pleaser usually left  for the encore.   Everyone sings along, jumping up and down to the crazy beat, waving their Union Jack lighters in the air.  Tomorrow is forgotten, the moment is all that matters.  Here we go. Get ready.  Gabba gabba hey.  Eins, zwei, drei, vier.  Boris Johnson still believes access to the European single market can be achieved without adopting the central tenets of the EU.  Bloody heck, what a mess.

Over and out,

Terry

PS I know I said no more posts about trade deals.  I'm fickle that way. Next time I will be posting about pensioners.  Howzat for brinksmanship!

Urgent Update:  Oops, only 3 months have passed since the EU referendum.  Send a boy to do a man's job and see what happens.

 

Thursday, 22 September 2016

Move on up

Does anyone remember "Auf Wiedersehen, Pet"?  It was a comedy-drama in the 80s about a group of British building site workers who ended up working in Germany due to a slump in the UK building trade.  You wouldn't film it today because UK workers have full working rights in the EU, meaning that there is less comic potential in the itinerant circumstances that faced the characters and even less in the cultural exchange between Newcastle and Düsseldorf.  Having said that, any TV commissioners out there might want to look at a remake in the next few years.  If the UK ever experiences a prolonged recession the likely locations of a reboot might be India or Malaysia.  After all, if David Davis has his way these countries might soon be our closest trading partners and, as a consequence, the most likely destination for British workers seeking employment abroad.  I can help out with the script:  replace all jokes about pickled gerkhins with pak choi and you are good to go.  It would also be hilarious if Moxey got over his stutter in fluent Malay but still stumbled over his words in English. Ho ho ho.


This post is about the freedom of movement of labour in the European Union.  It seems more certain than ever that the UK government believes it has a responsibility to end EU migration.  In my previous two posts about post-EU trade deals I looked at how they might compare with the EU in terms of "control" and effectivness. I'm not particularly concerned about taking back control but if you are then the news is bad:  trade deals inherently involve giving up control. Just ask Canada, now the most sued country in the world under free trade tribunals.  It is also believed that a significant stumbling block to TTIP was that the EU didn't want to leave itself open to investor-state disputes.  Questions of control aside, I am most definitely worried about the effectiveness of replacing European trade deals with Malaysian and Australian ones.  We should by all means pursue further agreements but let's not chuck out our metaphorical veggie burger and potatoes just because we want to add some quinoa to our plate.  The elephant in the room in all of this has been the freedom of movement of labour in the European Union.  Trade deals don't necessarily result in workers moving house so why has the EU gone down this path? Why would anyone sign up to such an agreement?  Please read on and find out. And then be worried.

If you are a regular reader of this blog you will already know that NAFTA led to US jobs offshoring to Mexico.  Not a regular reader?  Get with it, Grandad, this is where the cool kids hang out!   Membership of the EU hasn't really led to much tabloid scandal about jobs offshoring to Bucharest because this hasn't happened at any scale.  Instead there has been a boom in UK businesses that rely on a plentiful supply of workers from Poland and other countries in the EU 8. The difference here is that EU workers are allowed to live and work in any EU country, while workers in NAFTA nations need to stay at home.  Under these conditions, offshoring US jobs to Mexico is almost inevitable because businesses that don't take advantage of efficiency savings tend not to stay solvent for too long.  Similarly, it is almost inevitable that Eastern European workers turn up en masse in Boston, Lincolnshire because they can earn a higher hourly rate there than at home. For business owners in the UK this supply of labour can propel all sorts of propositions over the efficiency hump without the risks and initial costs of relocation.  The UK Treasury is a winner too because they get a share of the profits through taxation. From the UK perspective this is a win-win deal:  businesses haven't started an offshore stampede; they pay tax on profits; and nothing stops any of these businesses employing local workers as vacancies arise. How about in Warsaw?  Have they lost the deal?  No, it turns out they haven't lost the deal, either.  In the following graph you can see that unemployment in Poland fell and approached the EU average in the years leading up to the global financial crash.  It surely isn't a coincidence that unemployment started to fall very quickly just as they joined the EU.

Poland joned the EU in 2004.  Unemployment fell quickly in the following years. 
Falling unemployment in Poland is good for the Polish Treasury because they don't need to spend money on umemployment benefit.  Moreover, falling rates of unemployment should surely result in upwards pressure on Polish wages.  Are Polish wages steadily increasing or not?  Let's see.

Polish wages continue to rise.  Source: http://www.tradingeconomics.com/poland/wages
It seems that Poland and the UK are both winners as a result of their membership of the EU.  Key to their success was the freedom of movement of labour.   Hurray for us, we all get to be winners in this race.  Political correctness gone mad, if you ask Nigel Farage.

So far, we've focused on so-called commodity businesses but what about businesses that rely on product differential?  Hah, I just threw in some economics buzzwords to make me look clever.  Post-neo-classical endogenous growth theory!  If you run a business then there are really only a few strategies you can follow if you want to make money.  The first is to drive down manufacturing costs so you can win market share on price alone.  A business engaged in that kind of race might be called a commodity business. If you want to get really rich then I'd recommend not going down that route.  It's far better to do something that nobody else can because then you can invoke scarcity value when pricing your luxury goods.  Companies like Apple and BMW make luxury products that rely on differential when they price and market their products.  The problem is that today's high-end technology is tomorrow's commodity. As you might imagine, maintaining a differential strategy is really, really hard.  Maybe you had a genius idea back in 2013 but you're going to need to repeat that every day of every month of every year if you want to stay ahead of all the copycats.  Just ask IBM, who eventually had to sell their ailing PC business to a Chinese manufacturer.  Back in the 80s they were the trailblazers of the PC industry.

A differential business needs a constant supply of creative and educated people.  If that tap turns off it is likely to end up struggling as a commodity business.  When that happens everyone can wave goodby to booking Lady Gaga for the annual office party.  Cheer up, though, I heard that The Reynolds Girls are still available at very reasonable rates.



The UK government really likes the idea of being a hub for differential businesses because huge profits mean huge tax revenues.   Doing something that nobody else can and perfecting it faster than everyone else and repeating that year after year requires rapid recruitment of super-smart people who have very, very specific skills.  Actually, they might not be super-smart but they will most definitely have very specific skills.  Let's say you want to recruit 20 software developers with expertise in multi-threaded, interactive-rate simulation in heterogeneous computing environments.  They also need to have a working knowledge of graphics hardware pipelines and basic ukulele skills.   If you do want to recruit somebody like that then please give me a call because I might just be in the market for a new job.  Really, please do give me a call.  A business like that is obviously going to struggle if the pool of potential workers is small.  After all, it takes a special kind of loser who can put that kind of nonsense on their CV and not immediately kill themselves out of shame.  The likelihood is that matching candidate and employer is going to be hard and will involve looking around the European Union.  Do you think it will get harder or easier for UK businesses to attract specialist skills after the door is slammed on the EU?  That's right, it will get harder.  Moving house to a new country is not very attractive for most people but it becomes a lot less attractive if your right to work is coupled to your employer, as it is in Canada, the US and the EU (for non-EU workers).  I've already touched on this in previous posts with a number of not-hilarious personal anecdotesIn summary, slamming the door on EU workers but then telling them they can still come if they accept second-class employment rights is not going to prove a successful strategy.  The government might as well forget trying to develop London as a hub for social media start-ups because they will just move to Berlin, where they have the added advantage of cheaper rent.  This is even worse than offshoring because a business that offshores at least needs to be onshore before it can offshore.  In effect, the Leave campaign has offshored all our potential.

Life is going to be hard in the UK after the door is closed on EU workers.  Commodity businesses will struggle to recruit local workers as a replacement for EU workers.  To maintain their workforce at all they will need to increase the hourly rate and put up prices to match their costs.  This is not good news for a commodity business.  You might argue that it is good for British workers because they will enjoy a higher hourly rate.  I'm afraid that doesn't really work, though, because the competitive pressure to offshore to our new partners in Kuala Lumpur might really mean increases in unemployment.  When that happens UK workers can't just jump on a plane to Germany or Austria to take advantage of vacancies there.  Remember, the door slams in all directions.  Differential businesses are really going to struggle, too, due to a lack of access to specialist skills.  If the struggle is too great they will quickly become commodity businesses and we already know where that ends up.

The arguments against freedom of movement of labour in the UK are often grounded in concerns about the way population increases are managed.   "Creaking-point", "crisis levels", and "over-crowding" are words that you often heard from Leave campaigners.  These problems really arise from a lack of attention to UK infrastructure.  If more people are paying tax to the UK treasury then where is all  this money going?  Why is not being spent on schools and hospitals and roads and homes at a rate commensurate with the population growth? Was the EU referendum really about deficiencies in UK town planning?

Over and out,

Terry

PS  This is my last post about trade deals for a while.  Thank goodness for that.  In truth, even I'm relieved it all came to an end.  Growing a huge beard and tending to bees in a rural retreat seems suddenly very attractive. 

PPS More posts about "EU or UK?" in the pipeline but where is that indyref2?  I'm going to run out of topics by March, 2019 at current rate.  What will I write about then?








Wednesday, 21 September 2016

Just Say No

I have been away on holiday in Copenhagen for the last week. A wonderful time was had by all.  To add to the awesomeness of having time off work I took the train the whole way there and stopped off for a couple of nights in Hamburg.  I can't recommend either city highly enough, especially if you like watching container ships and fishing boats coming in and out of harbours and docks.  That is exactly the sort of thing I like.  I also like stuffing my face with delicious Danish pastries and German beer so it was a truly excellent time. 

During a wander through Hamburg I saw this kind of poster everywhere. They were really hard to miss. 




Is this the future of protest in the UK?  Will there be energetic protest groups taking to the streets to campaign against all the trade deals that David Davis would like to sign?   It is quite amazing that every time he says he will sign a trade deal it is reported almost without controversy.  The only doubt is whether they can be signed at all or how quickly they can be negotiated.  The idea itself is never thought of as divisive or troubling. If  I've learned one thing since I started this blog it's that trade deals are nothing but controversial and will be most controversial to those who already thought the EU was a hindrance to their well-being.

Just by way of catching up after a break, there was a twitter spat between Douglas Carswell and a scientist called Paul Nightingale, who works at Sussex University’s Science Policy Research Unit.  Where I used amateur dramatics to sum up the folly of abandoning European trade, Paul Nightingale invoked Newton's laws.  I like his style.


Douglas Carswell then responded with the bizarre claim that the moon was not responsible for tidal motion.


We live in strange and sometimes frightening times.  Can I be confident that David Davis and Liam Fox understand forces or exchange rates or even the concept of numbers?

Over and out,

PS Next post is about freedom of movement of labour and trade deals.  I know, I know, it is like waiting for Christmas.

PPS I also saw graffiti in Hamburg in support of jailed erstwhile members of the Red Army Faction.  I'm sure I took a photo but can't find it. Anyway, a blast of history right there.

Saturday, 10 September 2016

Power to the People

Don't dare mess with this blog because we are powerful people who can shift the will of the people. That's right, this blog is now an opinion former, a mover and a shaker.  The future of the UK's strategy in the Brexit negotiations is in our hands.  How do I know that?  Well, tonight I clicked about 100 times in an online poll in a broadsheet newspaper and totally changed the outcome.  Listen up David Davis MP because the public have spoken.  You can find the poll here if you wish to be influential as I am.

Should Britain and Switzerland work together to negotiate a good trade deal?  Maybe you think they should negotiate a bad trade deal with the EU.  Bloody heck, the level of care taken to conduct this poll is an affront to human dignity.  Was this written by one of those "journalists".  You know what, I don't really give a monkeys one way or the other. I do, however, have a lot of spare time on my hands on my time tonight and I intend to use it for mischief. The poll started at 66% for Yes at around 11pm but with less than 300 votes.   Can I turn this around?  Let's find out.  I took a screenshot of the votes cast before I started my mind control exercise but because I am an idiot I either put it in some forgotten corner of my hard drive or wrote over the image at a later time.  Anyway, using the power of maths I worked out I only had to click around 100 times on No to break Peter Snow's swingometer and send him into a state of statistical apoplexy.  All I had to do was flush out the browser cache each time so that I could vote again and again and again and again and again and again. 

I'm not different or awkward. I'm special.
 Coo, I think outside the box.  But this intellectual frenzy really needs some motivation. Time for some music by a popular beat combo to get a bit of a rhythm going.
Bloody love a bit of The Human League. 
Tap, tap, tap, tap, tap.  Tap, tap, tap, tap, tap.  "Ten thousand watts of power,News headlines on the hour tonight".  Sorry, I was singing along with some pop music there by my one of my favourite bands of all time. 

All this moving opinion is thirsty work so I'm ready for a libation. It is Friday night, after all.
12 year old Arran malt.  Yum. Home measures, too.
How are we doing.  Phew, getting close.
About 30 minutes into this now and I'm starting to regret it.  Other people are voting against me, meaning I have to vote more than my estimate of 100 times.  Anyway, one last push and we're over the hump.

Hurray, this is decisive.   The people have spoken.  Brexit means Brexit.  The will of the people must be recognised etc etc etc. If Johann Schneider-Ammann so much as enters the same room as David Davis I want the editor of The Independent to come down on it like a ton of bricks.

Newspapers are really, really shit these days, aren't they? 

Over and out,

Terry

PS Arse potatoes, I'm losing again.  Wanna join in?  Maybe we'd be battling against Putin's online army of btl commenters. 



Wednesday, 7 September 2016

I Predict A Heated Debate

Way back in the mists of time I posted about the situation in Switzerland and the ongoing negotiations to place a cap on inwards EU migration.  I look back at that early post and think how far I've come as a blogger and, dare I say, human being. Back then I was doing embarrasssing things like posting pop videos with semi-appropriate song titles and filling up valuable internet space with pretend conversations with fictional readers.  I believe I even claimed at one point that Switzerland was a land of erotic adventure.  I'd never dream of doing that sort of thing these days, not now that I am a serious blogger speaking truth to power with authority and gravitas. Anyway, getting back to the main thrust of this post, there have been developments that might affect future Swiss/EU relations.  It might be the case that these developments can gives us clues about the future of UK/EU negotiations.  Let's have a look at them together, shall we?

Switzerland is a signatory to the freedom of movement of labour in the European Union.  It is also a signatory to 120 other bi-lateral treaties with the EU.  Each treaty agreement is coupled to the next like a house of cards that took over 20 years of pain-staking effort to build.  In February, 2014, a referendum was held to place a cap on inwards migration from the EU.  The proposal to impose a cap won the day with 50.3% of all votes cast, leaving the government in Bern with the difficult task of implementing a solution within the statutory 3 years. A Swiss/EU deadlock meant that pretty much nothing has happened in those years that is worthy of a blog post.  Fast forward to today and three events have happened in quick succession (quick for Switzerland, anyway).  The first is that there are now enough signatures to force a second referendum, while the second is that the Swiss Parliament has rejected the imposition of quotas.  Drum roll please for the final bombshell:  the government have announced their negotiating position (German). About time, too, if you ask me.



This second referendum idea is a bit of a novelty, isn't it?  The basic idea is that a more detailed referendum question will properly outline the consequences of a migration cap.   Can you imagine? Neither side really wants this:  the proponents of migration limits have a lot to lose, while the opponents can't seem to agree on a shared strategy.  I don't think this will happen directly but might still be a possibility if the negotiating position fails.  I'm teasing you here but we'll come back to this later on.

That second event of limited interest is that the Swiss parliament in Bern rejected the unilateral imposition of quotas on EU nationals.  This isn't too surprising because almost all Swiss parties support the continuation of the bi-lateral treaties and absolutely don't want to endanger Swiss trade by ripping up a single treaty on EU labour movements.  I'm an EU migrant so I'm personally pleased that good sense prevailed.  I also live here and don't want any shocks to the price of German beer in the event that a unilateral limit triggers the immediate breakdown of all 120 treaties.  Really, this would have been a terrible idea.   The EU would not have taken a unilateral cap without an immediate response.

Do not send this to Jacques Delors.  He'll go nuclear.
What about that negotiating position?  Well, how's this for kicking the can down the road?  The proposal is to just leave it all up to employers by asking them to have a hiring preference for local people.   I bet you never expected that!  It is only a proposal right now so there is no guarantee that the EU will accept it.  I'm not sure they will accept it, to be honest: even though the definition of local people includes EU citizens already living in Switzerland, it still forces employers to behave in a disciminatory way against EU nationals not already here.  It also leads me to the definition of "here".  Could an Austrian move over the border, rent a room and then say they are "here" for the purposes of employment?  Maybe "here" means here and employed. Well, what happens if I lose my job and need to look for another one?  Am I "here" or not?  This needs fleshed out because there is plenty of scope for endless debate about the true meaning of the proposal.  A good time to be a lawyer.

Is he "here" or just here?  Neither.  He is there but not "there".  I am "here". Where are you?
There are a few interesting clues in all of this that might be of interest to UK nationals.  The first is that the Swiss blinked first.  In fact, the EU had pretty much told the Swiss government that there was no further time for negotiations because they had their hands full with Brexit.  The Swiss clock (not cuckoo, they are Bavarian you fool) was ticking towards the 3 year limit and something had to be done. This is a bit like the 2 year limit on exiting the EU after triggering Article 50.  At some point the UK is going to find itself staring at the Countdown clock in a game with a much larger adversary.  Don't forget the influence of the media scrum banging on about immigrants eating swans and British jobs for British people and so on.  This will be stressful for all involved and someone has to blink first.  Also of interest is that the anti-EU campaigners have not had their way in the sense that a straightforward cap on migration is not now a likely outcome.  There are actually a lot of similarities between the SVP and UKIP, especially in the way that their poster campaigns are openly racist and xenophobic.  Anyway, the key point is that there is significant pro-EU political momentum that can't be stopped by a single referendum.  This is also true of the UK parliament and civil service, both of which are strongly positive about the benefits of EU membership.   My last point is that the second referendum might not look all that attractive now but might start to if negotiations hit a sticky patch.  Theresa May might say that there will be no second referendum but what happens when she starts to feel she can't negotiate an outcome that will satisfy Nigel Farage and the denizens of Canary Wharf?   Could Switzerland ultimately lead the way on this issue? Literally nobody knows so there is no point in speculating.  Yes, I know, I just devoted a few hundred words to idle speculation. 

That's enough Swiss chat for now.  In case you're wondering, it is not really a land of erotic adventure.  Excellent cheese, though.

Over and out,

Terry

PS Of course, none of these developments really affect me because my own EU citizenship is soon to expire.  Is the UK government on the ball with this?  Thought not.

PPS Just for fun I might do a quick post about the SVP.  They are really quite an odious group of people and the similarities with UKIP are rather striking.

PPPS One more post about trade deals in the pipeline and then we can all move on with our lives.

Monday, 5 September 2016

Standing in the way of control

The UK has been talking about all sorts of international trade deals that will be signed after the door is finally slammed on the European Union.   Hey, watch it, my finger was in there!  In my previous post I looked at how all trade deals inherently result in a loss of "sovereignty" and diminish what the Leave campaign like to call "control".  To save you the trouble of reading it, a summary might be that trade deals are just contracts specifying rights and responsibilities on both sides.  For the agreement to function at all these rights and reponsibilities need to take precedence over the desires of local policy-makers. The EU is really no different in that respect.  Today, I want to look at whether these proposed deals could ever replace the all-in-one package that we had with the EU.  Now, this is a painfully boring topic so I promise role-playing amateur dramatics and pop videos with semi-appropriate song titles. That's right, role-playing amateur dramatics.  You don't get that at The Guardian. If that isn't enough there is some weak political satire right at the end in the style of Ben Elton. While you absorb these bombshells, here's a pop video with a semi-appropriate song title right now to get your toes tapping.  Enjoy.



Let's imagine you grow cucumbers in Kent.  I know, amazing, isn't it?  Such a fantastical notion will take all the powers of your imagination but stay focused because I know you can do it.  I usually try to get in to character for this type of stuff so if I start writing in the style of a 53-year old English farmer called Clive you'll know what is going on. Ok, you grow cucumbers in Kent and you are able to export a lot of cucumbers to France.  You can do this because you are a very efficient person and are able to compete with French cucumber purveyors, despite the extra costs you incur shipping your tasty veg across the English Channel.  Uh oh, there's a problem.  That bloody David Davis just closed the door on the EU and now you have to pay a hefty import tariff.  All those years battling down costs to make your cucumbers competitive have come to nothing.  Nobody will buy your cucumbers now because every cucumber grower in Breton and Bordeaux can sell them cheaper than you.  In fact, life just got a lot worse because the migrant workforce have buggered off to the EU to work in rival cucumber nurseries.  Don't worry, though, the UK government just signed a trade deal with Vietnam.  Does anyone know the costs of refrigerated shipping to Vietnam?  Wie viel?  Merde. More importantly,  have you ever tried relaxation techniques like yoga or tai chi?  They might come in handy when your house gets repossessed.

Tasty cucumber reduced in price due to superficial damage in transit.
This role-playing is great fun so let's dive back in the dressing-up box.  This time you sell billing software and have all sorts of customers all over the European Union.  I know this is even more fantastical but maybe try employing the Stanislavski method this time.  Two major costs in your business are support and on-site installation.  Wow, this is dramatic.  You've been battling for years trying to make your business ever more efficient to stay competitive with the Spanish and the Germans. Just to add to the reality of the scene, your friends might even think of you as plucky and spirited but only ever mention it behind your back.  You know that they think this and they know that you know, yet it is never mentioned in your presence.  Isn't life complex?  Uh oh, there's a problem. That bloody David Davis just closed the door on the EU and now you have to pay a hefty import tariff.  Nobody wants to buy your billing software because it costs more than similar solutions from other vendors in the EU.  What's more, your wages bill is going up because the remaining UK workforce realises there is a widening skills shortage and are snapping at your heels for a wage increase like a boisterous game of, erm, snap.   Don't worry, though, the UK government just signed a trade deal with Vietnam.   Anyone know the cost of flights to Hanoi?  What about hotels there?  Scheisse. More bad news: you need to introduce shift work for the support calls from Vietnam. Nobody will come and do that in your Stevenage HQ unless you pay them a premium, making you even less competitive.   You're lucky this time, though, because you can offshore the whole enterprise before the bailiffs come knocking.  How are you with wok cooking?

There's a problem with these distant trade deals, isn't there?  Despite what we might think about our connected world, there is still a significant cost to delivering goods and services.  My weak gag about refrigerated shipping makes almost no sense when you remember that everybody prefers fresh cucumbers to old ones.  Offshoring the billing support rings more true, though.  You might as well take advantage of lower Vietnamese labour costs where you can if you are doing a lot of business there.  This has been a constant criticism of NAFTA.  Is this really what Leave campaigners wanted?

On the back it reads, ".. and sign trade deals that will offshore all ensuing job vacancies". 
The advantage of distant trade deals with India or Malaysia is really quite limited because they often do no more than make uncompetitive propositions slightly less uncompetitive.  That is going to help no one.  A better idea is to take a proposition that is only slightly uncompetitive and do what you can to make it competitive.  Clive selling his cucumbers in Bourges is almost competitive but just not quite there.  Slash the import tariffs and he's over the hump to clean up all over France. Likewise with that billing software.  It is almost competitive to sell billing software to Bernd in Bochum (great guy, say hi if you're ever in Bochum) because German and UK workers are shifted by just 1 hour and have roughly equivalent salaries.  The trade agreements brought about by the EU gave the boost needed to turn around the conditions of all sorts of business propositions that were just on the wrong side of efficient.  I don't think a trade deal with Vietnam or Malaysia or Australia is going to have the same kind of effect, no matter how many David Davis signs on our behalf.

In my last post, I looked at the NAFTA and CUSTFA trade deals.  Despite their many critics, these agreements do make a kind of sense because they involve immediate geographic neighbours occupying the same range of time zones.   Remember, slashing tariffs in such circumstances might just be enough to push a business proposition over the efficiency hump.  The US is currently trying to negotiate a wider partnership called the Trans Pacific Partnership that will supersede NAFTA.  Nobody is talking about ripping up the agreement between US/Canada/Mexico because they will also be involved in TPP.   The really significant gains are always with your nearest neighbours but maybe there are extra possibilities out at the margins with countries further afield.  There is an undeniable logic to this, despite the understandable concerns many have for international trade deals. Would it be logical for the US to tear up its agreement with its immediate neighbours and try to hook up with Brunei instead?  Such an exercise would be pure folly, yet that is exactly what David Davis and his colleagues are doing right now.  Many aspects of our EU trade relations are under threat and all we hear is that everything will be hunky-dory because India are champing at the bit to sign an unspecified trade deal with the UK.  This is a complete mess.  I honestly don't think our current set of leaders understand anything about how the world works, yet they seem perfectly able to understand the House of Commons expenses procedure (hurrah, this is the weak political satire in the style of Ben Elton that I promised at the start).

That's the end of role-play for today.  You can be yourself again now.  Just shake it all out and relax. Don't worry about Clive.  He joined a commune, grew a huge beard and now tends to his bees down in Dorset. 

Over and out,

Terry

PS I'm not done with these trade deals.  I know that's not what you want to hear but that's the way it is.  What exactly are the arguments for the freedom of movement of labour?  Stay tuned and you might find out.

PPS If anyone has contacts to Downing Street can you please suggest a quick afternoon of role-play?  I really think it might help. No, I don't mean "vikings and villagers".  Cheeky! You know exactly what I mean.









Thursday, 1 September 2016

Only fools and trade deals

Let's start with a not-hilarious joke.  When is a trade deal not a trade deal?  When it is conjured from the feverish imagination of David Davis.  Ha ha ha ha ha ha guffaw ha silence. I shall enter that for best joke at the Edinburgh Festival.  Take that, Stewart Lee!  He would finish off the joke by berating the audience as a diversionary tactic.  As an experiment, I shall try that out:  shut up you idiot readers, this is brilliantly written and hilarious but you are too stupid and ignorant to understand my genius.  Hey, that feels great.  Just for my own pleasure, expect more haughty derision littered throughout the rest of this post. 


This post is going to be about trade deals.  One of the mantras of the Leave campaign is that the UK will be free to conduct its own trade deals and that these will be innately better trade deals than the trade deal we have with the EU and, by extension, the trade deals the EU has with other non-EU nations. They will be British trade deals, after all.  It occurred to me that I didn't really know much about trade deals.  To be honest, I don't imagine many people know much about trade deals.  Does the UK government even know that much about trade deals?  What we do know is that by leaving the EU and conducting our own trade deals we will be able to "take back control".  It must be true because it came from the mind of David Davis.  Hmm, but was he really telling the truth?  Is a new world calling?  Let's find out together.



I thought it might be interesting to look at the North American Free Trade Agreement (NAFTA).  This is a complex trade deal that encourages trade between Mexico, the US and Canada.  More specifically, the agreement eliminates a wide range of tariffs and duties but also involved a number of side agreements to harmonise intellectual property rights, protect the environment, and even includes some legislation to safeguard workers' rights.  These side agreements have exciting names such as 
"North American Agreement on Environmental Cooperation" and "North American Agreement for Labor Cooperation".  You're probably thinking this sounds a lot like EU-lite.  I'm thinking that too. There's going to be a paragraph or two on this exact point at the end of this post.  Hey, don't just jump there right now.  Ok, go on, but you're missing out on a moderately interesting argumentative preamble so it's your loss.

NAFTA negotiations began in 1990 and came into force in 1994.  That's right, it took almost 4 years to come to an agreement.  What's more, the terms of the agreement were gradually implemented so that the process was only completed in 2008.  That's right, it took 18 years to fully negotiate and implement NAFTA.  To make matters worse, NAFTA superseded the Canada–United States Free Trade Agreement (CUSTFA), so it wasn't as though they started from scratch.  How many years did it take to negotiate and implement CUSTFA?  That is an almost impossible question to answer because the US and Canada have a long history of bi-lateral treaties.  Nevertheless, I'm going to have a stab at an answer using the power of arithmetic.  Let's see, CUSTFA was signed in 1988, while the first US-Canada trade agreement was in 1855.   I make that 133 years. Alright,  alright, I agree, I'm playing fast and loose with definitions for comic effect. But it was definitely hilarious.  Yes, you idiot readers, it was.  I am the king of light-hearted EU blogging.  Admit it! Admit it, you fools!


If  you want to know more about NAFTA tariff ranges or the CANAMEX corridor I suggest that you peruse the information super-highway but before you do that take a hard look at yourself in the mirror.  Is this the person you want to be? Have you let your younger self down? To be perfectly honest, I couldn't really be bothered reading more about NAFTA or CUSTFA because they are just so huge that I didn't know where to start.  If you take a look at any of the side agreements you quickly realise that they are similarly enormous and reference other legal frameworks such as the Stockholm Declaration on the Human Environment.  I'm just not going to plough my way through all that for a bunch of idiot readers.  Do it yourselves, you feckless losers.  Wow, this does feel great, Stewart Lee is on to something here.  Ok, getting back to the main point, I'm far more interested in how these treaties affected sovereignty and control.  Yes, how might they be affected? Everyone say it together out loud - how might they be affected?

One criticism of NAFTA is that it has led to a significant transfer of manufacturing jobs from the US to Mexico.  Some studies put this figure at 700,000 jobs, others closer to 1 million.   After all, if goods can be produced cheaper in Mexico and still be sold without any tariff disadvantages in the US and Canada then what business wouldn't do that?  A further criticism is that the boom in manufacturing in Mexico has led to a mass displacement of agricultural workers, many of whom displace themselves even further from their home town to a life in the US. In the following table we can see significant growth in the number of Mexican immigrants in the US during the NAFTA years.

Source: http://www.migrationpolicy.org/programs/data-hub/charts/mexican-born-population-over-time
So far, we've seen that NAFTA led to disputes about the ability of governments to protect jobs, and also led to significant pressure at the borders.  If this all sounds horribly familiar then read on because now we're going to learn that it can also lead to the court system being bogged down in disputes between local policy and NAFTA rules. Let's say you represent a consortium of US investors and want to set up a golf course in beautiful Canada. The Canadian government denies you the right to plough up an area of designated beauty but you in turn argue back that you are completely compliant with all NAFTA legislation on the environment and that your rights, protected by NAFTA, are being illegally undermined.  I do hope you enjoyed the Trump satire there because if you didn't I will hunt you down and call you bad names like turnip and toilet-head. Boy, now I know how Stewart Lee feels on stage and, let me tell you, it is grrrrreat. Before I get carried away, here is a real investor-state dispute: Canada tried to ban the import of a gasoline additive from a US company called the Ethyl Corporation.  The Canadians lost the case and had to pay $15,000,000 in addition to overturning the ban.  Perhaps more topical is an ongoing case for $119,00,000 over a fracking ban in Quebec.  This kind of investor-state dispute has led to the Canadian government gaining the accolade of the most sued government in the world under free trade tribunals.  Here is a list of ongoing cases against the Canadian government. Quite impressive, isn't it?

Let's do a quick recap.  NAFTA has limited the ability of governments to stimulate jobs growth, increased levels of cross-border migration, and resulted in local lawmakers having their good intentions for the environment overturned in the courts. Does anyone still think David Davis is right that signing our own trade deals will let the UK take back control?  I don't.  Any trade deal we sign will necessarily come at an attempt to level the playing field for all parties.  That can only be achieved through setting out common rights and responsibilities.  After all, what kind of fool from country A would sign a trade deal with country B when there is simply no hope to competitively manufacture products for sale in country B?  Sadly, I suspect David Davis might be exactly that kind of fool.  A quick google for "NAFTA criticism" will show that almost all civic and legal friction has resulted from differences in attitudes to the environment or in levels of economic development or in health and safety standards.  This might explain why TTIP has thankfully reached an impasse. Doesn't it make more sense to pursue a trade deal with the nations most closely aligned to your own?  Your immediate neighbours, perhaps.  Oh yeah, we had one of those, didn't we?

I don't want anyone to come away from this blog post thinking I'm against trade deals.  I could easily follow up this post with stories about how NAFTA transformed North America for the better. The US is even pursuing a further trade deal known as the Trans Pacific Partnership so they must see some value in them.  Also, I live here in sunny Switzerland as a direct result of trade deals so it would be paradoxical to be against them.  My only point here is that trade deals necessarily involve ceding power to the deal itself because contracts always lay out the rights and responsibilities of each party. This seems to have escaped the collective mind of the leading Brexiteers.  What's more, instead of trade deals with countries most closely aligned to our own values and economies, we are now hell-bent on agreements with countries that have quite different approaches to workers' rights or the environment or employment law or taxation.  As a consequence, the middle ground on these deals will be far, far away from either side.  I can imagine many putative UK trade deals will either stumble in endless negotiations like TTIP did or eventually prove even more unpopular than the EU due to the legal imposition of rights and responsibilities that are out of touch with British sentiment.

Will we see more articles about scary US cleaning products?  Answers on a postcard to David Davis MP.
What will Nigel Farage have to say when a consortium of Malaysian investors sues the UK government in a UK court and wins the case?  Maybe they want to open up a centre of nocturnal Malay folk dancing near Nigel's house . Will he finally be happy and free? Will the Daily Mail rail against investor-state disputes with any of the energy they devote to the ECHR?  Will the Daily Express devote every front page to stories about dangerous American shampoo?  I don't know the answer but I definitely don't want to be a citizen of the UK when I do find out.

Over and out,

Terry

PS I promise to be polite and respectful next time.  Don't know what came over me there.  Too much Stewart Lee on youtube, I think.

PPS If you enjoyed the trade deals theme there is more to come.  Fascinating stuff.  Who would have thought comprehensive trade deals with your nearest neighbours make good sense?