India - a challenge ahead for HMS Brexit...

Declaring an interest as someone of half-Indian extraction, I’ve argued on occasion that, whilst much attention is given to China’s emergence as a world power, both military and economic, there should be more attention given to its democratic counterpart, India. It’s an uphill struggle, I acknowledge, but still an important one.

In terms of the domestic debate here, India falls under the category of “obvious trading partner” post-Brexit, i.e. someone we can increase exports to. Now, putting aside the fact that United Kingdom governments have treated Indian citizens in a manner akin to leprosy victims in terms of visa access over the years, the action of Theresa May in effectively vetoing the proposed EU/India Free Trade Agreement, is hardly an encouragement to the Indian Government to prioritise us over, say, the European Union.

But, of course, some of the more lacking in self-awareness supporters of Brexit believe that, as part of the (jolly old) Empire, the Indians will be only too eager to sign something - fifth largest economy in the world, you know, Commonwealth ties, old boy.

Except that, according to the Centre for Business Economics and Research, with its Conservative-friendly world view, Britain’s economy is already smaller than India’s, and with India’s trend growth rate far higher than that of the United Kingdom, the gap will grow fast. In whose interests is a trade deal then, who will be able to drive the harder bargain? Not a difficult question to answer, is it?

Any trade deal will require significant visa liberalisation, and thus more Indians coming to Britain to work and study - a tough sell to those who voted for Brexit, and indeed for the Conservatives, in order to reduce immigration. And the net figure will be worse still, as the chances are that few British citizens will wish to make the reverse journey.

It gets better though. By 2034, India is predicted to be the third largest economy, with the likes of Indonesia, the Philippines and Bangladesh in the top twenty-five. And they know that. The bargain will get harder, not easier, and the Hindu nationalist administration that runs India is hardly likely to hold back from  using that growing power imbalance to settle some old scores.

Meanwhile, the European Union will be keen to gain preferential access to the Indian market. It has quite a lot to offer, isn’t as attractive to Indians seeking to work abroad but offers plenty of opportunities for the rapidly growing number of middle-class Indians to spend money as tourists. It also offers access to a market six times larger and, in significant cases, wealthier than that of the United Kingdom.

Negotiations with the Modi administration should be interesting, and something of an eye opener for the Johnson-led Conservative Government. How they respond to the challenge may be a guide to the future economic prospects of the United Kingdom, and the ability of the Conservatives to deliver their rather generous promises.

They’d better learn fast...

Yes, Liam, international trade is much more complex than you thought...

The news that Russia has formally objected to United Kingdom proposals to divide the current quotas between the two according to the historical flows of trade in each product comes, sadly, as little surprise to anyone who has been paying attention all along.

In any negotiation where you seek to alter existing arrangements as a supplicant with a ticking clock, you start at a disadvantage. The other side can simply wait it out, knowing that, as your cliff edge gets closer, you’ll get more desperate, thus more likely to offer a good deal. Now under normal circumstances, that’s not a good place to be, but when you’ve put your entire economy on the line, it’s a pretty desperate affair.

Now, if you’ve got something great to offer, and demand is high, you might get away with it. Alternatively, if your negotiators are very good, and have a firm grasp of the potential options, the damage might be restricted.

We do make some pretty good stuff, but it isn’t unique, and it can for the most part be made elsewhere. As for negotiators, we have Liam Fox. You might suggest that we’re utterly screwed. I might not necessarily disagree with you.

Incompetence, combined with an astonishingly high level of ignorance and entitlement, has brought us to this state of affairs whereby, on 29 March, we will  possibly leave the European Union without any agreements on tariffs or access to markets. We have insulted some potential partners, i.e. Moldova, we’ve taken others for granted, such as Canada, New Zealand and Australia, and we’ve placed our faith in the likes of Donald Trump who will unhesitatingly shaft any potential trading partners for votes in Wisconsin or Indiana.

I take no joy in this, have no grim sense of “you get what you deserve”, for the worst affected will not be those whose idea this was, but too many of those who were persuaded to vote for it. Asking people simplistic questions on hugely complex subjects is seldom productive, but you should reasonably be able to assume that those asking the question, and particularly those espousing a particular answer, would have an understanding of the issues themselves.

As it turned out, neither of those assumptions could be relied upon. The Brexiteers have demonstrated that they really didn’t understand how the European Union worked, possibly because that might have caused them to think a bit harder, but worse still they had, and seem to still have, an astonishingly naive sense of Britain’s place in the world and a complete disregard for how Britain’s reputation abroad has become degraded since June 2016.

You can hardly blame the Great British Voter for what happened next.

And now we see the rush from accountability. An EEA option has emerged, already ruled out by Theresa May’s red lines, lines drawn to keep the Brexiteers onside and her in power. Ruling out a role for the European Court of Justice, ruling out freedom of movement, even with the provisions available for use, disregarding the Good Friday Agreement as an issue, despite it being a binding international treaty.

Alternatively, it’s the fault of those pesky Remainers, despite the fact that the European Union is negotiating with the United Kingdom Government, and nobody else.

There’s an irony here. I’d taken the view after the referendum that, whilst hating the outcome, you couldn’t really tell how bad it was going to be. Sensible people start off with a negotiating position which evolves as facts emerge and compromises become necessary. And, whilst the Brexiteers were wrong, they weren’t stupid.

Unfortunately, as time passed and the likes of Boris Johnson and David Davis exposed their lack of skill and knowledge, as the significance of the red lines became more and more apparent, as Theresa May painted herself, and the country, into a smaller and smaller corner, it dawned on me that they believed their own hype and that, unless they were stopped, we were screwed.

It’s going to take an series of acts of astonishing altruism on the part of our trading partners to salvage something. And that ain’t going to happen, because such things only happen in fairy tales, or in Liam Fox’s dreams...

And now, the end is near, and as we face the final curtain...

The votes took place, the Lords conceded... And then the murders began...

But seriously (and apologies to readers, but I felt that I ought to test a theory that's doing the rounds), we have reached the point of no return. Well, actually, we haven't, but that's another story. Let's just assume that we have for the time being. What happens next?

Of course, Theresa May formally notifies the invocation of Article 50 and negotiations for our departure commence. The EU Council meets to consider its negotiating stance, bringing together the divergent views of twenty-seven nations, all with their own red lines or issues of principle, whilst the European Parliament considers what it will or will not compromise on.

Meanwhile, the United Kingdom negotiating position is a mystery. This is either because they're keeping their cards very close to their chest or, more likely, because they aren't able to agree on what it is. After all, is the priority sovereignty, or immigration, or what?

For the likes of Daniel Hannan and Tim Montgomerie, it's all about sovereignty, the freedom to determine our own destiny in a global economy. People like Daniel and Tim are keen for us to make new trading arrangements and escape the sclerotic bureaucracy that is the European Union. They've been pretty clear that an accommodation with the European Union in terms of trade would be preferable, the so-called Norway model. The problem is that they appear to be in a minority on the Brexit side.

For Nigel Farage and his mates, it's about English Nationalism. Frankly, he knows that the Scots and Northern Irish don't give a hoot for his narrow-minded view of the world. And given that the major urban centres weren't keen on Brexit, and that UKIP do relatively badly in areas with a high ethnic minority population, his anti-metropolitan elite schtick appeals to people who gain little tangible benefit from the global economy. Some of them are wrong about that, but in any event, just because you don't gain anything doesn't mean that you've lost something. But they're convinced that everything will be better if we raise the drawbridge and send the foreigners home. There are lots of people out there who think like that, a lot of them in areas that traditionally vote Conservative. For them, sovereignty is immersed in the immigration issue.

So, how does Theresa cater for both sets of demands? A series of lobby groups - farmers, financial sector, health care, hospitality - are all seeking special arrangements to allow migrants for their businesses, probably in excess of her stated target of 100,000, whilst a bunch of people with votes want her to send them all home.

There is talk of deals with Australia, Canada and New Zealand which, if concluded, would probably means death to swathes of our agricultural sector given their ability to produce food more cheaply than we can - land is cheap and plentiful, and they have economies of scale that we simply can't match. A cynic would suggest that the emphasis on countries that are overwhelming white is not an accident, but nevertheless...

And it seems to be being forgotten that, whist trade deals for manufactured goods are relatively straightforward, trade in services, which makes up much more of our trade, is much more difficult to negotiate. There are influential professional lobbies that aren't keen on competition, and it's much easier to erect barriers both legal and cultural.

This is not going to be easy. And the negotiators for the other side know that. They have time on their side, and a set of core principles that must be defended if the European Union is to survive intact. And we have... confusion and a divided nation.

There is no sign of compromise on this side of the Channel - the "winners" are sour in their victory, the "losers" despairing in their sense of loss and angry that the lies told during the campaign have gone mostly unpunished. And when the choice offered is so increasingly binary, compromise is rather less likely than sullen silence.

So, Brexiteers. You wanted it and now you've got it. Come back and let me know when you've decided what "it" is...

TTIP: MEPs back EU-US trade deal but call for ISDS to be scrapped

The European Parliament has backed the conclusion of talks over an EU-US trade deal (TTIP) that could boost the UK economy by up to £10 billion a year, with 436 MEPs voting in favour and 241 against.

MEPs have demanded that the controversial Investor-State Dispute Settlement (ISDS) be replaced by a transparent and accountable form of investor protection that protects the right of governments to regulate in the public interest.

The Parliament's resolution also calls on negotiators to ensure that EU environmental and consumer standards are not lowered, public services such as the NHS are excluded and the transparency of the negotiations is improved.

The needs of small businesses must be prioritised in the talks, MEPs emphasised, with a focus on lifting bureaucratic barriers to make it easier for small firms and entrepreneurs to export to the US.

Liberal Democrat MEP Catherine Bearder commented:

Today's vote gives the European Commission strong democratic support to conclude trade talks with the US.

Public concerns must be taken on board. That means ISDS should be scrapped and replaced by a fair, transparent form of investor protection which ensures national governments have full control over the provision of public services.

We should also remember that the US is by far the biggest export destination for small British businesses. Helping these small firms expand by reducing barriers to trade should be at the heart of this deal.

The European Commissioner responsible for trade is a liberal, Claudia Malmstrom, and she has taken a big step towards transparency by publishing the negotiating texts online and opening up meetings to the public.

The ALDE Group's priorities for a smarter TTIP can be found at Pavel Telicka's website (he's a Czech member of the Group).