Stephen Booth: Why the row about the Northern Ireland Protocol suggests that the EU’s position isn’t quite as strong as it likes to think

17 Sep

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

It is often said that Brexit is low on the list of the EU’s priorities. That national capitals have not been fully engaged in a process which they have delegated to Michel Barnier and the European Commission. The introduction of the Government’s Internal Market Bill has certainly got the EU’s attention.

The events of the last two weeks have upped the ante, but the two sides continue to talk and a deal between the UK and the EU is still possible, if the political appetite is there.

As I noted in my previous column, the negotiations over a new UK-EU free trade agreement have been locked in a stalemate over fishing and state aid for weeks, and a compromise can only be unlocked by high-level political intervention.

At the same time, a parallel, and up to now seemingly boring, process has been underway to implement the Withdrawal Agreement and the Northern Ireland Protocol. It has long been clear that the UK and the EU have significant disagreements to resolve in the Joint Committee, the forum established under the Withdrawal Agreement empowered to iron out the practical details of the Protocol’s implementation.

In its May 2020 Command Paper on the subject, the UK identified its practical concerns. For example, under the Protocol, Northern Ireland is subject to the Union’s Customs Code, which requires exit summary declarations for goods leaving the area to which the rules apply.

However, the UK’s view is that export or exit summary declarations should not be required for NI to GB trade (since Article 6 of the Protocol states that nothing in the Protocol should prevent NI businesses from having “unfettered access” to the rest of the UK).

Removing this requirement should not be particularly controversial, since Northern Ireland will remain in the UK’s customs territory (as stipulated in Article 4 of the Protocol) and therefore any risk of complaints about the arrangements in terms of international obligations should rest with the UK, rather than the EU.

Another, more significant issue is the status of goods travelling from GB to NI deemed to be “at risk” of entering the EU (and therefore subject to EU tariffs). The Joint Committee is tasked with defining which goods are “at risk” and therefore broadening the scope of goods that would not be subject to tariffs. However, the default is that goods are “at risk”, unless the Joint Committee agrees otherwise.

The powers taken in the Internal Market Bill are advertised as an “insurance policy” to be used in the event of failure to address the UK’s concerns about the Protocol (which include the state aid provisions as well as exit summary declarations) via agreement within the Joint Committee and/or via a free trade agreement. There are reports that the Government plans to use the forthcoming Finance Bill to give itself similar powers with regard to tariffs.

Leaving aside the legalities and the domestic politics for a moment, why might the UK have decided to initiate a row with Brussels now and pre-empt the Joint Committee process? Of course, we cannot divine the precise motivation. Perhaps no deal is now seen as an inevitable, or at least probable, outcome by some in Government? But the logic of the negotiations offers another plausible rationale.

Implementation of the Northern Ireland Protocol and the wider free trade negotiations are theoretically on distinct tracks. While the Withdrawal Agreement committed both parties to seek to negotiate a free trade agreement in good faith, the Protocol comes into effect at the end of the transition period irrespective of any UK-EU trade agreement.

However, it is clear from the way the negotiations have been structured (at the strong insistence of Brussels) that the trade negotiation and the practical functioning of the Protocol are linked, and this gives the EU leverage over the trade negotiations. Since EU negotiators are not obliged to reach compromises in the Joint Committee on the issues causing the UK concern, they are able to hold the process up in order to apply pressure to the UK in the wider trade negotiation. Just because the EU is within its rights to do so, does not mean it should.

What the Government is doing, for better or worse, is to suggest to the EU that its leverage is not quite as strong as it would like to think. Ultimately, under the Protocol it is UK officials and agencies who will be tasked with enforcing EU rules. Realistically speaking, how plausible is it that the UK would do so zealously in a scenario where not only have the UK and the EU failed to reach a trade agreement, but the EU is also insisting on its maximalist interpretation of the Protocol?

The UK might have made this point more subtly if it had made clear that any measures it takes in the future would be strictly consistent with Article 16 of the Protocol, which allows either party to take unilaterally “appropriate safeguards” if the application of the Protocol leads to “serious economic, societal or environmental difficulties”, and its pre-existing commitments under the Good Friday Agreement.

Equally, it should also be noted that the UK is not declining to implement other important aspects of the Protocol. Indeed, as Michael Gove noted in closing Monday’s debate and Brandon Lewis repeated in committee evidence yesterday morning, the UK is erecting border-inspection posts for sanitary and phytosanitary (SPS) checks on goods entering Northern Ireland, which in an ideal world it would not have to and despite the opposition of the DUP.

Ultimately, what this row demonstrates is that a negotiated settlement on the Protocol and the wider trade issues should be preferable for both sides compared to an acrimonious breakdown in the UK-EU relationship. Indeed, the UK legislation introduced this week would be redundant if compromises can be reached.

A Protocol that is politically sustainable is in the EU’s interests. Equally, a UK-EU trade agreement would not remove all of the irritations thrown up by the Protocol but it could certainly help to smooth over some of the important issues. If there are no tariffs between the UK and the EU, there is less risk to the EU of goods entering the Single Market at a lower tariff. If the EU and UK reach agreements on SPS, like the EU has with New Zealand, then paperwork could be simplified. Equally, establishing a UK domestic subsidy regime, recognised by the EU in a free trade agreement, would help prevent the “reach back” of the state aid provisions in the Protocol that are also of concern to the UK.

Only time will tell if this episode is the beginning of the path to a deal or the point when things turned sour.

Stephen Booth: Why the row about the Northern Ireland Protocol suggests that the EU’s position isn’t quite as strong as it likes to think

17 Sep

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

It is often said that Brexit is low on the list of the EU’s priorities. That national capitals have not been fully engaged in a process which they have delegated to Michel Barnier and the European Commission. The introduction of the Government’s Internal Market Bill has certainly got the EU’s attention.

The events of the last two weeks have upped the ante, but the two sides continue to talk and a deal between the UK and the EU is still possible, if the political appetite is there.

As I noted in my previous column, the negotiations over a new UK-EU free trade agreement have been locked in a stalemate over fishing and state aid for weeks, and a compromise can only be unlocked by high-level political intervention.

At the same time, a parallel, and up to now seemingly boring, process has been underway to implement the Withdrawal Agreement and the Northern Ireland Protocol. It has long been clear that the UK and the EU have significant disagreements to resolve in the Joint Committee, the forum established under the Withdrawal Agreement empowered to iron out the practical details of the Protocol’s implementation.

In its May 2020 Command Paper on the subject, the UK identified its practical concerns. For example, under the Protocol, Northern Ireland is subject to the Union’s Customs Code, which requires exit summary declarations for goods leaving the area to which the rules apply.

However, the UK’s view is that export or exit summary declarations should not be required for NI to GB trade (since Article 6 of the Protocol states that nothing in the Protocol should prevent NI businesses from having “unfettered access” to the rest of the UK).

Removing this requirement should not be particularly controversial, since Northern Ireland will remain in the UK’s customs territory (as stipulated in Article 4 of the Protocol) and therefore any risk of complaints about the arrangements in terms of international obligations should rest with the UK, rather than the EU.

Another, more significant issue is the status of goods travelling from GB to NI deemed to be “at risk” of entering the EU (and therefore subject to EU tariffs). The Joint Committee is tasked with defining which goods are “at risk” and therefore broadening the scope of goods that would not be subject to tariffs. However, the default is that goods are “at risk”, unless the Joint Committee agrees otherwise.

The powers taken in the Internal Market Bill are advertised as an “insurance policy” to be used in the event of failure to address the UK’s concerns about the Protocol (which include the state aid provisions as well as exit summary declarations) via agreement within the Joint Committee and/or via a free trade agreement. There are reports that the Government plans to use the forthcoming Finance Bill to give itself similar powers with regard to tariffs.

Leaving aside the legalities and the domestic politics for a moment, why might the UK have decided to initiate a row with Brussels now and pre-empt the Joint Committee process? Of course, we cannot divine the precise motivation. Perhaps no deal is now seen as an inevitable, or at least probable, outcome by some in Government? But the logic of the negotiations offers another plausible rationale.

Implementation of the Northern Ireland Protocol and the wider free trade negotiations are theoretically on distinct tracks. While the Withdrawal Agreement committed both parties to seek to negotiate a free trade agreement in good faith, the Protocol comes into effect at the end of the transition period irrespective of any UK-EU trade agreement.

However, it is clear from the way the negotiations have been structured (at the strong insistence of Brussels) that the trade negotiation and the practical functioning of the Protocol are linked, and this gives the EU leverage over the trade negotiations. Since EU negotiators are not obliged to reach compromises in the Joint Committee on the issues causing the UK concern, they are able to hold the process up in order to apply pressure to the UK in the wider trade negotiation. Just because the EU is within its rights to do so, does not mean it should.

What the Government is doing, for better or worse, is to suggest to the EU that its leverage is not quite as strong as it would like to think. Ultimately, under the Protocol it is UK officials and agencies who will be tasked with enforcing EU rules. Realistically speaking, how plausible is it that the UK would do so zealously in a scenario where not only have the UK and the EU failed to reach a trade agreement, but the EU is also insisting on its maximalist interpretation of the Protocol?

The UK might have made this point more subtly if it had made clear that any measures it takes in the future would be strictly consistent with Article 16 of the Protocol, which allows either party to take unilaterally “appropriate safeguards” if the application of the Protocol leads to “serious economic, societal or environmental difficulties”, and its pre-existing commitments under the Good Friday Agreement.

Equally, it should also be noted that the UK is not declining to implement other important aspects of the Protocol. Indeed, as Michael Gove noted in closing Monday’s debate and Brandon Lewis repeated in committee evidence yesterday morning, the UK is erecting border-inspection posts for sanitary and phytosanitary (SPS) checks on goods entering Northern Ireland, which in an ideal world it would not have to and despite the opposition of the DUP.

Ultimately, what this row demonstrates is that a negotiated settlement on the Protocol and the wider trade issues should be preferable for both sides compared to an acrimonious breakdown in the UK-EU relationship. Indeed, the UK legislation introduced this week would be redundant if compromises can be reached.

A Protocol that is politically sustainable is in the EU’s interests. Equally, a UK-EU trade agreement would not remove all of the irritations thrown up by the Protocol but it could certainly help to smooth over some of the important issues. If there are no tariffs between the UK and the EU, there is less risk to the EU of goods entering the Single Market at a lower tariff. If the EU and UK reach agreements on SPS, like the EU has with New Zealand, then paperwork could be simplified. Equally, establishing a UK domestic subsidy regime, recognised by the EU in a free trade agreement, would help prevent the “reach back” of the state aid provisions in the Protocol that are also of concern to the UK.

Only time will tell if this episode is the beginning of the path to a deal or the point when things turned sour.

Stephen Booth: Why the row about the Northern Ireland Protocol suggests that the EU’s position isn’t quite as strong as it likes to think

17 Sep

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

It is often said that Brexit is low on the list of the EU’s priorities. That national capitals have not been fully engaged in a process which they have delegated to Michel Barnier and the European Commission. The introduction of the Government’s Internal Market Bill has certainly got the EU’s attention.

The events of the last two weeks have upped the ante, but the two sides continue to talk and a deal between the UK and the EU is still possible, if the political appetite is there.

As I noted in my previous column, the negotiations over a new UK-EU free trade agreement have been locked in a stalemate over fishing and state aid for weeks, and a compromise can only be unlocked by high-level political intervention.

At the same time, a parallel, and up to now seemingly boring, process has been underway to implement the Withdrawal Agreement and the Northern Ireland Protocol. It has long been clear that the UK and the EU have significant disagreements to resolve in the Joint Committee, the forum established under the Withdrawal Agreement empowered to iron out the practical details of the Protocol’s implementation.

In its May 2020 Command Paper on the subject, the UK identified its practical concerns. For example, under the Protocol, Northern Ireland is subject to the Union’s Customs Code, which requires exit summary declarations for goods leaving the area to which the rules apply.

However, the UK’s view is that export or exit summary declarations should not be required for NI to GB trade (since Article 6 of the Protocol states that nothing in the Protocol should prevent NI businesses from having “unfettered access” to the rest of the UK).

Removing this requirement should not be particularly controversial, since Northern Ireland will remain in the UK’s customs territory (as stipulated in Article 4 of the Protocol) and therefore any risk of complaints about the arrangements in terms of international obligations should rest with the UK, rather than the EU.

Another, more significant issue is the status of goods travelling from GB to NI deemed to be “at risk” of entering the EU (and therefore subject to EU tariffs). The Joint Committee is tasked with defining which goods are “at risk” and therefore broadening the scope of goods that would not be subject to tariffs. However, the default is that goods are “at risk”, unless the Joint Committee agrees otherwise.

The powers taken in the Internal Market Bill are advertised as an “insurance policy” to be used in the event of failure to address the UK’s concerns about the Protocol (which include the state aid provisions as well as exit summary declarations) via agreement within the Joint Committee and/or via a free trade agreement. There are reports that the Government plans to use the forthcoming Finance Bill to give itself similar powers with regard to tariffs.

Leaving aside the legalities and the domestic politics for a moment, why might the UK have decided to initiate a row with Brussels now and pre-empt the Joint Committee process? Of course, we cannot divine the precise motivation. Perhaps no deal is now seen as an inevitable, or at least probable, outcome by some in Government? But the logic of the negotiations offers another plausible rationale.

Implementation of the Northern Ireland Protocol and the wider free trade negotiations are theoretically on distinct tracks. While the Withdrawal Agreement committed both parties to seek to negotiate a free trade agreement in good faith, the Protocol comes into effect at the end of the transition period irrespective of any UK-EU trade agreement.

However, it is clear from the way the negotiations have been structured (at the strong insistence of Brussels) that the trade negotiation and the practical functioning of the Protocol are linked, and this gives the EU leverage over the trade negotiations. Since EU negotiators are not obliged to reach compromises in the Joint Committee on the issues causing the UK concern, they are able to hold the process up in order to apply pressure to the UK in the wider trade negotiation. Just because the EU is within its rights to do so, does not mean it should.

What the Government is doing, for better or worse, is to suggest to the EU that its leverage is not quite as strong as it would like to think. Ultimately, under the Protocol it is UK officials and agencies who will be tasked with enforcing EU rules. Realistically speaking, how plausible is it that the UK would do so zealously in a scenario where not only have the UK and the EU failed to reach a trade agreement, but the EU is also insisting on its maximalist interpretation of the Protocol?

The UK might have made this point more subtly if it had made clear that any measures it takes in the future would be strictly consistent with Article 16 of the Protocol, which allows either party to take unilaterally “appropriate safeguards” if the application of the Protocol leads to “serious economic, societal or environmental difficulties”, and its pre-existing commitments under the Good Friday Agreement.

Equally, it should also be noted that the UK is not declining to implement other important aspects of the Protocol. Indeed, as Michael Gove noted in closing Monday’s debate and Brandon Lewis repeated in committee evidence yesterday morning, the UK is erecting border-inspection posts for sanitary and phytosanitary (SPS) checks on goods entering Northern Ireland, which in an ideal world it would not have to and despite the opposition of the DUP.

Ultimately, what this row demonstrates is that a negotiated settlement on the Protocol and the wider trade issues should be preferable for both sides compared to an acrimonious breakdown in the UK-EU relationship. Indeed, the UK legislation introduced this week would be redundant if compromises can be reached.

A Protocol that is politically sustainable is in the EU’s interests. Equally, a UK-EU trade agreement would not remove all of the irritations thrown up by the Protocol but it could certainly help to smooth over some of the important issues. If there are no tariffs between the UK and the EU, there is less risk to the EU of goods entering the Single Market at a lower tariff. If the EU and UK reach agreements on SPS, like the EU has with New Zealand, then paperwork could be simplified. Equally, establishing a UK domestic subsidy regime, recognised by the EU in a free trade agreement, would help prevent the “reach back” of the state aid provisions in the Protocol that are also of concern to the UK.

Only time will tell if this episode is the beginning of the path to a deal or the point when things turned sour.

Profile: Erin O’Toole, the genial and reassuringly dull Conservative who could soon be Prime Minister of Canada

9 Sep

When the editor of ConHome, swift to discern a new trend, commissioned me to write a profile of Erin O’Toole, I confess I had no idea who he was talking about.

Brexit has prompted a renewed interest in the politics of Australia, New Zealand and Canada, previously seen as countries from which the United Kingdom had diverged.

But of those three countries, Canada has so far attracted the least coverage, and O’Toole’s election on 23rd August as leader of the Conservative Party of Canada, so as Leader of the Opposition and perhaps within a few months Prime Minister, was pretty much ignored in the British press.

Even in Canada, the result did not cause wild excitement. For although the Prime Minister since 2015, Justin Trudeau. has led, since last October’s general election, a minority government, which means there is a strong possibility of new elections, perhaps next spring, which the Conservatives might win, O’Toole’s manner is unexciting.

He a calm, genial, avuncular figure, and although, at 47, he is a year younger than Trudeau, he has the decency to look and sound a generation older.

If Canadians want someone who will stand up, in a stalwart but good-humoured way, for old-fashioned good manners against liberal iconoclasm, they will turn to O’Toole.

Here is a passage from his acceptance speech, delivered in the middle of the night after he won the leadership. He refers to his wife, Rebecca, and speaks quite often in French, while apologising for his English accent:

“Je suis né à Montréal et j’ai grandi en Ontario. J’ai appris mon français dans les Forces Armées Canadiennes. Et oui, je parle comme un anglo… mais un anglo qui respecte les francophones et qui est fier du français dans notre pays. Je suis en politique pour me battre pour tous les Canadiens et nos deux langues nationales.

“Like millions of Canadians, Rebecca and I have been juggling a lot of jobs lately. With our kids at home, COVID has made us appreciate teachers more than ever before.

“My mother, who passed away when I was nine, was a teacher. And, throughout my life, I have wished she was here to give me advice.  Right now, I wish she were here to see her child succeed.  But, I know she is here tonight because I can see her in my daughter who shares her name.”

O’Toole’s father worked for General Motors for 30 years, and from 1995 to 2014 was a member of the provincial assembly in Ontario.

This was an example of public service which the son decided to follow. But first he joined the Canadian air force, in which he hoped to serve as a pilot, but instead found himself selected to be navigator on “an old, antiquated helicopter”, rising to the rank of captain.

“You learn more from your setbacks than from your successes,” he said afterwards.

He loves the armed forces, and that indispensable extension of the armed forces, the Merchant Navy. While glancing down O’Toole’s Twitter feed, I came across a message from a few days ago adorned by the Canadian flag and the Union Jack, which said in English and French:

“Let us always remember the courage and determination of our Merchant Navy. We will never forget those we have lost and the service and sacrifice of our brave women and men in uniform.”

I was brought up on such sentiments. How wonderful to find them being expressed in 2020, by the man who might be the next Prime Minister of Canada.

On leaving the air force, he read law, and was soon profitably employed as a lawyer. In 2014, Bev Oda, the first Japanese Canadian MP and Cabinet minister, resigned her seat in Durham, north-west of Toronto, after being found to have made unacceptable expenses claims.

O’Toole’s father still represented Durham at provincial level. The son won the by-election to represent Durham in Ottawa.

He was soon made Minister of Veterans’ Affairs, his predecessor having infuriated the veterans. The new minister, who had taken a close interest in the welfare of veterans and had set up a mental health charity in that field, calmed things down.

In 2917, when he was still ordinary enough to pretend not to be a career politician, O’Toole ran for the Conservative leadership. He came third, but gained respect for declining to hurl personal abuse at his rivals, and was rewarded with the foreign affairs portfolio.

Andrew Scheer, victor of that contest, failed in 2019 to overthrow Trudeau, and was forced to stand down. O’Toole stood again, struck an angrier note than he had before, obtained the endorsement of Jason Kenney, the celebrated Premier of Alberta, and won by positioning himself as a True Blue Conservative who made right-wing noises without, generally speaking, committing himself to anything so inconvenient as right-wing policies.

He has, however, for several years been a firm supporter of CANZUK, the projected alliance between Canada, Australia, New Zealand and the United Kingdom.

And he is in favour of eliminating the budget deficit, increasing child benefit, cutting and simplifying taxes, building the pipelines which are such a divisive issue in Canadian politics, and taking a hard line on China.

Conrad Black, one of the few Canadian pundits of whom readers of ConHome will almost certainly have heard, said in a recent piece for The National Post that O’Toole

“has the minor distinction of being the first holder of his position since John Bracken, who led the Progressive Conservatives in the 1945 general election, that I have never met. But I think his chances of success are quite promising, for several reasons. First, he is a confident man and has a largely self-made career… In addition to self-confidence and tactical skill, O’Toole appears to have an intuition about where the voters are… He is a bit ordinary, but so are most people (and most politicians).”

To get a better idea of O’Toole, and what might be called his dull quick-wittedness, it is worth watching his accomplished performance on Maclean’s 60-second challenge.

And here for purposes of comparison is Trudeau.

Which will the Canadians prefer? One can’t help feeling that Boris Johnson, so keen to cultivate his Australian contacts, may have missed a trick by failing to send his congratulations to O’Toole.

Howard Flight: From rising demand for out of town housing, to increases in savings, the Covid trends to look out for.

31 Aug

Lord Flight is Chairman of Flight & Partners Recovery Fund and is a former Shadow Chief Secretary to the Treasury.

I expect the UK to emerge from this Covid-related economic and health shakeup with permanent major changes of behaviour. These should in turn impact on the values and relative prices of goods and services.

The first most obvious area is housing, house prices and where you live. The discovery with modern communication and technology that people can work at least three days a week from home without their output suffering looks set to release a large “working from home” revolution, particularly in London and the home counties.

As a friend recently commented to me, it is a pleasure to be living most of the time in the country; it adds two hours a day to his free time and £500 per month (effectively tax free) to his disposable income.

This implies, longer term, upward price pressure on out of town housing and downward relative pressure on city centre properties. Also surely the correct economic policy for the rail operators would be to reduce fares to encourage greater usage of the network?

This economic crisis has already unleashed a significant increase in the savings rate – in the home counties plus £2,000 pa per person and rising. The main reason looks to be fear of unemployment, but there is also, clearly, a risk of interest costs rising substantially at some stage in the not too distant future.

A relatively permanent increase in the savings rate implies bad news for the service sector. Higher savings are likely to be made across the young, middle aged and older sections of the community where the latter is helping to finance the young.

Savings should logically be the largest amongst the middle aged part of the population. We are likely to see the young as the key inventors; the middle aged as the investors, and the older part of the population financing the young and predominately financing new investment.

A trend which is not yet apparent is the relative performance of Greater London versus the “Rest”. House price and interest rate developments leave London relatively less affluent and the rest of the country better off.

An apparent trend is a greater interest in education by both the young and their parents – particularly amongst the rising immigrant community who have been performing extremely well academically. This should be good for the economy.

The Conservative Government has had a rough time, at least half of this, their own fault. As the General Election witnessed, and I believe is still the case, the electorate is not interested in Communism. What it wants, particularly, is what is perceived as “fairness”.

Fairness is not just financial fairness. As the Government’s education blunders have witnessed, young students, their parents, teachers and many Conservative members of Parliament have been driven by the wish to see fairness as amongst the young effected.

As Liz Truss, the Secretary of State for International Trade, has commented, fairness is the main case for free trade. After joining the EU, we fell behind our allies in terms of trade; now we have the chance to change this.

We are in a series of negotiations with the US, Japan, Australia and New Zealand to strike new, fair free trade agreements and lower tariffs for our exporters. Talks with all four are progressing well. Round Four of the US negotiations starts soon.

From Japan we have consensus on the major elements of a deal that will go beyond the agreement the EU has with the country. We aim to have agreement in principal by the end of August. Round two of talks with Australia start in mid September and the second round of discussions with New Zealand start a month later.

These deals are an important step towards accession to the Comprehensive and Progressive Agreement for the Trans Pacific Partnership Agreement which will hitch Britain to one of the fastest growing parts of the world.

CPTPP reduces tariffs on 95 per cent of goods between members and also sets high standards in areas like digital trade and data. Membership will help put Britain at the centre of a network of free trade agreements where parties treat each other fairly, play by the rules, and help make us a hub for businesses trading with the rest of the world.

If you back CANZUK, you should also support the D10 – an alliance of democracies

28 Aug

If by CANZUK you mean new trade deals, four of the five eyes, and stronger cultural links with some of what Churchill called “the English-speaking peoples”, we’re all for it.

If by CANZUK you mean free movement, a NATO-type defence union and a single Joe Chamberlain-style economic bloc, our advice is to lie down until the feeling goes away.

The subject is topical because Erin O’Toole, the new Conservative Party leader in Canada, sees CANZUK as “a top priority”.  His version is somewhere between the two sketched above.

The first would sit comfortably with another idea whose time has come – the D10, about which James Rogers of the Henry Jackson Society wrote recently on this site, and which Boris Johnson’s Downing Street is rather keen on.  Expect it to feature in the Defence and Security Review.

Where NATO is a hard power alliance, the orientation of which is still to confront Russia by military means if necessary, the D10 would be a soft power one, aimed at countering the influence of China.

“You might say that, we couldn’t comment,” a Government insider told ConHome, adding that “the idea is being picked up by a broad listenership, which includes Canada and Australia.”

“There’s some interest in Bidenland.  And for the medium-sized powers, there’s security in numbers.  The idea’s in the ether, but it could materialise.”

The UK chairs the G7 next year, so the stage is set for the idea to get a push then, after the Defence and Security Review sets the scene.

So: who would be in the D10?  CANZUK enthusiasts should note that three of the four potential members would be in it: Canada, Australia and the UK.  New Zealand leans towards a different foreign policy orientation.

Then turn to the G7, of which the UK and Canada are already members.  Add Australia and South Korea to the United States, Japan, and the three EU country members – France, Germany and Italy – and you have a total of nine.

Finally, there’s India.  That’s ten major democracies with different military orientations and economies – but shared democratic values.

One could seek to draw other countries in – such as Spain, for example.  But what is being looked for here is a group big enough to work, but not so big as to be unwieldy.

During the Cold War, America and western Europe tended to speak with one voice.  Post-war progress, wealth and stability was built on this alliance – expressed in its security dimension by NATO.

That organisation is still adjusting to the collapse of communism – with two members, Greece and Turkey, at loggerheads, and others, such as Turkey and Hungary, moving closer to Russia.

Which imperils NATO’s integrity – but even were it functioning seamlessly, the organisation isn’t shaped to deal with China, not only because of where it sits but because of what it does.

A soft power D10 wouldn’t be a rival to a military alliance.  It would differ in purpose to the G20, which contains not just China but Russia too, plus the entire EU.  It would take in most of CANZUK, as noted.

At a time when China is expanding its interests through the Belt and Road Initiative, the D10 would offer a counterweight, in terms of investment, capacity-building, aid and the promotion of democratic values.

It could also begin to speak with a common voice at the United Nations, and there would be an obvious crossover with the Trans-Pacific Partnership, which the UK is keen to join, as our columnist Stephen Booth has reported.

Downsides?  The EU countries are not on the same page as America on China – or, to strike a very topical note, on Iran, over which Britain is sticking with the EU position rather than moving towards the American one, having voted recently the former at the UN.

Doubtless part of the diplomatic thinking is the calcuation that Donald Trump may not be in place after November – which may be wrong.

Elsewhere, Narendra Modi is taking India in a different direction from its secular heritage. And it is hard to see how this alliance could conjure up a quick alternative provider to Huawei.

But if you believe that the great post-war alliance between America and western Europe was of value, you will smile on a new means of creating a modern version for a different purpose.

Terry Barnes: Abbott’s trade appointment is a masterstoke

28 Aug

Terry Barnes advised Tony Abbott when he was a Cabinet minister in John Howard’s government.

Whatever one thinks of the reported appointment by Boris Johnson of former Tony Abbott as a Co-President of the Board of Trade with Liz Truss, it is certainly one in the eye for the diminishing band of diehard Remainers.

Abbott’s putative role was greeted with disbelief and even derision among Australia’s left-leaning media elite who have little love for him, just has he has no love for them. Their reaction has been echoed by the likes of Emily Thornberry, who has not hesitated to give the former Australian Prime Minister a very undiplomatic and uncharitable, even vicious, character assessment in slamming the appointment.

Certainly, the Prime Minister has caught everyone by surprise by bringing Abbott, as a former “colonial”, into the heart of Whitehall. Perhaps it was one of Dominic Cummings’s wheezes to put the wind up the mandarins and the British trade establishment.

One person who will be very satisfied with a co-presidency of the Board of Trade – however archaic and anachronistic the Board itself is today – is Abbott himself.

A great student and devotee of British history, and especially of Winston Churchill, Abbott will be well-aware that he is following in the footsteps of one who he regards as one of the greatest figures in all history, whose presidency of the Board under Asquith was his first Cabinet post. He will also surely derive some pleasure from another previous holder of the political office being the very Viscount Sydney after whom his home city is named.

But beyond the historical parallels, and the strangeness at first glance of Abbott’s appointment, there is much to suggest that he is the right man for the job.

It is often forgotten that Abbott was not only a Rhodes scholar but is also British-born, at a time when Australian citizens were also deemed British subjects, and there was free movement and residency rights in both directions.

He retained his dual British citizenship until he stood for the Australian parliament in late 1993. Both it, and the heritage that he has always felt that his birth conferred on him, has made him more passionate about Britain, and more determined that she regains what he sees as her rightful standing in the world, than many resident Britons. He desperately wants Britain to succeed in once again venturing independently from the EU into the world of international trade free just as Australia, after decades of growing pains, eventually did the same from her mother country.

Then of course there’s Brexit. Abbott was already out of office in Australia by the time of the 2016 referendum, but from the very outset he was a passionate and influential supporter of Brexit. Anyone who has read his pro-Brexit writings will know that Abbott is full-blooded for Brexit and very, very bullish about Britain’s prospects of negotiating, just for starters, strong, effective and highly lucrative trade deals with Australia, New Zealand, Canada and the European Union. Indeed, if Abbott takes up this role, the appointment will be a strong signal from Number 10 that the highest priority for bilateral trade agreements is what was once called the Old Commonwealth.

And it is not as though Abbott has no reliable form in trade negotiations. Far from it. On his watch as Prime Minister, Australia cut world-leading trade deals with China, Japan and South Korea, moving swiftly to close them where the previous Labor government had dithered.

Even with Australia’s relations with China going through a very rough patch – this week, a senior Chinese diplomat patronisingly told the Canberra press gallery that the relationship is like a bad marriage where only one partner, Australia, is to blame – the deals that Abbott signed are working, and have opened wide new markets for Australian exporters and investors across the board.

So when Abbott talks about trade deals, he knows full well of what he speaks, and can supply insights derived from experience, and an international contact book, to help substitute for the expertise and confidence about going it alone that has atrophied in Britain since she joined the then European Economic Community in 1973.

Lastly, Abbott is not part of the British, Remain-grieving, establishment. As a former Prime Minister in a Westminster parliamentary democracy, he understands how Whitehall’s machinery of government works, but he is alien to the culture of the Whitehall mandarinate. His will be a voice in the circles of government unequivocally for making Brexit not only work, but for it being a spectacular success. Like his compatriot, Lynton Crosby, Abbott will derive his greatest satisfaction from his role by proving his naysayers wrong, and delivering for all of Britain trade outcomes that will boost not only the United Kingdom’s prosperity, but its prestige at home and abroad.

On hearing of the reported appointment, the “Abbott-haters” in Australia have not hesitated to accuse him of defecting to the opposition and undermining Australia’s best interests. Looked at superficially, that is understandable but, in reality, the appointment is the opposite. Australia, and other countries with whom Britain is looking to secure trade deals, will benefit greatly if their British trade and investment grow the economic pie for both countries. Lending the expertise of Australia’s former Prime Minister to her former colonial power is an indication of a mature bilateral relationship, not a subservient or dysfunctional one.

A Canadian, Mark Carney, was appointed Governor of the Bank of England by David Cameron and George Osborne, partly to bring fresh perspectives and ideas into Threadneedle Street and the City. While his success was mixed, not least because of his opposition to Brexit, turning to Carney sent a message that not all financial and monetary policy wisdom resides in Whitehall and the Square Mile.

The same logic applies to Abbott and international trade. However his role may finally be defined, Johnson appointing Abbott to a far more than symbolic role at the Board of Trade, supporting him and Truss as they strive to fully implement Brexit in the face of a sullen if not outright hostile European Union and a Coronavirus-blighted world, may prove to be a post-Brexit masterstroke.

Matt Kilcoyne: CANZUK is a bold, imaginative, and popular blueprint for a global Britain

19 Aug

In less than a year the Conservative and Unionist Party will face a threat to its existence.

Maybe not the Conservative bit, but certainly the Unionist portion. Coming down the tracks are the Scottish election and a renewed Nicola Sturgeon is positioning herself and her party to rip apart the United Kingdom.

Unionists need to offer something better. Something bigger than Scotland, frankly bigger than Britain. That offer should be Canzuk.

Time is running out. The polls are going in the nationalists’ favour. Poll after poll, in fact, shows that the Union is on the back foot. We know what Nicola Sturgeon is likely to spin Scottish independence as being natural, inevitable, and the sensible option.

Far from being shown up by a pandemic that has hit Scotland hard, Sturgeon is buttressed by an impression of strength and a compliant media north of the border, and no scrutiny south of it.

The First Minister, using all the privilege that position entails, is going to cast independence as both normal, and a reprieve from chaos. Set Scotland free with Sturgeon, or risk being bound to Brexit Britain with Boris. Tories should understand the danger of this messaging, the party used it with great success against Ed Miliband in 2015.

What worries me is that, while there may be plenty of policies on offer, there is a lack of a narrative and a lack of an incentive for Scots to choose to stick with their fellow Brits in the years ahead.

My proposition to the leaders of the Conservative party then is simple. Use something popular, something bold, and something global to counter a proposition that would sow division, narrow Scotland’s worldview, and limit the freedoms of our people.

Offer them the world. Offer them the right to live and work right across Britain, Australia, Canada, and New Zealand. The North Atlantic and the South Pacific. A global alliance of modern, diverse, liberal, English-speaking democracies united by common cause, a shared head of state, institutions, businesses, academia, legal systems, and of course all important family links.

Scottish Nationalists look at the pandemic, some even at the possibility of manning the border and kicking out the Sassenach, and think their time has come. Tories should be telling them it has not, and that rather it is the hour of the Unionist instead.

For Unionists across all the Canzuk states are moving in tandem on this issue. Canzuk is now official policy of the Canadian Conservatives, it is the stated aim of the New Zealand First, ACT and National parties, and today we at the Adam Smith Institute launch a paper by Australian Senator James Paterson supporting the alliance.

His proposition should be studied carefully. New Zealand and Australia have a unique relationship in the same way that the United Kingdom does with Ireland. They treat each other with respect, understanding that lawmakers want the citizens of each to be safe and have high quality assured in the products they buy and services they procure. They recognise each other’s qualifications so teachers, and nurses, and engineers can work back and forth across the Tasman Sea.

If the EU weren’t trying to meld together ex-communist, ex-fascist, constitutional republics, monarchies, federal states and unitary government; if it weren’t pushing together 28 states with different languages and legal systems and centuries of mistrust and warmongering together, then they might try something similar. If Ireland weren’t in the EU we’d probably propose a similar idea across the whole of the British Isles.

We can, though, propose such a network between our high-trust English speaking allies. The ones with whom we share the Queen and who sit in the Five Eyes alliance. We already trust each other with the highest classified state secrets, we should be able to trust that Jenny from New Zealand can be a nurse talented enough to look after our Prime Minister without making her have to apply to have her qualification recognised.

Trust is what trade is all about, and you can trust your mates the most. We’ve fought and died together. No matter if you’re white, British Asian, Afro-Caribbean, or Cantonese, you’re likely to have family in one of the Canzuk states. In fact, 80 per cent more Brits live in CANZUK states than across the whole of the neighbouring EU, with 1.2 million Brits living in Australia alone.

Polls have consistently shown the idea is very favourably received in each of the states, with a recent poll for CANZUK International (based in Canada) showing supporting majorities in each with New Zealand highest (82 per cent in favour), followed by Canada (76 per cent), Australia (73 per cent) and UK (68 per cent). Over 300,000 people from the four states have signed a joint petition to encourage governments to commit to the idea.

Together these four states are emerging as a global force by sheer force of fact. Whether that’s challenging China over Hong Kong, or protecting the biodiversity of the oceans, or standing up for press freedom, we’re championing the liberal rules-based order that is the cornerstone of our prosperity on the global stage.

Our Canzuk states share a love for freedom, and it’s an offer that shines bright with opportunity and promise. A global future for a generation that has been disillusioned with a politics that has been inward looking. An idea that connects them to our shared civilisation, and to their own global families too.

Give Brits an offer they can’t refuse: give them Canzuk.

Stephen Booth: The UK’s parallel trade negotiations are of unprecedented ambition

6 Aug

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

Brexit is necessarily reshaping Britain’s trade relationship with the EU. Meanwhile, the UK is simultaneously trying to ensure continuity of, or build upon, existing trade agreements with non-EU countries, such as Japan, and reach entirely new deals with partners including the United States, Australia and New Zealand.

The UK also intends to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which currently includes 11 countries on the Pacific rim including Japan, Australia, New Zealand and Canada.

Predictably, the EU negotiations are set to go down to the wire. Since Boris Johnson became Prime Minister all signs have pointed to a so-called “skinny” free trade agreement (FTA) or none at all. For this Government, Brexit is primarily about establishing sovereign independence, while the EU has sought to underline and assert its role as the dominant regulatory and economic power.

It is no wonder that politics has trumped economics throughout the Brexit process. The EU is a political endeavour pursued by economic means. The €750bn economic recovery plan agreed by EU leaders last month illustrates the extent to which the UK’s preference for confining deeper political and economic integration to the Eurozone faced an uphill struggle had it remained in the bloc. It is impossible to imagine any British government agreeing to such a dramatic expansion of the EU’s financial firepower or the precedent it has set for further moves towards a common EU fiscal policy.

Nevertheless, there are reasons to be cautiously optimistic about a UK-EU deal being reached. The latest negotiating round appeared to mark a breakthrough on governance issues. David Frost’s statement welcomed the EU’s “more pragmatic approach” on the Court of Justice and suggested the UK was ready to consider the EU’s preference for one set of governance arrangements, rather than a suite of separate arrangements.

The remaining sticking points are fishing and state aid. Fishing is not significant in terms of GDP but is politically totemic in the UK and certain EU member states. Therefore, a deal must be left to the last minute. Establishing a “level-playing field” on state aid is proving to be the biggest substantive issue to resolve. The EU is moving away from its request for dynamic alignment and the issue now is what domestic regime the UK will propose.

Negotiations with the US appear to have got off to a good start. However, both sides accept that a deal cannot now be reached until after the US elections in November. Therefore, the most difficult areas, such as agriculture, will not be addressed until later in the year at the earliest.

The most pressing issue Liz Truss, the Trade Secretary, discussed on her trip to Washington earlier this week is the removal of US retaliatory tariffs as part of the ongoing Airbus/Boeing dispute, which sits outside the FTA negotiations. The US has levied tariffs on whisky and further tariffs could be extended to gin and other products if the dispute is not resolved.

The prospect of delay with the US has made UK engagement with the Asia-Pacific countries all the more important and pushed accession to the CPTPP up the agenda. Toshimitsu Motegi, the Japanese Foreign Minister, is in London this week in an attempt to finalise talks on the UK-Japan FTA.

The Japan deal is an important stepping stone towards CPTPP accession, since Japan is the biggest economy within the agreement. The Japan negotiations are working to a condensed timetable because the parties are aiming to ensure a successor to the EU-Japan FTA is in place before the end of the Brexit transition period on January 1, 2021.

The time constraints mean that a UK-Japan deal will be largely modelled on the EU precedent. However, media reports have suggested Japan might be prepared to accelerate tariff cuts for British pork, and Japan is seeking the immediate elimination of car tariffs. The major opportunities for innovation in UK-Japan trade relations is on regulatory cooperation in the services and digital sectors. The FTA can provide the architecture but domestic regulators will need to work together to realise long-term gains.

Another reason why the CPTPP may become increasingly important is that Joe Biden has indicated that he might be prepared to (re-)join the CPTPP if his presidential bid is successful. President Trump pulled out of its previous iteration, the Trans-Pacific Partnership, spearheaded by President Obama. However, this could be a slow process, since Biden’s campaign has also emphasised that his primary focus will be on domestic investment and he has previously suggested he would seek to renegotiate CPTPP if the US were to re-join.

Some have suggested that engaging with the US via the CPTPP rather than bilaterally would defuse some of the thorniest issues, such as agricultural standards on chlorine-washed chicken or hormone-treated beef. However, the reality is that while the optics might be different, the UK will face many of the same substantive trade-offs whoever is president.

The CPTPP rulebook is much closer to the US approach – indeed the World Trade Organisation’s (WTO) approach – to regulating agriculture than we have inherited from the EU. Blanket bans on agricultural imports, not supported by scientific evidence, will not only be viewed as a protectionist move by the US but potentially by other members of the CPTPP.

The question of agricultural liberalisation cannot be ducked for much longer. Equally, as we noted in the recent Policy Exchange paper, The art of the UK-US trade deal, the issue need not be as stark as some of the hyperbole has suggested. The starting points should be to promote consumer choice, while ensuring consumer safety. The UK already has the right, under WTO rules, to prohibit the import of unsafe food. Labelling, either via domestic legislation or voluntary certifications, can be used to inform consumers of food production methods.

The UK’s domestic and international policies must also work in tandem. UK tariff liberalisation can be phased in gradually, giving UK producers time to adjust to new trading conditions. This would reflect the gradual introduction of the UK’s Environmental Land Management scheme, replacing the EU’s Common Agricultural Policy. Meanwhile, it should also be remembered that agricultural liberalisation is an export opportunity for high quality UK products, particularly beef and lamb.

In today’s world, trade agreements do not merely set tariffs or regulate cross-border investment. For medium-sized powers in particular, they are important building blocks for wider political relationships and alliances. However, in order to unlock these relationships, the UK must be willing to live up to its rhetoric on free trade.

Local lockdowns are dispiriting – but there are reasons to be hopeful about the battle against Coronavirus

1 Aug

On Thursday evening, Matt Hancock posted a series of Tweets that sent the UK into disarray. He wrote that the Government had “seen an increasing rate of transmission in parts of Northern England” and would subsequently not allow people from different households to meet indoors in Greater Manchester, Blackburn with Darwen, Burnley, Hyndburn, Pendle and Rossendale, starting from midnight.

Events moved quickly the next day, in which Boris Johnson elaborated on the decision that had been made. At a 10 Downing Street press briefing, he announced that lockdown easing would be postponed in England and that the country would have to “squeeze the brake pedal”, as “the prevalence of the virus in the community, in England, is likely to be rising for the first time since May”.

Even more depressingly, Chris Whitty, England’s Chief Medical Officer, said that “we have probably reached or neared the limits of what we can do in terms of opening up society”.

Alongside the news that England has the highest excess mortality rate in Europe, the spikes being seen across Europe, and the repeated warnings of a second wave, no doubt this has been one of the most disheartening weeks in the Covid-19 crisis so far for many Brits – particularly those living in the affected areas.

Indeed, in these times, it can be hard to feel optimistic about the battle against Coronavirus. But there is a strange paradox to the detection of cases in the North – abrupt though Hancock’s announcement was – and the Government’s swift action.

Far from being a sign of decline, it emphasises the enormous improvements that have been made in the UK’s testing regime. Hence why it is now easy to spot cases.

At the beginning of the crisis, many will remember that the Government was routinely attacked for lack of tests. When the Health Secretary promised to accelerate the testing regime by tens – and then hundreds of thousands – the target seemed preposterous. But big strides were made; 11,722,733 tests have been processed so far, with 206,656 processed today, and testing capacity at 338,585. 

To put this in context, by way of new tests per thousand people, the UK rate is 2.27 (as of July 30. Source: Our World in Data), Belgium is 1.30 (as of July 29), Denmark is 0.79 (July 30), France is 1.38 (July 28), New Zealand is 0.51 (July 30) and Norway is 0.89 (July 27). 

Now that our testing regime is better, there’s no doubt that the UK will have more localised lockdowns. But as the testing, and data, becomes more sophisticated, so will the way that the Government is able to apply its intelligence.

Another reason to feel hopeful is the progress made in developing a Covid-19 vaccine. Last month, a team of scientists at Oxford University’s Jenner Institute and Oxford Vaccine Group trialled one that induced a strong immune response in patients. They have since worked with the UK-based global biopharmaceutical company AstraZeneca, with the help of a £84 million Government funding scheme, to accelerate its development. The organisation has reported “good data so far” in its large-scale clinical studies.

And that’s not all: the Government has signed up for 60 million doses of a potential Coronavirus vaccine, which is being developed by Sanofi and GlaxoSmithKline.

Of course, no one can argue that the Government has been perfect in this crisis – clearly the decision to discharge hospital patients into care homes was wrong, and people will be troubled by the excess mortality rate (although there is some debate as to whether this accurately gives a snapshot of countries’ performances). 

But it can be easy to forget that hospital cases continue to decline (even if cases are going up, it doesn’t mean hospitalisation), as have the number of deaths involving Coronavirus across all English regions. At the same time, treatments and understanding of the virus continues to rise.

And let’s not forget the significant achievements throughout this crisis; the speedy roll out of the Nightingale Hospital; the shielding scheme to protect two million people; the Government’s ability to increase the number of mechanical ventilators in the NHS from 9,000 before the pandemic to 30,000; the emergency arts package, and of course Rish Sunak’s multiple schemes to keep the economy moving.

They were phenomenal logistical achievements that should give us faith about Britain’s ability to deal with what’s next.

The speed at which the nation has improved on testing is only going to bolster its decision-making further – and, indeed, these developments will be seen worldwide as all countries improve in this regard.

In short, it may not feel like it this week, but there are reasons to be hopeful about the future.