The Basis of EU Trade Deals

We do not need to base our deals on those negotiated by others, although examinations of such might provide some ammunition.  We need the deal which is right for us and our negotiators need to use the advantage of our trade deficit to force an acceptable one.

I am concerned to read that Liam Fox “revealed that he will be allowed to cherry pick the brightest and the best from each Government department to ensure he heads the strongest team possible to advance Britain’s interests. “  Hopefully he might not leave David Davis with the worst of the bunch to negotiate with the EU.

I would like to know what experience of hard negotiations those “brightest and the best”, or the others, bring to the table. The issue with using government employees as negotiators is that there is no price for failure. Mess up and they will simply return to their day jobs and the taxpayer will eventually pay. Government ministers might change after an election but those in the departments behind them might have not. Their negotiating abilities are highlighted by the disastrous – for the taxpayer – PPI projects of the Blair/Brown era.

On the other hand we must have thousands of very experienced negotiators in the private sector used to complex contracts and in particular dealing with issues when things do not go according to plan. The big difference here is in the price for failure, which could have serious financial consequences for the company, even leading to its demise. Of course the negotiators themselves will not survive such a fate and must always be on their mettle to safeguard their own livelihoods. These people are the “hard-nosed” negotiators we need!

Another aspect of negotiation is having the ability to walk away. It should be clear in everyone’s mind (but not of course declared) what the break point is, where a deal becomes unacceptable. That might normally be a financial constraint but could be something else like potential failure in a high risk project affecting reputation and ability to gain other work. In this context it includes the avoidance of any rules which the EU wants to impose outside those we would accept from one of our regular non-EU trading partners. The negotiators need to know when it is necessary to walk away. This is where our advantage will force the deal which is right for us. Of course that does not mean that we should force the other side into an untenable position either; after all we still like to trade with them, but as one part of a global network.

It is important that trade deals are just that. We should make it clear from the outset that we will not accept, for example, free movement of people as a pre-condition. That is a separate matter and must remain so. After all, trade generally occurs between individual companies and organisations, most of which are not in public ownership. Would they accept the employment of foreign workers in their UK plants as a condition of trade?

New Free Trade Agreements

Hopefully we should soon be free of the EU shackles and it is right to prepare the ground for new, one-to-one trade deals with other countries. By and large goods sourced directly from the existing EU countries comply with common standards ensuring their fitness for purpose. However, it is necessary to exercise caution and not assume that goods from other countries will meet those standards, even if they are claimed to do so and are and identified as such.  

I have direct experience of electrical items from China with a “CE” mark moulded into them which have proved to be dangerous in use.  There is low grade steel and outsourced components already being imported; all supported by the bean counters being allowed to overrule the Engineers despite the evidence in high reject rates. “Still costs us less” they say, but what of the future when the home manufacturers have been priced out of the market and proper quality is a thing of the past?  Maybe the imported goods will improve over time, but only if we apply our standards rigorously.

It is easy for the politicians to say that we can replace European sources with those in the Far East, but in practice such issues will make it difficult. Hopefully our home industries will see a revival but government needs to create an environment which will encourage them.

We do of course need to commence that encouragement now, but it would be a good deal easier if we were to cut our contributions to the EU sooner. We should, as suggested, prioritise trade deals with already willing partners but I would be wary of any enthusiasm for including China in that list.

TTIP

We should be wary of diving headlong into this. I am sure that this alone could take up an entire article so will not attempt to delve into it here. However my understanding is that it might give large corporations the upper hand in dealing with national governments.  We need more clarity.

Grants from Brussels

If our negotiators are not careful we, i.e. the taxpayers, will end up paying such grants with neither corresponding reduction in our membership fees nor any change in relevant regulation; for now we can only talk about such changes, but hopefully plan for them and await our final exit.

Of course this would be unrealistic. Farmers and the like need a smooth transition which cannot happen in one day, with everything else that is going on.  Our negotiators’ first task should be the agreement of a phased transfer with our membership fee being gradually reduced, along with the staged withdrawal of grants.

At present this is another huge disadvantage of Article 50, but with the above modification could become one of its strengths.

Conclusion

We are embarking on a long and difficult path and our enemies, many of them in government, will seek to frustrate our exit at every opportunity.  Moreover, we cannot place absolute trust in any of those in government who declare themselves on our side. At least David Davis seems to be on our side and he does have some experience of working in the real world.

No doubt we will see more street demonstrations by the Remainers, most of whom surely do not understand the present state of the EU, let alone where it is heading. We must continue our efforts to enlighten them.

Perhaps the worst aspect of the long process of leaving is the continuation of mass immigration by those who seek our destruction. We will see if our new Home Secretary is more effective than May in this respect.

One thing that we might usefully do is to improve the security and increase the capacity of our major ports, so reducing reliance on Rotterdam and Antwerp.  The cancellation of HS2, which is just an EU vanity project, would help finance this.

Once we have rid ourselves of the EU, but continue to trade with the countries of Europe and many others in the world, no doubt we will need to turn out attention to a new enemy, which might simply be another facet of the one we just left.

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