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Newsletter 20 Dec 2020

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And it came to pass in those days, that there went out a decree from Caesar Boris that all the country should be locked down. And all went to be locked down, every one in his own city…

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­Dear Subscribers,

And it came to pass in those days, that there went out a decree from Caesar Boris that all the country should be locked down. And all went to be locked down, every one in his own city…

This is the last BfB newsletter of the year and it would be nice to be able to go out on a high. But with the Christmas relaxation cancelled in the South East and severely curtailed across the UK, there is not all that much to celebrate.

Still, we should finally hear the outcome of the Brexit negotiations over the next few days. BfB will continue post occasional articles in this period, but we will not be sending out our next Newsletter until early January, when we can take stock of what happened.

We leave you with some important articles from our contributors, outlining why no deal need not be a problem and warning against some of the ploys the EU might try during the final stages. On a lighter note, subscribers might be entertained by this piece from a liberal American Bloomberg columnist, making the (grudging) admission that Brexit was not such a bad idea after all.

It has been a trying year, but we look forward to an improving 2021 outside the EU’s single market and customs union. In the meantime, we wish you the best Christmas possible. The Briefings for Britain site has had over a million views during 2020 and we would like to thank all contributors, sponsors and readers for your enthusiastic support.

Media

BfB co-editor Robert Tombs has written an article for the Telegraph, reflecting on the profound reasons for our divergence from the European continent. He concludes that at last, after half a century, we are going with the grain of our history:

“Our peculiarity – or so General de Gaulle thought when he vetoed our entry into the European Economic Community – was that we were too global: “an island, sea-going, bound up, by its trade, its markets, its food supplies, with the most varied and often the most distant countries”. It has taken us half a century to realise he was right, and finally to go with the grain.”

On the website this week

Blogs

For the last time – an EU trade deal isn’t worth it for the UK, by Harry Western

The UK should walk away from trade talks with the EU, as the deal being discussed is not worth having. It would preserve the EU’s privileged position in the UK market while offering very modest trade benefits to the UK which would be more than offset by damaging restrictions on the UK’s freedom of action in the regulatory and other spheres. The EU fears the UK’s competitiveness under a WTO scenario – so that is the scenario the UK should choose.

“It should now be abundantly clear that the EU is not interested in a balanced and mutually advantageous deal, only in political domination.”

Britain has ‘nuclear options’ against EU hostility, by Briefings for Britain

The EU has tended to push the UK around in trade talks rather as it does to small nations like Switzerland. The media frequently suggest all manner of impediments which the EU can use against UK people, transport and trade if it does not get its way. This article lists some important counter-measures which the UK has in reserve if needed to counter bad behaviour by Brussels.

The media both here and on the continent always stress the potential problems for the UK from EU adoption of similar measures but rarely if ever consider the other side of the coin.”

Ready aye ready? Preparations to defend our territorial waters, by Gwythian Prins

Professor Gwythian Prins asks what is it ‘irresponsible’ to do as we prepare to defend our territorial waters from New Year’s Day? He concludes that only by making detailed preparations to counter force we will maximise the chance that nothing will happen. This is the whole point of deterrence.

“The most irresponsible and dangerous thing to do would be to hope for the best and to do nothing and to say nothing.

Everything is agreed until nothing is agreed, by David Blake

The standard mantra in EU trade negotiations is that nothing is agreed until everything is agreed. Everyone knows this, except apparently British trade negotiators who have accepted the very opposite by acceding to the EU’s sequencing of negotiations. Professor David Blake describes how the EU has cornered the UK at every turn.

“We are in danger of getting virtually nothing from this trade deal, while the EU gets everything it asked for. This is what Boris Johnson will try to sell as ‘getting Brexit done’.”

Britain is part of Europe: but how much a part? By Robert Tombs

Professor Robert Tombs casts a historical eye over Britain’s relations with Europe. Brexit proves that, even in the 1970s, it was too late to alter the global orientation of our island nation.

We could never have been at the heart of this “Europe”, with its quasi-religious mission to replace old nationalisms with an ersatz Europeanism seen as benign.”

Key points this week

A Brexit Bottleneck

Various headlines have warned Britons to brace for a number of Brexit- & Coronavirus-related disruptions, from huge queues on the roads to Dover and Calais, the temporary closure of factories, and the exhaustion of warehouse capacity as businesses prepare for the end of the transition period.

Yet although these conditions are difficult, they are unlikely to be permanent. Firstly, this disruption is essentially a global rather than a specifically local problem.  The decline in global trade means that containers that would normally be aboard ships at sea are instead occupying substantial space in ports, reducing capacity for other goods.  As such, to link these difficulties with Brexit is misleading.

Secondly, much of this demand represents businesses’ desire to import various goods ahead of the imposition of tariffs, and will thus abate after the end of the transition period.  This relates to the broader issue of the UK’s main imports from Europe which tends to come in the form of bulk goods such as food.  What is more concerning is that wholesalers have not (yet) found alternative, non-EU suppliers, even if many – such as Tesco – are in practice prepared for the consequences of no deal.

Finally, these conditions increasingly reveal the unworkability of the Northern Irish Protocol in its current state, as companies stockpile goods from the UK mainland in anticipation of severe disruption to the province’s trade in the future.  From the need for expensive, international trade-compliant pallets to ship goods between NI and the UK, to the potential presence of EU customs officials in Belfast, the EU is insisting on restrictions which will manifestly hurt the interests of the province’s people.  A responsible UK government ought to resist such impositions with all its strength.

Eras-must or Eras-musn’t?

The UK may no longer participate in the Erasmus student exchange scheme after the end of January, according to news reports.  Though the UK has suggested rolling yearly renewals of its membership, Brussels is insisting on the UK committing to the full seven year period.  The end of the scheme would not represent as serious a loss as student union and university bodies make out, however.  British students barely use the scheme, with fewer than 600 masters students per annum employing it 2015 and 2016, while under 2% of British students 2012-13 actually used the scheme – the lowest rate in Europe.

Before piously decrying the limited horizons of the British youth, it’s worth examining the qualitative advantage of British universities.  According to the THE’s world university rankings for 2020, 7 of the top 50 are in Britain, with Oxford and Cambridge taking first and third place respectively.  That contrasts with the highest-ranked university in the EU, LMU Munich, which comes it at 32nd.  Even those British students who do wish to study abroad will be able to do so, with the Treasury allocating funds to aid student mobility to (though not from) European institutions.

Advocates of the scheme have thus been forced to find other advantages.  Universities UK, an organisation representing vice-chancellors, claims that EU students provide financial benefits of £243m per year, once £177m in membership fees for the scheme is accounted for.  No evidence seems to be easily available, however, to source these claims, and the funding explicitly received by UK universities in 2017 from the programme was a mere €62m.  Unlike more long-term international students who pay full fees and stay in the UK for substantial periods of time, EU Erasmus students do not pay tuition fees to their host institution, and stay for only a limited duration, reducing their relative economic impact.

Claims for transformational effects on employability and degree results, too, are misleading: it’s true that students who go on the scheme do better in exams and in the workplace, but most probably because more organised, intelligent students are likely to apply for the programme in the first place.  Finally, the scheme was explicitly designed (and continues to be) to promote European integration, the EU’s cultural capital and ‘European identity’.  It thus ought to be treated with caution, further suggesting the wisdom of the UK’s reserved attitude.

Dictating the Terms of Trade

Professor Jonathan Portes (a Professor at KCL and a senior fellow of Remain-leaning thinktank UK in a Changing Europe) has recently suggested that any trade deal with the EU will necessarily reflect Europe’s greater economic gravity, compelling the UK to settle for the terms it sets.  One of the examples he uses is the supposedly bullying relationship of the US with the smaller nations with which it trades, citing the fact that it supposedly imposed a minimum wage of $16 on Mexican automobile workers after Trump’s recent renegotiation of the North American Free Trade Agreement.

Yet this is a revealing distortion of the facts.  There is no ‘minimum wage of $16 per hour for car workers’ mandated in the new NAFTA deal – only a rule that to qualify for zero tariffs, 40% of a car must be made in plants paying such a wage. Otherwise a mere 2.5% tariff applies, which many firms will probably choose to pay.  Moreover, such a restriction is limited to the automotive sector – rather than a full-blown level playing field comprising economy-wide regulations systematically monitored and enforced by foreign inspectors.  Implying that the kind of systematic monitoring and level playing field regulations that the EU is demanding is normal is thus simply untrue.

Looking at the argument more generally, the kind of leverage tactics Portas discusses (threatening to withdraw from deals to renegotiate more favourable terms) differs substantially from the mechanisms of unilateral tariff impositions across various sectors desired by European negotiators.  The former operate outside the treaty; the latter within it.

If this seems trivial, consider the difficulty that threatening to withdraw and subsequently renegotiating represents, particularly when compared to dynamic powers to penalise across the economy at will.  Rather than a rapid, legal and indisputable instrument to get your partner to do what you want, you have to threaten to dissolve the whole arrangement, then renegotiate and then ratify it.  If this prospect was difficult enough to delay the US from trying it until Trump, think how hard it would be the EU, with its need to agree, consult, and ratify across 27 capitals – as well as its substantial export surplus with the UK, and the growth of non-EU markets likely only to diminish Europe’s significance for British exporters in the long run.  Strategically, the EU’s interests are to secure a deal as soon as possible in the short term to preserve its current advantages – a need British negotiators should recognise and exploit.

Key Points is compiled by a Cambridge PhD student. The first key point should have appeared in last week’s newsletter.

Twitter 

(@Briefings­_Brit)

We are also on Twitter, posting articles and retweeting the daily events that bring Brexit to the fore in the national news.

Facebook 

Discussion also continues over on Facebook.

How you can help

There is much about Brexit still to be decided. Our MPs listen to their constituents. Do continue to send them links to our articles, especially on matters relevant to your constituency – for example, in rural areas, articles on the threat to British agriculture. Alternatively, make an appointment to speak to them at their next surgery. Let them know what you want post-Brexit Britain to look like.

As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU will be good for the UK economy and for our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.

You can follow us on Facebook and Twitter.

Yours Sincerely, 

Newsletter Editor

An Oxbridge PhD Student

Dr Graham Gudgin 
Economist, Centre for Business Research, Judge Business School University of Cambridge

Professor Robert Tombs
Emeritus Professor of French History, University of Cambridge

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Briefings For Britain