Profile: Liz Truss, Perky promoter of free trade with Japan – and, like Johnson, a disruptor

29 Oct

Liz Truss, the International Trade Secretary, proclaims the brilliance of the free trade agreement she has just signed with Japan. According to a video posted by her on Twitter, the deal, the first of its kind since Brexit, is “a win-win” and “just a glimpse of global Britain’s potential”, for it paves the way to other deals.

Experts observe that the economic benefits of the first deal are likely to be “very small”, and mockery erupted when the Department for International Trade tweeted, during an episode of The Great British Bake Off, the questionable assertion that soy sauce from Japan will become cheaper.

Nonetheless, it’s worth remembering that opponents of Brexit lauded the EU’s trade deal with Japan, while taking side-swipes at the UK’s “untested, yet still somehow flailing, negotiating team”.  Truss has delivered a trade agreement which some Remain supporters said wouldn’t happen before a trade deal was complete with the EU.

It is extraordinarily difficult to sing the praises of a trade deal. Rosy assertions about future prosperity have yet to be confirmed by events, and are countered by grim forecasts from depressed Remainers, while the voluminous details of what has been agreed are deeply technical and strike the public as intolerably dull.

In the present Cabinet, only Boris Johnson, Michael Gove and perhaps Rishi Sunak could give a speech about trade which would raise people’s spirits.

Like most of the rest of her ministerial colleagues, Truss is a dull speaker who never seems to get much better.

But she has the virtue of never appearing to get downhearted. She possesses a seemingly invincible perkiness.

Last summer, while contemplating a bid for the Tory leadership, she told The Mail on Sunday that as a woman in politics, “you have to be prepared to put yourself forward because nobody else is going to”.

In her case, this could well be true. A senior Tory this week told ConservativeHome: “Her longevity in Government is a mystery to virtually the whole parliamentary party.”

The senior Tory had perhaps failed to observe that in the most recent ConHome Cabinet League Table, Truss, with a net satisfaction rating of +69.7, was second only to Sunak, on +81.5, with Dominic Raab in third place with +59.7 and Gove fourth on +56.4, while the Prime Minister got -10.3.

At the age of 45, Truss is a veteran, the second-longest serving member of the Cabinet, which she joined as Environment Secretary in July 2014, a record beaten only by Gove, appointed Education Secretary in May 2010.

Perhaps that explains why the editor of ConHome possesses a seemingly inexhaustible appetite for profiles of Truss. The first appeared in March 2014, when she was a rising star of the 2010 intake, a tough-minded Thatcherite northerner who had been educated at a comprehensive school and was tipped by some as a future leader.

The next profile appeared in March 2017, by which time she was Lord Chancellor and Justice Secretary, and the judges were furious with her for failing, as they saw it, to defend judicial independence against attack by The Daily Mail.

Three months later, she was demoted to the post of Chief Secretary to the Treasury. Here she continued to fight her corner, and on occasion to express her disrespect for Cabinet colleagues (including Gove, by now Environment Secretary), as in this lecture, delivered at the London School of Economics in June 2018:

“I’ve never liked being told what to do. And I don’t like to see other people being told what to do. Britain is a country that is raucous and rowdy…

“I see it as my role as Chief Secretary to the Treasury to be on the side of the insurgents – I see myself as the disruptor in chief! Because British people love change…

“And government’s role should not be to tell us what our tastes should be.

“Too often we’re hearing about not drinking too much…eating too many doughnuts…or enjoying the warm glow of our wood-burning Goves…I mean stoves.

“I can see their point: there’s enough hot air and smoke at the Environment Department already…

“we have to recognise that it’s not macho just to demand more money. It’s much tougher to demand better value and challenge the blob of vested interests within your department.

“Some of my colleagues are not being clear about the tax implications of their proposed higher spending.

“That’s why, in next year’s Spending Review, I want to take a zero-based, zero-tolerance approach to wasteful spend.”

In May 2019, while dipping her toe in leadership waters which turned out to be too chilly for her, Truss spoke of “a need to build a million homes on the London Green Belt”. On an earlier occasion, to an American audience, she had spoken with relish of a world in which “no one knows their place, no one fears failure, and no one is ashamed of success.”

This gung-ho side of her, the relish she takes in assaulting the cosy world of received pseudo-liberal opinion, her longing to let the free market rip in order to produce the wealth which alone will rescue the poor from over-priced housing and allow them to feed their children, find a ready assent in Johnson.

He too is a disruptor, who wants to unleash the animal spirits which have been crushed by socialist planning laws, and who favours tax cuts for everyone, including that most despised group, the better off.

Truss became the first Cabinet minister to declare for Johnson, and as Stephen Bush some time afterwards related in The New Statesman:

“During his bid for the leadership, Liz Truss advised Johnson on economic policy, and was the architect of plans to cut taxes for people earning over £50,000. Civil servants dreaded a Johnson government because they found Truss’s tenure as Chief Secretary to the Treasury under Theresa May exhausting, for reasons ranging from her demanding work schedule to her habit of asking officials multiplication questions at random intervals. Few dispute that she would have been able to do the job effectively. But Johnson discarded her as his chancellor-designate in part because of the row the tax plans caused, and in part because Sajid Javid was more willing to spend freely.”

Truss was more suited to the go-getting task of pursuing free-trade deals, as part of a global Britain strategy in which – despite having voted Remain in 2016 – she has the merit of actually believing.

She holds another post, Minister for Women and Equalities, and here too she is of value to Johnson, by holding the line against fashionable opinions which if adopted by him, would destroy his credibility with the former Labour voters in the Midlands and the North who handed victory to the Conservatives last December.

Truss is conducting a review of the whole field of equalities and diversity policy, and at Downing Street’s behest, has already refused to allow self-definition by transgender people under the Gender Recognition Act.

Crispin Blunt, Conservative MP for Reigate, was furious with her:

“Does she appreciate that trans people cannot discern any strong or coherent reason for this screeching change of direction?

“Does she understand the anger at the prospect of them receiving their fundamental rights being snatched away?”

But the Labour Party leadership has declined to pick a serious fight over this issue, for it knows that many old-style feminists are aghast at the idea of trans men being allowed to declare themselves women and enter women-only spaces.

So Truss, with her odd mixture of indiscretion and obedience, her contempt for liberal groupthink, love of freedom and faith in free trade, is in many ways a useful ally for Johnson.

Her detractors will continue to say she has only got where she is today because the Prime Minister needs a reasonably high proportion of women in senior posts. But it would be fairer to say that she has got there because she had the gumption to declare her loyalty to him in June 2019, and is in many respects a kindred spirit.

Profile: Liz Truss, Perky promoter of free trade with Japan – and, like Johnson, a disruptor

29 Oct

Liz Truss, the International Trade Secretary, proclaims the brilliance of the free trade agreement she has just signed with Japan. According to a video posted by her on Twitter, the deal, the first of its kind since Brexit, is “a win-win” and “just a glimpse of global Britain’s potential”, for it paves the way to other deals.

Experts observe that the economic benefits of the first deal are likely to be “very small”, and mockery erupted when the Department for International Trade tweeted, during an episode of The Great British Bake Off, the questionable assertion that soy sauce from Japan will become cheaper.

Nonetheless, it’s worth remembering that opponents of Brexit lauded the EU’s trade deal with Japan, while taking side-swipes at the UK’s “untested, yet still somehow flailing, negotiating team”.  Truss has delivered a trade agreement which some Remain supporters said wouldn’t happen before a trade deal was complete with the EU.

It is extraordinarily difficult to sing the praises of a trade deal. Rosy assertions about future prosperity have yet to be confirmed by events, and are countered by grim forecasts from depressed Remainers, while the voluminous details of what has been agreed are deeply technical and strike the public as intolerably dull.

In the present Cabinet, only Boris Johnson, Michael Gove and perhaps Rishi Sunak could give a speech about trade which would raise people’s spirits.

Like most of the rest of her ministerial colleagues, Truss is a dull speaker who never seems to get much better.

But she has the virtue of never appearing to get downhearted. She possesses a seemingly invincible perkiness.

Last summer, while contemplating a bid for the Tory leadership, she told The Mail on Sunday that as a woman in politics, “you have to be prepared to put yourself forward because nobody else is going to”.

In her case, this could well be true. A senior Tory this week told ConservativeHome: “Her longevity in Government is a mystery to virtually the whole parliamentary party.”

The senior Tory had perhaps failed to observe that in the most recent ConHome Cabinet League Table, Truss, with a net satisfaction rating of +69.7, was second only to Sunak, on +81.5, with Dominic Raab in third place with +59.7 and Gove fourth on +56.4, while the Prime Minister got -10.3.

At the age of 45, Truss is a veteran, the second-longest serving member of the Cabinet, which she joined as Environment Secretary in July 2014, a record beaten only by Gove, appointed Education Secretary in May 2010.

Perhaps that explains why the editor of ConHome possesses a seemingly inexhaustible appetite for profiles of Truss. The first appeared in March 2014, when she was a rising star of the 2010 intake, a tough-minded Thatcherite northerner who had been educated at a comprehensive school and was tipped by some as a future leader.

The next profile appeared in March 2017, by which time she was Lord Chancellor and Justice Secretary, and the judges were furious with her for failing, as they saw it, to defend judicial independence against attack by The Daily Mail.

Three months later, she was demoted to the post of Chief Secretary to the Treasury. Here she continued to fight her corner, and on occasion to express her disrespect for Cabinet colleagues (including Gove, by now Environment Secretary), as in this lecture, delivered at the London School of Economics in June 2018:

“I’ve never liked being told what to do. And I don’t like to see other people being told what to do. Britain is a country that is raucous and rowdy…

“I see it as my role as Chief Secretary to the Treasury to be on the side of the insurgents – I see myself as the disruptor in chief! Because British people love change…

“And government’s role should not be to tell us what our tastes should be.

“Too often we’re hearing about not drinking too much…eating too many doughnuts…or enjoying the warm glow of our wood-burning Goves…I mean stoves.

“I can see their point: there’s enough hot air and smoke at the Environment Department already…

“we have to recognise that it’s not macho just to demand more money. It’s much tougher to demand better value and challenge the blob of vested interests within your department.

“Some of my colleagues are not being clear about the tax implications of their proposed higher spending.

“That’s why, in next year’s Spending Review, I want to take a zero-based, zero-tolerance approach to wasteful spend.”

In May 2019, while dipping her toe in leadership waters which turned out to be too chilly for her, Truss spoke of “a need to build a million homes on the London Green Belt”. On an earlier occasion, to an American audience, she had spoken with relish of a world in which “no one knows their place, no one fears failure, and no one is ashamed of success.”

This gung-ho side of her, the relish she takes in assaulting the cosy world of received pseudo-liberal opinion, her longing to let the free market rip in order to produce the wealth which alone will rescue the poor from over-priced housing and allow them to feed their children, find a ready assent in Johnson.

He too is a disruptor, who wants to unleash the animal spirits which have been crushed by socialist planning laws, and who favours tax cuts for everyone, including that most despised group, the better off.

Truss became the first Cabinet minister to declare for Johnson, and as Stephen Bush some time afterwards related in The New Statesman:

“During his bid for the leadership, Liz Truss advised Johnson on economic policy, and was the architect of plans to cut taxes for people earning over £50,000. Civil servants dreaded a Johnson government because they found Truss’s tenure as Chief Secretary to the Treasury under Theresa May exhausting, for reasons ranging from her demanding work schedule to her habit of asking officials multiplication questions at random intervals. Few dispute that she would have been able to do the job effectively. But Johnson discarded her as his chancellor-designate in part because of the row the tax plans caused, and in part because Sajid Javid was more willing to spend freely.”

Truss was more suited to the go-getting task of pursuing free-trade deals, as part of a global Britain strategy in which – despite having voted Remain in 2016 – she has the merit of actually believing.

She holds another post, Minister for Women and Equalities, and here too she is of value to Johnson, by holding the line against fashionable opinions which if adopted by him, would destroy his credibility with the former Labour voters in the Midlands and the North who handed victory to the Conservatives last December.

Truss is conducting a review of the whole field of equalities and diversity policy, and at Downing Street’s behest, has already refused to allow self-definition by transgender people under the Gender Recognition Act.

Crispin Blunt, Conservative MP for Reigate, was furious with her:

“Does she appreciate that trans people cannot discern any strong or coherent reason for this screeching change of direction?

“Does she understand the anger at the prospect of them receiving their fundamental rights being snatched away?”

But the Labour Party leadership has declined to pick a serious fight over this issue, for it knows that many old-style feminists are aghast at the idea of trans men being allowed to declare themselves women and enter women-only spaces.

So Truss, with her odd mixture of indiscretion and obedience, her contempt for liberal groupthink, love of freedom and faith in free trade, is in many ways a useful ally for Johnson.

Her detractors will continue to say she has only got where she is today because the Prime Minister needs a reasonably high proportion of women in senior posts. But it would be fairer to say that she has got there because she had the gumption to declare her loyalty to him in June 2019, and is in many respects a kindred spirit.

Minette Batters: Today, MPs should insist on better scrutiny arrangements for future trade deals

12 Oct

Minette Batters is the President of the National Farmers Union.

Today, MPs will once again be debating the Agriculture Bill in the Commons, and once again the critical issue of how we can strike out as an independent trading nation while safeguarding our food and farming standards will be addressed. But time is running out for Parliamentarians and government to come up with a definitive answer.

This has become one of the defining issues that has emerged from Brexit. Now we have left the EU, we have the freedom to negotiate our own trade deals and to define our own standards.

I want to be part of that – selling more of our great British food abroad, and using our import policy to drive the competitiveness of our farmers. But we are also facing the reality of a world with different values and priorities to our own, and with different approaches to food and farming.

It is difficult to disentangle this debate from the wider question of what it means to take back control and to take a new role on the world stage as Global Britain. Our voice will have regained its individuality, but we are no longer backed by the economic status of being part of the largest economy on the globe. This forces us to make some tough choices – and so it is vital that those choices are made by our elected representatives in Parliament. Proper Parliamentary accountability: that is what this current debate on trade and standards boils down to.

I was struck by the recent furore over the Internal Market Bill and the Withdrawal Agreement. It seems that many of those who vocally supported the Withdrawal Agreement earlier this year were disappointed with some of the fine print. Whatever the rights and wrongs of that particular issue, it was a stark reminder of what can happen when critical, international agreements are not properly scrutinised.

The Withdrawal Agreement runs to some 540 pages. A typical trade deal can be three times bigger. The EU/Canada agreement, for example, runs to nearly 1600 pages. Without proper scrutiny, it’s obvious that our future trade deals could hide all sorts of commitments we should at least be aware of.

A former Tory Prime Minister, the Earl of Derby, compared the development of the UK constitution with an old country house, added to over the years with a window here and a gable there. Well, that is the nature of the system we are relying on to scrutinise trade deals – cobbled together from different materials accumulated over centuries.

But with Brexit, we have cleared the furniture and can now take care of the leaky plumbing and fraying electrics. We should take the chance to create a bespoke system of trade scrutiny while we can.

We are told that our current arrangements for scrutinising trade deals are fine. But this is not the opinion of a number of recent Parliamentary select committee inquires and independent assessments.

The truth is, if you wanted a system that ran a high chance of side-lining MPs from having a really good say on trade policy, then the current arrangements under the Constitutional Reform and Governance Act 2010 (CRAG) would do the job.

Yes, MPs can vote against a trade deal, but they have 21 days to read these enormous tomes, and – as a negative resolution process – they then need to get themselves organised to pray against it. And repeatedly, every 21 days. There is no requirement for government to provide time to debate or vote on the deal.

It’s also important to recognise that changes to our domestic standards that result from trade deals will require domestic legislation to implement, including changes to our food standards.

This is an extra layer of Parliamentary involvement – but, again, it is very weak. Nearly all would be via secondary legislation, mostly through negative resolutions. I wonder how often any of our current MPs have voted against a Statutory Instrument under the negative resolution procedure – the last time such an instrument was defeated in the Commons was 1979. Robust Parliamentary scrutiny it isn’t.

Perhaps most concerningly of all, there are in fact no safeguards in domestic law for standards in areas such as animal welfare or environmental protection which can be used to control imports. I believe our food safety standards are strong. But in trade policy these cannot be extended to concerns over the way food is produced – for instance on animal welfare or environmental measures.

This is a reflection of international trade law, not on the Government, but it throws into sharp relief the reality behind the assurances we are given that our standards have been safeguarded in law after Brexit. Quite simply, they haven’t.

To be fair, Liz Truss and the Department for International Trade have recently indicated that they are looking at ways of facilitating greater Parliamentary scrutiny – providing select committees with advance sight of deals, making Parliamentary time available for debates, and providing impact assessments to inform MPs. But all of this is somewhat cobbled together and informal and could easily be reversed in future. There is no safeguard that such a system will remain in place, or even used for each and every deal. We need more.

So what would that look like?

First, we need a clear and simple process that ensures Parliament is given time to consider the details of any trade deals – 21 days is too short. Next, here needs to be formal, independent and expert evidence on those trade deals for Parliament to consider too, again something that needs more than 21 days. Finally, Parliament needs to be formally provided with sufficient time to debate these deals and to vote on whether they should be ratified or not. Relying on an outdated system that only allows them to continuously delay ratification every 21 days, without debate, is quite plainly not fit for purpose.

Lord Curry’s amendment to the Bill – New Clause 18 – would have helped considerably. It would give MPs expert advice on the impact of trade deals before any such deals are signed. Unfortunately, it appears that the Speaker may not move the amendment for debate. Nevertheless, the principles behind it stand, and the issues will still be debated under New Clause 16, which calls for imports under future trade deals to meet equivalent standards to those in the UK.

The moment has come. The implications of the result of the EU referendum must now be addressed. If Brexit was about anything, it was taking back control. Many farmers, who have close and strong links with their MPs, had become exasperated by decisions they saw as being made by faceless bureaucrats in Brussels. They will not be impressed if in future decisions that could be existential for their businesses are taken by faceless negotiators in Whitehall and the negotiating rooms of Washington, Canberra and Wellington. Tonight, during the debate on the Agriculture Bill, I hope MPs will make these points loud and clear to government.

What the new Anglo-Japanese trade deal tells us about ‘Global Britain’

12 Sep

Amidst all the challenging stories dogging the Government at the moment, yesterday’s newspapers offered a rare bright spot: the conclusion of an ‘historic’ trade agreement between the United Kingdom and Japan.

With talks with the European Union having almost completely broken down, and negotiations with the United States also having stalled, it offers a much-needed sense of momentum to the idea of a free-trading ‘global Britain’ so cherished by Brexiteers.

It also undercuts the impression that Boris Johnson’s brinkmanship over the UK Internal Market Bill has left it internationally isolated, although the timing reportedly owes more to the imminent departure of Abe Shinzō, the Japanese premier.

Yet the detail also highlights the challenges of the new approach. The headline figure of a £15.2 billion boost to Anglo-Japanese trade sounds impressive, but is a relative drop in the ocean in GDP terms. Likewise on agriculture, a sensitive topic which is one of the key stumbling blocks to a deal with the US, Britain has only managed to secure access to any unused capacity in a tariff deal negotiated by the EU.

On the other hand, it does illustrate that it is possible for the Government to effectively ‘roll over’ trading relationships built whilst the UK was inside the EU – and indeed, deepen them in areas of particular interest to Britain, such as digital and financial services. Liz Truss, the Trade Secretary, has also indicated that she hopes the deal will be a stepping stone towards British membership of the Trans-Pacific Partnership – which the Financial Times describes as “a sprawling multinational trade pact” – and thus further out of the EU’s orbit.

What seems unlikely is that deals like this will have much cut-through with the electorate, who have never been greatly interested in the minutiae of trade or regulatory policy. As the Vote Leave team recognised during the referendum, ‘global Britain’ is not a narrative which greatly excites the voters, especially not those voters who have been won over to the Conservatives since 2016.

If the Government wants to convert trade policy into an electoral dividend, then, it will need to package them up as part of a broader, more appealing, and more digestible narrative with more concrete benefits, as advocates of CANZUK are doing.

The deal with Tokyo is undoubtedly good news. But the detail of the agreement, and the way it has been completely swallowed by the news cycle, spotlights both the challenges involved in operating an independent trade policy and the limited political rewards of doing so.

Image credit: LSE Digital Library.

What the new Anglo-Japanese trade deal tells us about ‘Global Britain’

12 Sep

Amidst all the challenging stories dogging the Government at the moment, yesterday’s newspapers offered a rare bright spot: the conclusion of an ‘historic’ trade agreement between the United Kingdom and Japan.

With talks with the European Union having almost completely broken down, and negotiations with the United States also having stalled, it offers a much-needed sense of momentum to the idea of a free-trading ‘global Britain’ so cherished by Brexiteers.

It also undercuts the impression that Boris Johnson’s brinkmanship over the UK Internal Market Bill has left it internationally isolated, although the timing reportedly owes more to the imminent departure of Abe Shinzō, the Japanese premier.

Yet the detail also highlights the challenges of the new approach. The headline figure of a £15.2 billion boost to Anglo-Japanese trade sounds impressive, but is a relative drop in the ocean in GDP terms. Likewise on agriculture, a sensitive topic which is one of the key stumbling blocks to a deal with the US, Britain has only managed to secure access to any unused capacity in a tariff deal negotiated by the EU.

On the other hand, it does illustrate that it is possible for the Government to effectively ‘roll over’ trading relationships built whilst the UK was inside the EU – and indeed, deepen them in areas of particular interest to Britain, such as digital and financial services. Liz Truss, the Trade Secretary, has also indicated that she hopes the deal will be a stepping stone towards British membership of the Trans-Pacific Partnership – which the Financial Times describes as “a sprawling multinational trade pact” – and thus further out of the EU’s orbit.

What seems unlikely is that deals like this will have much cut-through with the electorate, who have never been greatly interested in the minutiae of trade or regulatory policy. As the Vote Leave team recognised during the referendum, ‘global Britain’ is not a narrative which greatly excites the voters, especially not those voters who have been won over to the Conservatives since 2016.

If the Government wants to convert trade policy into an electoral dividend, then, it will need to package them up as part of a broader, more appealing, and more digestible narrative with more concrete benefits, as advocates of CANZUK are doing.

The deal with Tokyo is undoubtedly good news. But the detail of the agreement, and the way it has been completely swallowed by the news cycle, spotlights both the challenges involved in operating an independent trade policy and the limited political rewards of doing so.

Image credit: LSE Digital Library.

Stephen Booth: Why Stilton matters to the Japanese trade deal – and how talks can bring the UK closer to the CPTPP.

20 Aug

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Global trade is the result of billions of individual decisions taken by businesses and consumers, but trade negotiations and agreements are inherently political. They not only require politicians and policymakers to haggle, in painstaking detail, over tariffs, quotas, rules and regulations; trade deals are also tools of foreign policy and in an increasingly unsettled, competitive and multi-polar world they can signify alliances between nations or groups of nations. Outside the EU, the UK’s trade agreements must therefore simultaneously address narrow economic and wider geopolitical interests.

Last week, we learnt that the UK-Japan trade talks had hit a roadblock over UK demands for greater market access for exports of Stilton cheese. The talks still seem likely to conclude successfully but the episode illustrates how seemingly small issues can play a disproportionate role in trade negotiations.

This would be a significant agreement for the UK. Japan is the third largest economy in the world and an increasingly important strategic ally for the UK post-Brexit. A UK-Japan trade deal is also an important step towards the UK’s accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Total UK exports to Japan are already worth around £14 billion, just over half of which are in services, so increasing the market for UK blue cheese exports, which is currently worth around £100,000 in Japan, might appear a strange issue to potentially derail the talks. However, the UK’s demands on Stilton have not simply come out of the blue.

Growth in cheese exports is a recent UK success story, with the Department for International Trade (DIT) noting that the UK made it into the top ten cheese exporters worldwide in 2018, selling £665 million worth, almost half of which was cheddar. Growth in Asian markets in particular has been strong, with demand in China rising from £67,000 in 2013 to £6.5 million in 2018, so it is not unreasonable for the UK to seek greater opportunities for these products in Japan.

More significantly, the UK-Japan deal will replace the EU-Japan deal, which will cease to apply to the UK when the Brexit transition period ends on January 1, 2021. The goal, largely on the insistence of Japan, has been to seek a new agreement, rather than simply copy and paste the existing EU-Japan deal. Inevitably, however, with time tight, these talks have not departed significantly from the EU-Japan precedent with regard to trade in goods (services and data are likely to be the more innovative aspects of a UK-Japan deal).

“Automotive for agriculture” was a major feature of the EU-Japan negotiations and, in this case, Japan has been targeting an immediate removal of UK car tariffs, whereas the EU-Japan agreement only provides for phased reductions over several years. The UK has understandably countered that it cannot make the concession for nothing in return.

Under the EU-Japan deal, Japanese tariffs on hard cheeses such as cheddar would be phased out by 2033. But for blue cheeses, such as Stilton, there will only be duty-free access on an agreed quota. Reportedly, the UK has also targeted a faster reduction to Japanese tariffs on pork. If the UK is successful in increasing the quota or removing tariffs faster, it will have achieved concessions the EU did not, which would have obvious symbolic significance for Brexiteers.

We don’t yet know the full details of the eventual UK-Japan deal but the likely compromise is that neither side will get as much as they would like on cars or agriculture. Ultimately, this kind of tussle is part of the theatre of end-game trade negotiations, where both sides need to be seen by domestic audiences to be fighting hard over every inch. Indeed, given the importance of getting the agricultural lobby onboard in various UK trade negotiations to come, going into bat for British agriculture now is not a bad PR move for the Government.

Some commentators have questioned whether spending political capital on trade agreements is worth the candle since the estimated macroeconomic gains from them are relatively small. DIT estimates the increase to UK GDP from a Japan deal will be 0.07 per cent over the long run, while a deal with the United States would provide up to a 0.16 per cent boost.

Putting aside a valid debate about how accurately existing models capture all the facets of comprehensive modern trade agreements, these types of numbers are not unique to UK FTAs. The EU-Japan deal (the biggest ever completed by the EU) was estimated to boost EU GDP by 0.14 per cent, a figure regarded by independent researchers as “plausible, though at the high end of the range of past estimates”.

Ultimately, for advanced and open economies, trade agreements are rarely macroeconomically significant. They are opportunities to address microeconomic issues and require trade-offs to be made between them. These decisions can be hugely important for individual sectors, which is why they can be politically controversial.

Beyond any quantifiable economic benefits, closer economic and political cooperation via trade agreements presents an opportunity to build coalitions to help shape the course of regional or global developments. Successful conclusion of the Japan agreement and accession to the CPTPP will boost the economic and political relevance of the UK in the Indo-Pacific region, which is likely to host most of the world’s economic growth in the years ahead.

Similarly, Japan’s enthusiasm to reach a deal with the UK is not only about commerce. Foreign Minister Toshimitsu Motegi’s recent trip to London also provided a chance to discuss bilateral co-operation on security and defence, including the UK’s stronger stance towards China on issues such as Huawei and Hong Kong. A trade deal is another way to strengthen strategic bonds.

It is worth keeping this mind as another round of UK-EU talks – in this case to loosen ties – get underway this week. The Remain campaign had wanted the Brexit debate to be about trade above all else, but it was always primarily about politics. All trade agreements are political, but the level of economic and legal integration in the EU means it is as much, if not more, about politics than trade. Remain lost because it was unable, or unwilling, to make the intrinsic case for political union, or at least that it should be tolerated.

Indeed, the most significant macroeconomic consequences of Brexit – leaving the customs union and the single market – flow from the political desire to “take back control” of trade and regulatory policy. Continued dependence on Brussels in these fields without a vote in the EU’s political institutions was always likely to be untenable for the UK in the long-term.

Equally, sovereignty is never absolute. The more integration the UK seeks from trade agreements with the likes of the US and the CPTPP in the future, the more the UK will face difficult political trade-offs over its approaches to various issues from agricultural liberalisation to the regulation of data. Existing trade flows and geographical proximity to the EU will inevitably play some role in how the UK takes these decisions over the long-term.

However, it shouldn’t be a surprise that Brexit means treating the EU much more like any other trade partner. It’s the politics, stupid!

Stephen Booth: Why Stilton matters to the Japanese trade deal – and how talks can bring the UK closer to the CPTPP.

20 Aug

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Global trade is the result of billions of individual decisions taken by businesses and consumers, but trade negotiations and agreements are inherently political. They not only require politicians and policymakers to haggle, in painstaking detail, over tariffs, quotas, rules and regulations; trade deals are also tools of foreign policy and in an increasingly unsettled, competitive and multi-polar world they can signify alliances between nations or groups of nations. Outside the EU, the UK’s trade agreements must therefore simultaneously address narrow economic and wider geopolitical interests.

Last week, we learnt that the UK-Japan trade talks had hit a roadblock over UK demands for greater market access for exports of Stilton cheese. The talks still seem likely to conclude successfully but the episode illustrates how seemingly small issues can play a disproportionate role in trade negotiations.

This would be a significant agreement for the UK. Japan is the third largest economy in the world and an increasingly important strategic ally for the UK post-Brexit. A UK-Japan trade deal is also an important step towards the UK’s accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Total UK exports to Japan are already worth around £14 billion, just over half of which are in services, so increasing the market for UK blue cheese exports, which is currently worth around £100,000 in Japan, might appear a strange issue to potentially derail the talks. However, the UK’s demands on Stilton have not simply come out of the blue.

Growth in cheese exports is a recent UK success story, with the Department for International Trade (DIT) noting that the UK made it into the top ten cheese exporters worldwide in 2018, selling £665 million worth, almost half of which was cheddar. Growth in Asian markets in particular has been strong, with demand in China rising from £67,000 in 2013 to £6.5 million in 2018, so it is not unreasonable for the UK to seek greater opportunities for these products in Japan.

More significantly, the UK-Japan deal will replace the EU-Japan deal, which will cease to apply to the UK when the Brexit transition period ends on January 1, 2021. The goal, largely on the insistence of Japan, has been to seek a new agreement, rather than simply copy and paste the existing EU-Japan deal. Inevitably, however, with time tight, these talks have not departed significantly from the EU-Japan precedent with regard to trade in goods (services and data are likely to be the more innovative aspects of a UK-Japan deal).

“Automotive for agriculture” was a major feature of the EU-Japan negotiations and, in this case, Japan has been targeting an immediate removal of UK car tariffs, whereas the EU-Japan agreement only provides for phased reductions over several years. The UK has understandably countered that it cannot make the concession for nothing in return.

Under the EU-Japan deal, Japanese tariffs on hard cheeses such as cheddar would be phased out by 2033. But for blue cheeses, such as Stilton, there will only be duty-free access on an agreed quota. Reportedly, the UK has also targeted a faster reduction to Japanese tariffs on pork. If the UK is successful in increasing the quota or removing tariffs faster, it will have achieved concessions the EU did not, which would have obvious symbolic significance for Brexiteers.

We don’t yet know the full details of the eventual UK-Japan deal but the likely compromise is that neither side will get as much as they would like on cars or agriculture. Ultimately, this kind of tussle is part of the theatre of end-game trade negotiations, where both sides need to be seen by domestic audiences to be fighting hard over every inch. Indeed, given the importance of getting the agricultural lobby onboard in various UK trade negotiations to come, going into bat for British agriculture now is not a bad PR move for the Government.

Some commentators have questioned whether spending political capital on trade agreements is worth the candle since the estimated macroeconomic gains from them are relatively small. DIT estimates the increase to UK GDP from a Japan deal will be 0.07 per cent over the long run, while a deal with the United States would provide up to a 0.16 per cent boost.

Putting aside a valid debate about how accurately existing models capture all the facets of comprehensive modern trade agreements, these types of numbers are not unique to UK FTAs. The EU-Japan deal (the biggest ever completed by the EU) was estimated to boost EU GDP by 0.14 per cent, a figure regarded by independent researchers as “plausible, though at the high end of the range of past estimates”.

Ultimately, for advanced and open economies, trade agreements are rarely macroeconomically significant. They are opportunities to address microeconomic issues and require trade-offs to be made between them. These decisions can be hugely important for individual sectors, which is why they can be politically controversial.

Beyond any quantifiable economic benefits, closer economic and political cooperation via trade agreements presents an opportunity to build coalitions to help shape the course of regional or global developments. Successful conclusion of the Japan agreement and accession to the CPTPP will boost the economic and political relevance of the UK in the Indo-Pacific region, which is likely to host most of the world’s economic growth in the years ahead.

Similarly, Japan’s enthusiasm to reach a deal with the UK is not only about commerce. Foreign Minister Toshimitsu Motegi’s recent trip to London also provided a chance to discuss bilateral co-operation on security and defence, including the UK’s stronger stance towards China on issues such as Huawei and Hong Kong. A trade deal is another way to strengthen strategic bonds.

It is worth keeping this mind as another round of UK-EU talks – in this case to loosen ties – get underway this week. The Remain campaign had wanted the Brexit debate to be about trade above all else, but it was always primarily about politics. All trade agreements are political, but the level of economic and legal integration in the EU means it is as much, if not more, about politics than trade. Remain lost because it was unable, or unwilling, to make the intrinsic case for political union, or at least that it should be tolerated.

Indeed, the most significant macroeconomic consequences of Brexit – leaving the customs union and the single market – flow from the political desire to “take back control” of trade and regulatory policy. Continued dependence on Brussels in these fields without a vote in the EU’s political institutions was always likely to be untenable for the UK in the long-term.

Equally, sovereignty is never absolute. The more integration the UK seeks from trade agreements with the likes of the US and the CPTPP in the future, the more the UK will face difficult political trade-offs over its approaches to various issues from agricultural liberalisation to the regulation of data. Existing trade flows and geographical proximity to the EU will inevitably play some role in how the UK takes these decisions over the long-term.

However, it shouldn’t be a surprise that Brexit means treating the EU much more like any other trade partner. It’s the politics, stupid!

Jonathan Djanogly: Parliament should be able to scrutinise new trade deals properly. But the current arrangements are simply unfit for purpose.

29 Jun

Jonathan Djanogly is a former Minister, and is MP for Huntingdon.

Did we come through the Brexit process only for the UK Parliament to have less scrutiny over new free trade agreements than we had during our membership of the European Union?

This is the question that Parliament is going to have to address through the Trade Bill, currently making its way to report stage in the House of Commons.

In fact, it seems to be surprising most people that, seemingly contrary to what was proposed in the Queen’s Speech, the Trade Bill does not actually address future trade agreements at all.

Rather, it provides a low scrutiny mechanism, using Statutory Instruments (SIs), for existing EU free trade agreements (FTAs) to be ‘rolled over’ to the U.K. However, given that we have left the EU, it can be questioned as to whether any EU deals with such third countries should now be dealt with as new trade agreements.

For instance, the U.K /Japan proposed FTA is now being treated as a new agreement, and will not replicate the FTA that the EU agreed with it. Likewise, countries such as Canada seem to be waiting to see what the EU agrees with the UK, before agreeing their own new deals with the UK.

In effect, it is arguable that the Bill, which was perfectly rational when its second reading was initially heard in January 2018, may now simply have missed the boat, in terms of the future relevancy of EU trade deals that we have thus far failed to adopt.

It is also somewhat annoying, to those of us that have been following the generation of this bill for the last three or more years, that most of the sensible amendments offered by the then Secretary of State, Liam Fox, have not been re-incorporated into the current bill now before the House.

Agreement that the SI regime should only last for three years rather than five, and that the Government should have to produce reports for Parliament to explain their proposals at least 10 days before the SIs are heard, are surely not contentious. Accordingly, I have re-tabled the last Government’s own amendments for debate.

There then arises the question as to how we are going to deal with future FTAs with countries and organisations, such as the US, China and the EU. On this the Bill is quiet, despite Fox agreeing to consult on a new scrutiny process in 2018.

For the last 40 odd years, the EU has been negotiating our trade deals. As part of the EU scrutiny process, a vote needs to be taken by the EU Parliament on the draft FTA prior to its signature.

Most other countries have similar approval arrangements. In fact, some go further and allow the legislators to get involved in the provisions of the deal. So, for instance, the U.S. Senate can amend draft trade agreements.

In practice, a parliament holding the threat of a veto means that it is very rarely used. This is because the executive will have good reason to look for consensus on its negotiating mandate, as well as carrying legislators along during negotiations through regular disclosure and discussion.

A wise executive would naturally wish to avoid an unnecessary parliamentary bust up just before signing an FTA. Of course, this is where it all went wrong with the TTIP negotiations between the US – EU. Here, both the US Congress and the EU Parliament were disclosing information to their respective elected representatives, that was not being provided to UK parliamentarians.

As a result, and with the inevitable leaks, the whole debate surrounding thousands of lines of deal negotiations got reduced to accusations of selling the NHS and Brits being forced to eat American chlorinated chicken. One might have thought that the UK government had learnt its lesson from the TTIP experience.

The point to be addressed in the Trade Bill is not whether individual issues, such as food standards, environmental regulations, public services or digital services provision or consultation with the devolved authorities are good or bad things in themselves.

Rather, it is the need for the Bill to provide a statutory framework that requires government to take early stage consultation and ongoing soundings through the course of FTA negotiations. This is in order that business and citizens feel they are being listened to with similar rights to their counterparts in the country with whom we are negotiating. Then, before signing, MPs should get to vote on the deal, as will be the case with the counter-party.

In effect, I would argue that current UK practice on scrutinising trade deals is neither democratic nor practically fit for purpose. Moreover, I would go further to point out that our poor scrutiny process is going to be undermined, in any event, by other countries’ more modern scrutiny practices.

The Government suggest that the Constitutional Reform and Governance Act (CRAG) process, allowing a short delay mechanism before ratification (ie after the signing) of FTAs, is adequate. This is the same CRAG process that was implemented by Labour in 2010 at a time when the U.K. benefited from the EU Parliament veto. By the way it’s also the same process that was described in 2019 by the Lords Constitution Committee as ‘anachronistic and inadequate’.

Secondly, the Government suggests that the Trade Select Committee could be utilised to provide scrutiny for proposed new FTAs. Let us here, firstly, assume that the Trade department and therefore its committee is going to survive a rumoured merger with the Foreign Office. Even so, and despite negotiations with the US and now Japan having already started, no such arrangements with the trade committee have yet been agreed. We know this from an on the record June letter sent from the chair of the committee to Truss.

Of course, the Trade Committee will not have jurisdiction to look at the proposed EU FTA and, following the post- Brexit demise of Bill Cash’s European Standing Committee B, it has not yet been made clear who or how any proposed EU deal will be scrutinised.

I am not suggesting that MPs should be able to impede Government negotiations on FTA’s, and nor am I saying that MPs should be able to amend draft FTAs. However, we need legislation that provides for Parliament to approve FTAs, on a yes or no basis, before they are signed. I have tabled an amendment to the Trade Bill to that effect, and I look forward to the debate.