Thursday, October 1, 2020
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Out of the EU and on to a hard road ahead

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THE Withdrawal Bill has passed all its Parliamentary stages, received Royal assent and we’re out on Friday. Allegedly. The Withdrawal Agreement and Political Declaration are not that much altered from the versions Mrs May failed to get through and I fear that the new PM may be telling himself that a compromise that satisfies nobody has the most chance of shutting up the malcontents on both sides.

I hope I’m wrong. I hope there is a way to ensure that we don’t leave ourselves under EU legal jurisdiction, we don’t put our armed forces at risk of being embroiled in EU military adventurism, we don’t dash the hopes of our fishing communities, and we don’t continue to pay out monstrous amounts of money. Is there any other way than ‘crashing out’ without a deal?

But despite all these daunting challenges, are we too concerned with shorter-term matters? Perhaps we need to step back and see the big picture. The industrial Revolution that Britain pioneered multiplied human effort and, coupled with the development of international trade, allowed our population to increase to six or seven times what it was in 1801, the last time we were anything close to food self-sufficiency.

 To get by in World War Two, we ‘dug for victory’ and slaughtered most of our food animals, which left us short of natural fertiliser, and the land was reportedly ‘losing heart’ towards the end. Starvation was a possibility.

Since then, we’ve been building on agricultural land and flood plains, while a lunatic New Labour deliberately lost control of immigration in order to teach their political rivals some idiot point about diversity; now we don’t actually know how many people are in this country.

Today we import 80 per cent of our food (the 50 per cent figure is a fudge – food processed here from imported materials is counted as British) and according to Sunday’s BBC1 Countryfile programme, our farmers depend on the Common Agricultural Policy for 61 per cent of their income; otherwise many of them would be goners. Even if we cut out dietary luxuries, if anything seriously interrupts the system, we’re up a gum tree.

Since we can’t feed ourselves, we have to pay the world for our board. Food is cheap (for us) because of modern farming methods that ultimately depend on fossil fuels in various ways; and also because of relative currency values that make the pound buy a lot more in many foreign countries – for now. So, make-and-trade it is.

Except it isn’t. In the 1970s, a Conservative government signed away our fishing rights and plugged us into an EU-regional trading system that undermined our industry; the damage showed up in unemployment and underemployment –  both carefully disguised – imbalance in visible trade, gradual personal financial impoverishment for much of the populace, widening wealth inequality, growing public debt and neoliberal rules that allow rich individuals and powerful corporations to flee if taxes become too burdensome. And then it went global.

All this was foreseen long ago, as we see here:

In the recording above, Sir James Goldsmith was speaking to Brian Walden in 1994, not long after the signatories to the General Agreement on Tariffs and Trade (GATT) had agreed to form the World Trade Organisation. The billionaire warned that globalisation would harm the interests of the Western working classes, as on a smaller scale the EU’s internal market had done already, and he began by citing the experience of France, where he had recently won a seat in the European Parliament:

‘In France you had in 1973 420,000 unemployed. Between 1973 and 1993 the economy grew by 80 per cent, eight zero, almost doubling; and the number of unemployed went from 420,000 to 5.1million. What can be the purpose of an economy which by doubling goes to 5.1million?’

He went on to say that a similar situation pertained in Britain. Had it not been for North Sea Oil and monetary expansion (BoE and the mortgage boom), I’m not sure Conservatives would be looking back on the Thatcher years with such unmixed admiration.

Some say, get completely free of the EU and let’s trade on WTO terms. In that case, we need to examine the latter more closely, too. It’s a topical issue, for despite his domestic political travails, President Trump took the opportunity last week at Davos to call for reform of the WTO since China, though now the world’s second-biggest economy, is still benefiting from preferential terms relating to its WTO status as a ‘developing’ nation.

 Bloomberg explains further here, but the takeaway for us is that although several other countries have agreed to give up that status in future talks (see point 7 in the article), China is digging its heels in.

There’s a reason for that. Although the Middle Kingdom has the highest Gross Domestic Product in the world in terms of local spending power (Purchasing Power Parity), it has a vast population and per person its income isn’t even in the top 100. During President Xi’s term of office (and he has no intention of leaving soon) electricity production has more than doubled and he seems determined to continue industrialising and urbanising his country, whatever Greta, Sweden’s Joan of Aargh! may say.

Who runs the WTO anyway? The makeup of its secretariat is interesting: headed by a Brazilian, with deputies from Nigeria, the USA, Germany and China – so, two developing countries, one superpower, a wannabe superpower (already interfering in Africa and compromising Ireland’s constitutional military neutrality) … and the huge Chinese axolotl, neither primitive nor developed. (By the way, note that the latter’s WTO deputy, Yi Xiaozhun, is in charge of intellectual property issues: Mr Xiaozhun must have so much to discuss with his American counterpart!)

Post-Brexit, shouldn’t the UK also have representation at a senior level in the WTO, as a major global trading economy and freshly-liberated nation? For his part, Trump has more than once indicated a preparedness to withdraw from the WTO if necessary, but I wonder whether even our new UK government is capable of fighting its way out of a wet paper bag, let alone triggering WTO-exit. The next 11 months of EU trade negotiations will be a key test of its general will and skill.

But we ought to reassess our policy towards the WTO – another one that likes to give orders from very nice offices far away – because remote supranational quangos practically guarantee trouble for the little people, aka ‘the many.’  

Take the Airbus dispute: The EU subsidised the makers ‘illegally’ and the WTO ruled that the US could impose retaliatory tariffs on EU goods. This is to hit exports of Scotch whisky. Irish ex-EU beef exports could also suffer and at the same time the South American trade bloc Mercosur has agreed with the EU a deal allowing it to send annually 99,000 tons of beef to Europe.

Irish MEP Luke ‘Ming’ Flanagan told the EU Parliament that the agreement ‘paid the most sustainable beef farmers on the planet to go out of business: We don’t want that type of support. At the end of this, farmers have got to come out of it all right. It’s very hard to believe how they will, though, because they usually are the ones who – both in a literal sense and in a metaphorical sense – end up with the shit on their hands’.

I hope I’m right in thinking that Dominic Cummings’ recent job advert is for a team to tackle much more than Brexit and if so, I fully support him. The detailed planning to get us out of this nexus of potential disasters will need the geniuses and weirdos he’s looking for. 

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Rolf Norfolk
Rolf Norfolk
Rolf Norfolk is a former teacher and retired independent financial adviser.

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