Ben Roback: A trade war between Washington and Brussels would be dire for the car industry

For many years, if you cut a Republican they bled free trade. No longer.

Ben Roback is Head of Trade and International Policy at Cicero Group.

The Grand Old Party has traditionally bled free trade. It is to the Republicans what the social safety net is to Democrats and what free enterprise is to us Conservatives. In so many policy areas, President Trump has picked up and moved the anchor of the Republican Party, but none more so than on trade. “I like punitive tariffs” is not a statement we are accustomed to hearing from Republican occupants of the White House, but when it comes to putting ‘America First’ into action, this president will use all the tools at his disposal. “I love tariffs, but I also love them to negotiate,” the President also said on the same day – welcome to his Art of the Deal.

Those comments came ahead of a US Commerce Department report due to be published which is expected to recommend that the EU vehicle industry be classified as a threat to US national security. This is on the grounds that it strips the USA of an industrial base needed to produce military hardware. On the basis of that recommendation, the President could raise tariffs from 2.5 per cent to up to 25 per cent within the next three months.

Analysts fear the wider impact of a back and forth conflict, like Dutch financial services giant ING who warned ‘if the tariff precipitates a ‘tit for tat’ trade battle between the US and EU, economies on both sides of the ocean would be hurt significantly more’.

For motor manufacturers in the big production countries like Germany and the UK, that could turn into an economic nightmare – as well as inflicting punishment on the very blue-collar workers in manufacturing states that helped propel Donald Trump to the White House. German car manufacturers exported almost 500,000 vehicles to the US last year, while the car trade between the US and the EU is estimated to be worth at least around €50 billion annually. BMW’s largest plant in the world is not in Bavaria, but South Carolina. In the States, 113,000 Americans work for European vehicle manufacturers whilst 186,000 people are employed directly in motor manufacturing in the UK. Crystallising the potential domestic impact, a report from the Center for Automotive Research published last week showed that a worst-case scenario of a tariff of 25 percent would cost 366,900 American jobs in the auto and related industries. Readers accustomed to accusations of Project Fear will have to wait and see whether the forecasts are any more accurate than the direst projections made related to Brexit.

If the US Commerce Department recommends a hike in tariffs, we can expect the European Union to quickly respond in kind. That risks setting off a transatlantic trade war from which the President will not want to back down – especially after he was widely seen to have conceded to the Democrats in order to bring an end to the 35-day government shutdown. It would also mark another cooling of EU-US relations, in the same week that Mike Pence delivered a stridently ‘America First’ message to the Munich Security Conference. On Iran, Pence said the “time has come” for European partners to “stop undermining US sanctions against this murderous revolutionary regime”. But in urging EU Member States to pull out of the Iran Deal, he was met with a stony silence in the room. Far from considering pulling out of the Iran Deal, in February the E3 (France, Germany and the UK) announced the creation of a new platform aimed at facilitating legitimate trade between European firms and Iran.

Make no mistake, the tariffs floated by the President are purely the design of political gain rather than economic or security necessity. Otherwise, they would be fiercely supported by the sector. Instead, the tariffs are firmly opposed by the US car industry. The Motor and Equipment Manufacturers Association has said: “Not a single company in the domestic auto industry requested this investigation.”

Another bad news story is the very last thing motor manufacturing in the UK can handle at this delicate time. Ford, Nissan, Toyota and most recently Honda have all sounded a collective alarm over the future of their physical presence in the UK. Brexit and political instability are undoubtedly contributing factors – just as the industry is adapting to new global trade deals like the EU-Japan deal which reduces the incentive to build in Europe, and changing consumer behaviour that seeks out electric as well as petrol/diesel.

Motor manufacturers in the UK have sounded drastic warnings about the likely impact of No Deal on their sector. Some around the Cabinet table have sought to amplify that caution, like Greg Clark and his colleague Richard Harrington. But look beyond Brexit and we might collectively find that it is in Washington and Brussels where much of the industry’s future is being thrashed out.

Thornberry can’t “guarantee” her foreign policy won’t indulge human rights abusers when Corbyn does exactly that

The Shadow Foreign Secretary is making pledges her leader seems unlikely to honour.

Emily Thornberry is setting out her stall as the would-be Foreign Secretary today with a speech to the Institute for Government.

There are some signs that she is trying to establish a bit of distance between herself and her leader’s willingness to overlook and excuse human rights abuses committed by people he finds ideologically convenient. Indeed, the Guardian reports that she will make the message quite explicit, saying:

“…under a Labour Foreign Office, I can also guarantee there will be no indulgence of human rights abuses because they are committed by less powerful countries, or by governments who call themselves ‘socialist’ but who, by their actions, betray every socialist ideal.”

Cough cough, Venezuela.

In an article in the Times, Thornberry casts her approach to foreign policy as prioritising ‘British values’ rather than the promotion of trade:

‘…the exclusive focus on the promotion of trade is forcing the Foreign Office to set aside its equally important historic responsibility to promote British values, including urging every other country — friend or foe, trading partner or not — to respect human rights, basic freedoms and the rule of law.’

As it happens, I tend to agree with her that these values, fundamental principles of freedom, ought to underpin our foreign policy. If anything, I’d go further and argue they are also key to sustainable long-term trade, too – free democracies grow better and longer, and collapse into anarchy far more rarely, than tyrannies, and so prove to be better trading partners as well as morally preferable.

The problem she has is that the policy she proposes cannot be “guaranteed” by her alone. It would need the full and active support of the Prime Minister of that hypothetical Labour government, and of his senior colleagues and advisers. That’s Jeremy Corbyn, the very man whose indulgence of human rights abusing tyrants she feels it necessary to make a speech distancing herself from, and advisers like Seumas Milne, who appears to find it rather too easy to overlook the bodycount of anyone claiming to be an anti-imperialist.

The Shadow Foreign Secretary might pledge “no indulgence of human rights abuses” by states perceived to be underdogs or socialists, but her leader is indulging exactly such an abusive government in Venezuela right now. He has previously indulged such abusers around the world, and has even worked for the propaganda arm of just such a state, namely Iran. She knows this, or else she wouldn’t feel it necessary to pitch her speech as she does.

By all means offer a foreign policy based on fundamental values of liberty, decency and democracy. But there is no reason to believe it until you pair it with a leader who agrees.

Nabil Najjar: The Government must take a tougher line to protect British nationals abroad

It’s no good boasting about this country’s ‘soft power’ arsenal if even our putative allies can take UK citizens hostage at will.

Nabil Najjar is a political consultant working in the UK and the Middle East. He is an elected councillor in Wiltshire, Director of Conservative Progress.

Earlier this week Matthew Hedges, a British tourist and PhD student, was sentenced to life in prison in the United Arab Emirates. His alleged crime? Spying for the British Government.

Sadly, this is not the first time that a Western citizen has been locked up in a Middle Eastern prison on unproven, sometimes frankly spurious, intelligence-related charges, and if we do not act decisively it will not be the last.

In 2016 Nazanin Zaghari-Ratcliffe, a British-Iranian dual national, was detained in Iran for ‘allegedly plotting to topple the Iranian regime’, and last year Xiyue Wang, an American student from Princeton University, was convicted of spying in Iran and sentenced to 10 years in prison. The US State Department described this as the latest in a succession of ‘fabricated charges’ against US nationals.

Whether through cases such as these, or for that matter the assassination of journalists or former spies on foreign soil, Middle Eastern powers such as Saudi Arabia, the UAE, and Iran, as well as Russia, have begun flexing their muscles and projecting their own questionable human rights records on an international stage, in flagrant disregard for international precedents.

Opinions abound as to the reasons why. But the nature of our response to a complex international chain of events boils down to a simple one: how much do we as a country value the welfare of our citizens?

The oft-repeated argument about how these countries (and Saudi Arabia in particular) are valuable allies and strategic partners in a tumultuous region, and must not be upset, is one which is well understood, and I am in the camp that believes that, by and large, it is not the UK’s obligation to act as an international policeman. Once, however, this pattern of passive aggression begins to impact the lives of British people, the time has come to lay down a new set of rules of engagement, one which places the interests of our own citizens ahead of economic gain, and puts principle above politics.

Essentially, these governments are taking British nationals hostage; political bargaining chips to be exchanged when needed or returned when expedient. Diplomacy alone yielded pitiful results in the Zaghari-Ratcliffe case, and if we are to avoid another protracted (and potentially unsuccessful) parley with Abu Dhabi, our Government needs to be tough and act decisively from the outset. Rhetoric alone is not enough.

Successive governments have boasted about the UK’s unrivalled arsenal of ‘soft power’ – its ability to use diplomacy, intelligence and negotiation to further its interests – but our Government must be bolder in backing up its soft power with the threat of action, a combination of soft and hard power today known as ‘smart power’.

Whether it comes in the form of issuing travel warnings against holidaying in Dubai, threatening economic sanctions, or expelling diplomats, it is time for ministers to make a bold statement that actions have consequences, and that, in the United Kingdom, we put the human rights of our citizens first, even whilst they are abroad. Imprisonment without due cause will not be tolerated.

“Her Britannic Majesty’s Secretary of State Requests and requires in the Name of Her Majesty all those whom it may concern to allow the bearer to pass freely without let or hindrance, and to afford the bearer such assistance and protection as may be necessary.”

This sentence is printed on the inside cover of each British passport – perhaps it is time that those whom it may concern are issued with a reminder. If we do not, then we have only ourselves to blame when another British citizen is taken captive.

Garvan Walshe: Leadership crisis. Ministerial resignations. Eyes turn to the army…in Israel

The numbers in the Knesset are finely balanced, and the search is on for a figurehead to end Netanyahu’s decade in power.

Garvan Walshe is a former National and International Security Policy Adviser to the Conservative party. He runs TRD Policy.

An embattled prime minister under attack because of a troubled mission extricating their country from a decades long foreign entanglement. The responsible Cabinet minister resigned, believing the Prime Minister has gone soft, conceding to technocrats and selling the people short. All eyes turned to a famous hawk, deeply suspicious of Iran and known for his divisive work at Education. Yet, confounding expectations, this minister has refused to resign.

But enough about Theresa May’s troubles and Michael Gove’s decision to support her. This government crisis is taking place in Israel.

The resigned minister is Avigdor Lieberman, the former defence minister who wanted a more aggressive policy in Gaza than the Israeli army thought wise.

The unresigned minister is Natfhali Bennett. Unlike Gove, who refused the post of Brexit Secretary and stayed at Defra, Bennett wanted to be moved to the vacant defence ministry, and threatened to resign if he didn’t get it.

In Israel’s proportional system, parties are small and coalitions are formed after elections rather than within parties. Lieberman and Bennett both lead right-wing parties and were once rivals to lead a broad right-of-centre coalition.

Prime Minister Netanyahu has learned to master the system, tacking sufficiently to the right to compete for voters who prefer the red meat that Bennett in particular promises, while remaining acceptable at least to centre-right politicians like Moshe Kahlon, the finance minister.

As long as Israel’s strategic situation stayed uppermost in voters’ minds this was enough to keep him in the lead. Israeli voters do not, by and large, believe there’s a viable peace process, and the Palestinians have been unable to convince them otherwise.

Their traditional Arab allies are either distracted or hostile – preferring indeed a discreet anti-Iranian alliance with Israel – and the United States and EU, who might otherwise devote some attention to imposing an arrangement less to Israel’s advantage than the status quo, are otherwise occupied.

All this makes Netanyahu’s pose as “Mr Security” less relevant. The focus has shifted to corruption and the web of police investigations closing in on Netanyahu himself.

After Lieberman pulled his party out, he was left with a one seat majority. Had Bennett left the government as well, elections would have followed. Netanyahu had until recently thought new elections to be an advantage. Electoral politics after all is his favourite pitch. A new election and endorsement by “the people” could buy him time before the law might catch up with him.

Indeed, the political landscape appears to favour Netanyahu. Polls suggest his Likud party would be by far the single largest, with around 30 seats. Bennett’s nationalist Bayid Yahudi (Jewish Home) is useful to him because there was no chance of them forming a coalition with anyone else, yielding a right-wing bloc of about 40 seats.

A centrist group, including Kahlon’s Kulanu (currently in the government), a new party formed by Orly Levy (who left Bennett’s party to start her own movement) that refuses to position itself on the traditional left-right security spectrum, and the explicitly centrist Yesh Atid, would together win another 30.

The Left, comprising the Zionist Union (led by Tzipi Livni and Avi Gabbay), Meretz and the Joint (Arab) List, secures another 30.

(Religious parties — the Israeli DUP if you like — traditionally support whichever side gives them the largest subsidies, and command around 15 seats.)

That leaves Yisrael Beitenu, a party with its base among immigrants from the former Soviet Union led by the just-resigned Lieberman, and traditionally leaning rightwards, to make up the balance. Lieberman is a right-winger, but it would be perverse (if hardly unIsraeli) for him to resign from a government only to return to it after elections left the distribution of seats pretty much where it had been before.

Though Netanyahu himself can only rely on about 40 seats – a third of the Knesset, including Bennett’s party, to which the Prime Minister can now consider himself hostage – his opponents lack a unifying figurehead. The search is on, and, as is traditional, is zeroing in on the Army barracks.

The decoy general is Ehud Barack, the former Prime Minister. A polarising figure, he is simultaneously Netanyahu’s former commander, the man who beat him decisively in a direct election for Prime Minister in 1999, and someone despised with such intensity in many parts of the political spectrum that he could be called Israel’s Hillary Clinton.

The officer Likud actually fear is Benny Gantz, recently Chief of Staff of the Israel Defence Forces and already under attack from culture minister (and member of Likud) Miri Regev. Mark him. He could be the man to end Netanyahu’s decade in power.

Alexander Temerko: The relationship between business and government has never been as meaningless as under May

The key to a good Brexit is empowering UK entrepreneurs to talk to their European counterparts and become ambassadors for Downing Street’s plan.

Alexander Temerko is an industrialist and a Conservative Party donor and activist.

Never has the relationship between business and Number Ten been as meaningless or fruitless as under Theresa May. She continues to repeat the mantra that she is leading a pro-business government, but that is an exaggeration. Hers is not an anti-business government – that would be a more accurate way of putting it.

A pro-business government is what Margaret Thatcher and David Cameron led in their day; it’s what Donald Trump, Xi Jinping and Angela Merkel are leading today. Despite her soft-spot for SMEs, our Prime Minister is undeniably afraid of global business.

Globalisation has shown that big business and public-private partnerships (something we hardly see in the UK anymore) are the real long-term drivers of a steadily growing modern economy. The presence of global business centres is what makes the difference between a country that’s prosperous and one that’s merely surviving. Indeed, such business is the powerful locomotive, pulling along SMEs and much of the socio-economic activity in the regions.

Business leaders have always been there to support May’s Government at the most critical times. Yet our “strong and stable” leader has repeatedly shunned any direct engagement with business in favour of sporadic consultations with the trade lobby, whose academic experts’ interests have long since been prioritised over representation of any actual economy sectors.

The Prime Minister has a presidential style of leadership. Her talent is for forming small, quasi-familial groups of trusted advisers. While David Cameron was comfortable working with big diversified teams, she seems reluctant to engage with the broad meritocratic audiences whose praises she so often sings. This desire to keep discussions tightly controlled has had a negative impact on almost every key policy decision taken to date. It is time to change.

Today, not only the country’s economy but also its integrity hinges on the UK business community backing the Brexit plans proposed by the Prime Minister and her Cabinet. No-one wants Brexit to be a disaster – but how to avoid it without break-through ideas and bold compromises?

The British economy will quickly lose its appeal should financial, industrial and services majors, driven by impending uncertainty and the fear of mounting responsibility to shareholders, relocate their headquarters and investment capital to more profitable jurisdictions with more predictable regulations. This could, in turn, trigger almost instant separatist rhetoric and action by the country’s subsidised regions.

Inside the eye of the Brexit storm, this outcome would be increasingly irreversible. People will start going by the saying “Better a painful ending than endless pain”. One person will certainly be delighted with a “painful ending”: his name is Vladimir Putin. Are we willing to afford him the pleasure? The answer is clear even to Jeremy Corbyn and Jacob Rees-Mogg, both of whom have been aiding this “painful ending” by holding on to his very own wrong end of the stick.

Europe would suffer, too. Take just one example from my industry: 70 per cent of our utilities are owned by European firms. Machinery and metal products are another trade goldmine for European business. At a time of escalating conflict with the US and sanctions or restrictions in trade relations with China, Russia, Iran and others, this is key. Europe just cannot lose Britain with its import-oriented economy as well. If that happens, countries right at the heart of Europe – France, Germany, Portugal, and to some extent Belgium and Holland too – will feel the pain.

However, in these countries, business is much more influential and integrated with the operation of Government. European business wants to live and wants to live well – which makes it our best ally in promoting a sensible responsible Brexit.

Businesses talk best with other businesses. They will not waste time talking when they don’t know if they are being heard by the Government, though. Hence, the key to a good Brexit is empowering UK entrepreneurs to talk to their European counterparts and become official ambassadors for the Government’s Brexit plan.

The other key piece of the puzzle is for May to accept the Irish border backstop – provided that the EU undertakes to guarantee our country’s integrity. This would restrain any spontaneous separatist movements in the UK, at least for as long as the EU continues to exist. If accession to the EU is all but impossible for any breakaway state, withdrawal from the UK would be pointless.

What happens if our Government does not create the broad coalition of business it needs and push bold compromises through? Quite simply, if there is no deal hammered out by December, a new election will be the only option to avoid the catastrophe of no deal.

If the Chequers plan falls through, it clear to almost everyone today that Parliament will not accept any other plan – be it Canada-plus, Australia-minus or a No Deal. The European Commission for its part, will not consider any new proposals, since none of them could get a majority in the UK Parliament and Europe will itself be moving into EU Parliament elections.

All that’s left are two options. They are both domestic – either a new referendum or another snap election. It is up to Parliament and our political elites to choose. They have to choose between their two great fears: the fear of a new election which is highly likely to mean a coalition government, and the fear of a new referendum that goes against Brexit.