The world waits for reports of President Trump’s health, as the US election swiftly veered from farce (the first presidential debate) to medical drama.
Meanwhile, in terms of Brexit, it has been a week of a lot of speculation and non-stories. Foremost amongst these was the rather pointless announcement that the EU will launch legal action against the UK over the Internal Markets Bill. This is an announcement that will only reinforce pro-Brexit sentiment in the UK, reminding us once again of exactly how annoying it is to have the EU try and use their courts to tell us what to do. It is also simply not a big story: the EU sues its member states with relative frequency, and this particular effort will most likely be rendered irrelevant by UK-EU negotiations soon anyway.
The truth is that the real action continues behind closed doors in the negotiating room. Until the terms of a potential deal is announced, it is essentially all just noise. When these are announced, we shall have to watch closely. It is certain that both sides will announce ‘compromises’, and we will have to establish whether these are genuine compromises or unbalanced capitulations.
Both sides are announcing that 15 October will be a crunch date, by which the most important decisions must be made. Boris Johnson has signalled that Britain is prepared to start preparations for ‘Australian-style’ trade (i.e. no deal) from that point on if no acceptable compromise can be found.
Meanwhile trade talks are progressing with the USA. We are reassured from private discussions with high-level US contacts that a free trade agreement between the UK and USA is unlikely to be blocked by Congressional objections focussed on the Good Friday Agreement. Such objections had previously been voiced by House Speaker Nancy Pelosi.
On the website this week
Fishing: The Great Betrayal, by Ruari McCallion
British fishermen believe UK waters are not only overfished by other EU countries but that the Common Fisheries Policy also means they are restricted as to how much they can fish. The CFP began as a land (or rather, sea) grab, evolved into a stitch-up and grew into an environmentally devastating and commercially disastrous scandal. The EU, UK government and avaricious commercial interests are all to blame – and we’re far from being out of the woods yet.
“If the EU were to finally start behaving reasonably, yearly negotiations with the UK based on zonal attachment, as they already do with Norway, could be quickly agreed. However if they continue to demand 100% of the status quo, and carry on making ridiculous assertions about the UK regaining sovereignty over its waters but not the fish, as Barnier did recently, then under no deal, EU fishing boats should be excluded.”
Busting the food price myth in a no-deal Brexit, by Catherine McBride
On Friday the BBC headline news included an item entitled: Shoppers could pay more after no-deal Brexit. The story was planted by the British Retail Consortium (BRC) who said that tariffs would add £3.1bn a year to the cost of importing food and drink unless the UK and the EU can strike a free trade agreement. Catherine McBride discusses this article as a lesson in propaganda.
“The BBC should stop trying to scare British shoppers. The UK food supply is much more resilient than the BBC thinks.”
Would a ‘no deal’ Brexit really cost three times more than Covid? By Julian Jessop
Brexit talks resumed this week with growing hopes that a trade deal can be done in time for the October EU summit. This follows speculation that the UK has softened its position after Boris Johnson was ‘shocked by a London School of Economics report suggesting that no deal would cost Britain up to three times more than coronavirus pandemic’. But, as Julian Jessop explains, we should be wary of believing everything you read in the papers – or even in academic studies.
“Frankly, even if all these results are backed by the most sophisticated econometric modelling, they fail the common-sense test.”
The Thin Grey Line, by Adrian Hill
An island nation with global interests needs a navy. With two new aircraft carriers, the Royal Navy will be a formidable force. But, as Adrian Hill notes, it has survived a succession of cuts by the skin of its teeth, and the thin grey line still has big gaps in it.
“Naval power acts as a deterrent to political gamblers and thereby prevents conflicts.”
The EU increasingly resembles a reincarnated Austro-Hungarian empire with Germany the Austrian rider, and France the Hungarian horse. In Washington, Moscow, or Beijing, Brexit can only reinforce the perception that, as the global centre of gravity shifts, the European Union is doomed to be nothing more than a plebeian version of the Habsburg ‘Kakania’ immortalized by Robert Musil. There are signs that Paris is realizing this and looking further east.
“President Macron is unlikely to call for a Frexit anytime soon. But in the coming years, as he continues to make the predictable noises about the centrality of the ‘Franco-German couple’ and the need for ‘European sovereignty’, Macron is also quietly going to strengthen the Franco-British entente cordiale while continuing to turn toward the Open Sea.”
Key points this week
A Brexit Blow to Automobile Manufacture?
A recent story from the BBC pronounces fresh woes for the British car industry. The issue concerns the ‘rules of origin’ which govern whether a vehicle (say) made in Britain but using a number of foreign components counts as ‘British’ for the purposes of exports. The EU has refused to countenance allowing British manufacturers to claim Japanese and Turkish parts as British under these rules of origin agreements – despite the fact that both have agreements with the EU, and the requests of both British and EU industries that cumulation rules should include parts from these countries.
Yet this hardly represents as serious a problem as the BBC suggests. To begin with, if the EU is allowing cumulation of EU components (which are the largest source of components for UK manufacturers) then the threshold for UK content will be met in the great bulk of cases; Japanese and Turkish car parts form a minority of UK car part imports. While batteries for electric cars do represent a special case given their high per-unit value, they also present an opportunity for production to be moved to the UK, given the recent discoveries of lithium deposits in Cornwall. And cumulation restrictions can be avoided in the Turkish case if the UK joins the Regional Convention on Pan- Euro-Mediterranean preferential rules of origin (the PEM Convention).
In the wider view, this refusal represents a particularly short-termist protectionism by the Commission, to try and force British manufacturers to source components from the EU at the expense of our other trade partners. This runs against the prevalent trend in automotive manufacture, however, towards importing more components from outside the EU. The growth in demand for electric vehicles, in particular, will reshape global supply chains in ways that are as yet unclear. Europe’s forbidding third country cumulation will therefore only lessen the value of a free trade agreement with the EU over the medium term. More generally, most British production of cars or other manufactures will be unaffected by these rules. The issue is a very concentrated one, covering just a few sectors and not even all firms within those sectors. As a recent OECD paper shows, the foreign share of value added in UK exports is around 15%, of which at least half is EU content.
Finally, this story and others like it contextualise the recent controversy over Katya Adler’s tenure as the BBC’s Europe editor. It has been clear for some time to Eurosceptics that the BBC’s agenda has been to undermine the government’s position and accept Brussels’ statements at face value – and despite new director Davie’s promises to represent more than a narrow section of the metropolitan elite, his defence of Adler’s reporting suggests that the organisation has some way yet to go.
Key Points is compiled by a Cambridge PhD student.
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How you can help
There is much about Brexit still to be decided. Our MPs listen to their constituents. Do continue to send them links to our articles, especially on matters relevant to your constituency – for example, in rural areas, articles on the threat to British agriculture. Alternatively, make an appointment to speak to them at their next surgery. Let them know what you want post-Brexit Britain to look like.
As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU will be good for the UK economy and for our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.
An Oxbridge PhD Student
Dr Graham Gudgin
Economist, Centre for Business Research, Judge Business School University of Cambridge
Professor Robert Tombs
Emeritus Professor of French History, University of Cambridge