Sunday, August 20, 2017

The details of trade

Influential Brexiteer, Tory MP Bernard Jenkin writing the Financial Times and declaring optimism on Brexit --

The EU has no case for requiring British companies to prove origin if the UK is still applying the EU tariff on all non-EU imports.

This style of breezy assertion is typical. But it reveals deep misunderstanding about how modern international trade works. By referring to companies needing to "prove origin," Jenkin seems to think all trade is like wine and cheese: origin is intrinsic to where the good was produced. But the actual terminology is rules of origin -- an extremely complex set of rules tailored to supply chains where most goods contain materials and processing from different countries.

Jenkin thinks that as long as Britain maintains the EU tariff, it is entitled to tariff-free access to the EU. But that would depend on the preferential rules of origin that the EU would be entitled to impose on any such agreement with Britain. Practical questions such as: would British exports to the EU be allowed to count EU content and processing along the chain as UK origin for the purposes of tariff-free access? Would content and processing from the EFTA or Mediterranean countries that follow the same rules of origin also count? Incidentally, those countries don't apply the EU tariff but do apply the same rules of origin on EU trade, contrary to Jenkin's view of how such trade works. All those issues and many others would have to be negotiated -- declaring that the EU "has no case" is simply irrelevant.

But these people (Ray Bassett is another example) can get platforms in prominent opinion pages with demonstrably incoherent arguments.

Friday, August 18, 2017

Division

Superb analysis from El Pais of the tensions between Catalonia and the central government in Madrid which form a subtext of the response to the atrocities in the region. In particular, it took nearly a full day for Spanish PM Mariano Rajoy and Catalan President Carlos Puigdemont to have their first meeting on the crisis.

Thursday, August 17, 2017

Never going to get it

We have read Ray Bassett in the Daily Telegraph so that you don't have to:

In fact, the alternative, involving Ireland leaving the EU, opting out of the EU customs regime and staying in a free trade and customs union with the UK, may well be the better approach. It would allow the Irish to stay in the European Economic Area (EEA), like Norway, and still have free access to the EU market for its products.

That's the core misunderstanding of the West Brexiters; the same mistake appears in Bassett's Policy Exchange report (incidentally, Policy Exchange is now describing him as a Senior Fellow). If Ireland stays in the EEA Single Market while the UK is outside (as the government has said it will be), all the same problems that happen with Brexit still happen: the UK's non-compliance with EEA rules with make an open border with an EEA member, Ireland, incompatible. These are bilateral people bewildered by a multilateral world.

UPDATE: Policy Exchange Senior Fellow Ray Bassett says that Ireland should stay in the single market while leaving the EU. Here's Policy Exchange Chief Economic Adviser Gerard Lyons explaining why the UK will leave the Single Market (FT today) --

The [transition] plan has to be seen in the context of the need to leave both the EU single market and the customs union. This is the best way to maximise the economic benefits of Brexit. Outside the single market, Britain would save its EU contribution, determine its own laws, regulations and migration quotas. Outside the customs union, it can escape EU protectionism, cut trade deals and set its own tariffs.

Policy Exchange needs to have a staff meeting where they clarify internally how a UK-Ireland open border and differing participation in the single market can be reconciled.

From Tricolour to True Colours

Daily Telegraph Opinion Page --

The EU is becoming less hospitable for Ireland – it's time it joined Britain in leaving 
RAY BASSETT 
By setting out its plan for avoiding a “hard border” between the Republic and Northern Ireland, the UK Government has emphasised once again the strength of the UK and Ireland’s common interests. The new Irish Taoiseach, Leo Varadkar, had already laid down the maintenance of the present invisible border as a red line in any EU/UK deal.

That's one of three opinion pieces (2, 3) on the same page today all pursuing the strategy signalled in the UK government "position papers" on Brexit released over the last few days -- to present fantasy solutions to the post-Brexit border problem and then blame the EU, and Ireland, for the reality check.

Bassett had in the past had couched his arguments about Ireland leaving the EU as something to be "seriously considered" and complaints that the Irish government was "not doing enough." But no longer. Now it's just plain and simple West Brexit.

Incidentally, each one of the opinion pieces is paywalled, as are all Bassett's contributions on the issue for the Sunday Business Post.

It prompts a question similar to that mechanism by which the European Parliament was a primary funder of UKIP -- how much of West Brexit is just a grift, a money-making stroking of Imperial fantasies?

How did they get this one past Trump?

US State Department report on religious freedom in Australia --

Government Practices 

Four senators from the One Nation Party were elected during the July (2016) federal elections on a platform which included ceasing Muslim immigration, holding a royal commission on Islam, halting construction of mosques, installing surveillance cameras in mosques, banning wearing of the burqa and niqab in public places, and prohibiting members of parliament from being sworn in under the Quran. In her first senate speech, One Nation Party Leader Pauline Hanson said the country was “in danger of being swamped by Muslims.” Prime Minister Malcolm Turnbull disagreed with her views and said “my commitment is to an inclusive multicultural society which is based on mutual respect. The more we respect each other the more secure we become.”

This negative assessment of One Nation and Pauline Hanson is being mentioned in the Australian media today, in the context of Hanson's stunt of wearing a burqa to the Senate -- a stunt with which the alt-right Trump would presumably applaud!

Wednesday, August 16, 2017

A free zone in Ulster?

The UK government has released its Ireland Brexit paper, using the same strategy as the customs paper yesterday -- embargoed briefings to the press to manage the coverage ahead of the fantasy proposals. Just one example of the shambles in this paper: different sections were clearly written by different people, with no read-across for consistency. The section on the common travel area essentially proposes that it could be maintained by transaction checks when Irish people are accessing the privileges they have now (employment, voting, etc), which by the way doesn't follow through on its logic that everyone is going to need ID to enforce this. But anyway, the separate section on the border says --

One potential approach that the UK intends to explore further with the EU is a cross-border trade exemption that would recognise the unique economic, social and cultural context of the land border and the fact that many of the movements of goods across it by smaller traders cannot be properly categorised and treated as economically significant international trade. Such an exemption would ensure that smaller traders could continue to operate as they do now, with no new requirements in relation to customs processes. It is important to note that in 2015, over 80 per cent of North to South trade was carried out by micro, small and medium sized businesses. They are, in effect, examples of local trade in local markets.

If they are proposing to treat most cross-border trade as below the radar screen for customs purposes, then what's the practical mechanism for deciding whether a "small trader" in Dundalk, for example, who employs EU nationals not eligible to work in Brexit UK, is actually deploying those workers mostly in Newry? Once that loophole is open, you'll very quickly see exponential growth in "small trader" employment agencies along the border who can then staff firms anywhere in the UK. Local trade in local markets!

Tuesday, August 15, 2017

Trump blames Ireland for CEO Council resignations

From his tempestuous Manhattan media Q and A:

If you look at Merck as an example, take a look where – excuse me, excuse me – take a look at where their product is made. It is made outside of our country. We want products made in the country, now I have to tell you, some of the folks that will leave, they're leaving out of embarrassment, because they made their products outside, and I have been lecturing them, including the gentleman that you are referring to, about you have to bring it back to this country. You can't do it necessarily in Ireland and all of these other places. You have to bring this work back to this country. That's what I want.

Dublin, we have a problem

Context: The Kevin Myers row.

Consider now --

It was Lionel Barber, Jewish editor of the Financial Times, whose tweet started the ball rolling early that Sunday morning and by the time members of the vocal and powerful American Jewish lobby caught up 5 hours later in New York, the sh*t storm was already under way. As well, there is serious opposition to Murdoch's €13 billion 21st Century Fox bid to take over Sky and there is no greater opinion former in the US than the Jewish lobby.

That's not Myers defending himself, or one of Myers' defenders. That's an ostensibly dispassionate and insiderish analysis of the imbroglio being read in influential circles in Ireland and not triggering any online outrage -- because it's published in the print and paywalled Phoenix magazine (Irish version of Private Eye), not drawing any eyeballs outside Ireland.

Losing control

Hours after having had the advantage of media coverage based on embargoed papers and briefings, the UK Department for Exiting the EU has finally released the much-hyped paper with their proposals for new customs arrangements under Brexit. The paper is a load of rubbish. It actually contains no proposals at all, but is simply a long list of aspirations with a much shorter list of vague indications as to how these could be achieved. A couple of low points --

The Government is keen to explore with the EU a model for an interim period which would ensure that businesses and people in the UK and the EU only have to adjust once to a new customs relationship. This could be delivered through a continued close association with the EU Customs Union for a time-limited period after the UK has left the EU. This could involve a new and time-limited customs union between the UK and the EU Customs Union, based on a shared external tariff and without customs processes and duties between the UK and the EU.

The terminology shared external tariff is very odd. Customs unions usually have a common external tariff. It's not clear whether this is a sensitivity about words (in the same way that deep and special is used instead of deep and comprehensive) or whether there is a technical intent behind it. The paper certainly doesn't explain.

Then:

The UK would seek to recognise the unique circumstances of Northern Ireland and aim to protect individuals and traders by making maximum use of the UK’s flexibility in relation to our own operation of the border. As elsewhere, the processes on the other side of the border would be constrained by the relevant requirements of EU law.

In other words, they are setting up to blame Ireland, as an EU member, for any delays on the Brexit-imposed border. But all those obstacles arise from the UK's departure from the customs union and single market. Everyone else is expected to adjust to them!

Monday, August 14, 2017

Quote of the Day

Janan Ganesh in the Financial Times:

Perversely, the anti-elite movement invests the elite with heroic talents. It sees a world of obvious social improvements waiting to be made if only the negligent masters would snap out of their stupor. The deficit of trust flows from a surplus of faith.

Friday, August 11, 2017

The Queen's Gin

Great detail from Financial Times article on House of Commons drinking culture:

The late SDLP MP Lord (once Gerry) Fitt is remembered in the 1970s waving great glasses of gin and tonic at the passing boats crying: "It's free, it's all free!"

Quote of the Day

Jeremy Paxman in the Financial Times on how the fixation with salmon farms as a rural job creator requires such adaptation of the environment that the farms don't need to be in such locations:

Geography, though, is an insuperable problem. Salmon farming has political appeal because it seems to offer employment in these Highland communities that have a powerful romantic hold over Scottish identity. Once you use land-based systems, with manufactured salt water, why locate them in the Highlands at all? It could be much more economical to build them somewhere near the markets of southern England or the airports supplying export destinations.

Would you buy Loch Hounslow salmon?

Thursday, August 10, 2017

Brexit lorries

Financial Times analysis of UK customs union options points out yet another problem given zero consideration in the referendum campaign -- who will drive trucks after they cross the UK EU border? 

It is a different story at the Turkish border. Problems getting permits to drive across Europe regularly contribute to huge tailbacks. At the moment the EU only offers the right to work freely across Europe to truck drivers who are nationals of countries such Norway and Switzerland, which have accepted free movement of people from the EU. The UK has firmly ruled out such an option.

The Trump - Kim reading list Item 1

Thomas Hobbes, Leviathan:

So that in the nature of man, we find three principall causes of quarrel. First, Competition; Secondly, Diffidence; Thirdly, Glory. The first, maketh men invade for Gain; the second, for Safety; and the third, for Reputation. The first use Violence, to make themselves Masters of other mens persons, wives, children, and cattell; the second, to defend them; the third, for trifles, as a word, a smile, a different opinion, and any other signe of undervalue, either direct in their Persons, or by reflexion in their Kindred, their Friends, their Nation, their Profession, or their Name.

Saturday, August 05, 2017

The next phase of West Brexit

This Tweet from Brexit financier Arron Banks is a good sign of what's coming from his circle in terms of Ireland's position on Brexit. For a while, the Brexiteers have been content with finding useful idiots in the Irish media who will talk up their vision of Ireland leaving the EU with Britain. But with that line of argument at a dead-end -- confirmed by the Irish government's blunt assessment over the last week -- they'll switch very quickly to saying that Ireland is holding up Brexit because of its insistence on a continued soft border with Northern Ireland. This of course completely contradicts the claim of the Irish government's critics that it hasn't been "doing enough" about Brexit, but that won't stop the two lines of argument being made at the same time. The ugliness is only just beginning. 

BDS just got more complicated

This Al-Arabiya story (and yes, they have their anti-Qatar reasons) claims that a major beneficiary of the Neymar Jr to PSG deal is ... the Israeli Treasury, because Israel will collect a hefty income tax take on mystery agent Pini Zahavi's commission on this mysterious deal!

Friday, August 04, 2017

Make Kenya Great Again

Superb Wall Street Journal on the run-up to the Kenyan Presidential election --

Tensions on the street have been aggravated by an explosion of aggressive social media posts and fake news. Some spurious videos have carried the logos of CNN International and BBC World, claiming Mr. Kenyatta is set to win the election. Both organizations said the videos were fabricated. Facebook on Thursday took out a full-page ad in major Kenyan newspapers with guidelines on how to identify fake news. One election ad on social media site Instagram warned: “Kenya needs Uhuru—Violence needs Raila.” Some blame the spike in negative social-media advertising on Cambridge Analytica, a data-mining company hired by Mr. Kenyatta’s party. Cambridge Analytica also assisted in the Trump campaign. Cambridge Analytica declined to comment on the allegations, as did representatives for the government.

After all, it's not like Donald Trump has ever championed the misuse of a CNN logo!

Quote of the Day

Simon Kuper in the Financial Times:

As long as politicians restricted their silly wordgames to Prime Minister's Question Time while letting civil servants run the country, they were relatively harmless. But after the referendum, the Brexiters were tasked with managing Brexit. This was like asking the winners of a debating contest to engineer a spaceship. Results have been predictable. The Brexiters cannot wow Brussels with rhetoric, because the EU's negotiators prefer rules. "That is a cultural difference," notes Catherine de Vries, professor of politics at Essex University.

Wednesday, August 02, 2017

It's like reading Playboy for the articles

From the Donald Trump Wall Street Journal interview transcript (bizarrely, not published by the Wall Street Journal, but Politico) --

TRUMP: We think we’re going to have tremendous growth. We think money’s going to come pouring into the country. Look, we’re losing companies. People don’t even realize how bad it is, but we’re losing companies every single day where they’re leaving because the taxes are too high. When we do this, we’ll have companies – I know companies that have left. They go to Ireland, they go to other – I own a lot of property in Ireland. They go to Ireland because of these incredible tax rates, and other places, right? We’ll have companies pouring back into our nation. I mean, it’s going to be – you know, it’s going to be beautiful.

So others are investing in Ireland to dodge taxes, but he's there for the golf!

Tuesday, August 01, 2017

Quote of the Day

In the Financial Times, Jonathan Derbyshire reviews a couple of books about the crisis in western politics --

The emergence over the past few years of a more confrontational style of politics, in which charismatic leadership matters more than policy and the old division between right and left matters less than that between “internationalists and nativists”, leads Krastev to predict that 2017 “may end up being just as consequential” as 1917, the year of the Russian revolution.

The point that there's a stylistic element to populist politics as much as ideological is extremely important.

Monday, July 31, 2017

Knowing your market

Wall Street Journal on sales hook that Blackwater founder Erik Prince (whose sister is Trump's Secretary of Education) has been making for his proposal to hand the US operations in Afghanistan over to contractors --

Mr. Prince is pitching his idea as Mr. Trump’s new “Wollman Rink” moment, a reference to the president’s successful 1986 rehabilitation of a landmark Central Park ice-skating rink that was over-budget and years behind schedule. The proposal, seen by The Wall Street Journal, outlines ways for the U.S. to quickly replace most U.S. troops with contractors who would help carry out airstrikes and work side by side with Afghan forces across the country.

Thus, the notion that Trump is stuck in the 1980s is not just confined to interpretations of Trump from the sideline; it's integral to how people around him play their cards.

In 1986, the year that Trump "saved" Wollman Rink, one of the big pop hits was You Give Love a Bad Name, by Bon Jovi. Jon Bon Jovi has moved on. Trump hasn't.

Sunday, July 30, 2017

Friends of Friends


This photograph (via Saudi Press Agency) conveys an astounding message in the underlying event: a meeting yesterday in Jeddah of Saudi Crown Prince Mohammed bin Salman (MBS) with Iraqi cleric Moqtada al-Sadr. Moqtada is a major figure of Iraqi Shia politics, a key hate-figure for the American invasion forces, and an influential voice on the Iraqi street. That MBS would meet with him amid the constant feuding with Iran is a major statement that previous rules of engagement in the Gulf may no longer apply. 

Enumerating old themes

Kevin Myers is 70. Donald Trump is 71.

No, that's not a way to let Myers off the hook. But it is a way to point out that what Brexiteers like to portray as a North Atlantic Anglosphere has a public square afflicted with a cohort of people given platforms whose views have not evolved in 30 years.

Myers doesn't realize that a 1980s blend of Jewish stereotyping and pro-Israel political views isn't viable in 2017. Donald Trump still talks about "inner cities" with the lens of the crack epidemic, and his obsession with TV breakfast chit-chat shows and who's on the Time magazine cover is a perfect reflection of that decade. The former has had regular access to newspaper columnist gigs. The latter is President of the United States -- put there by a voting bloc that likewise never moved on from the 1980s TV Trump.

And then there's Brexit. That classic Fawlty Towers Don't Mention the War episode, except without the laughs. The era of Up Yours, Delors. The Irish border as something that the Irish government wasn't properly managing. They've never moved on, and the age profile of their Irish sympathizers is just as revealing -- a group also with access to newspaper columns. They're a combination of what was described by Yeats (ideas that began as a mound of refuse or the sweepings of a street, Old kettles, old bottles, and a broken can) and Keynes (slaves of some defunct economist, distilling their frenzies from some academic scribbler). Unfortunately, reducing their influence is a lot more difficult than sacking a newspaper columnist. 

Light touch regulation

An observation from Wolfgang Munchau in the Financial Times, nearly 2 years ago, that has stood the test of time --

More importantly, the Volks­wagen scandal has the potential to unhinge the German economic model. It has been over-reliant on the car industry, just as the car industry has been over-reliant on diesel technology. For its part, Berlin mollycoddles the industry and represents its interests abroad. The “VW law” in effect protects the company against a hostile takeover. And it was a former VW director, Peter Hartz, who wrote the labour reforms of the previous decade. In return, the industry contributes to the stability of regional employment. And the voting rules in the supervisory board ensure that production could be shifted out of Germany only with the explicit consent of the trade unions. In other words, it cannot. In terms of macroeconomic risk management, this is a silly strategy — similar to the UK’s over-reliance on the financial sector. Such strategies work well until they do not work at all.

He was talking about the diesel emissions scandal, which at the time afflicted only VW. But as it widens in scope and is now augmented by an anti-trust scandal, the distortions arising from the favoured status of the car industry look even clearer. 

Saturday, July 29, 2017

Quote of the Day

In the New York Times, Dwight Garner with a rumination on Paul Fussell's 1983 book, Class: A Guide Through the American Status System --

For the tyro reader, Fussell dispatches early the notion that class has much to do with how much money you have. Those who’ve paid any attention “perceive that taste, values, ideas, style and behavior are indispensable criteria of class, regardless of money or occupation.” Donald J. Trump is an instructive specimen in this regard.

The biggest failure of American liberal political punditry over the last 18 months is the failure to engage with the class aspects of the Trump phenomenon. Trump's supporters are seen as closet racists, ridiculed for "economic anxiety," and/ or a benighted proletariat voting against interest. Yet the connection between these voters and Trump's inner circle love-hate relationship with Manhattan is precisely where class comes into play. Proof that the pundit class has still not reconciled with this issue is the mockery of David Brooks for an admittedly belabored example of class signifiers operating through restaurant menus -- yet his point was just exactly one that Fussell made above. 

Operation Air Lion


The Telegraph's unsubtle graphic for a story relying on analysis of Brexiter Gerard Lyons that Philip Hammond's Brexit transition plan involves continued EU migration to the UK after Brexit. Of particular note: the arrows are one way, and they don't originate in the actual sources of large current EU migration to the UK. They do however originate in northern France, Benelux, and Germany. What possible historical echo could they have in mind?

Unapproved Roads

To the left is an illustration that the Irish Sunday Business Post -- a Brexit sneaking regarder publication -- has with a report on the areas of Ireland adjacent to the border with Northern Ireland. The West Brexit contingent has been quite busy over the last few days, inflamed by Michel Barnier's blunt assessment that Britain had presented no proposal on how to deal with the Irish border, leading to a revival of demands that this proves Ireland must leave the European Union.

Anyway, the focus on the land border is understandable, but it's a trap. The main impact of Brexit on Ireland and Northern Ireland will not happen through the land border. Violence imposed a much harder border than customs posts ever did, and people found ways to function across the border even then. The main impacts will happen through the disruption to the UK's trade, investment, travel and migration links with Ireland that currently operate on the presumption that both are EU members -- and only a tiny fraction of those links involve physical crossing of the land border.

So there will be scenic photography and warm Prosecco-worthy tales of borders passing through people's gardens as Dublin and London reporters head to Armagh and Donegal to cover the border issue. But the fixation on the border has as much to do with a perspective locked in, like Trump and 1980s television, in the era of the Troubles, on the border as a source of banditry and violence, as its current economic significance. And it lends itself to a view that razzle-dazzle technology, cameras etc, can "solve" the Brexit problem with Ireland, when it's actually a sideshow. It's that view that Ireland's government rightly lost patience with in the last few days; the border is an important issue, but it can best be solved by things that the Brexiters still do not want to acknowledge: the customs union, EEA, EFTA, or some other option that the UK government would need to start working on!

Sunday, July 23, 2017

Crisis, what crisis?

That means that Theresa May is spending 3 percent of the 2 year EU exit period -- a clock that she chose to start -- on holidays. And that's just this summer's holidays, and after all the time that was lost to the futile election. Meanwhile the newspapers -- even the "serious" broadsheets -- have already shifted to silly season mode of royals, celebrities, and sport.

Brexit, like the Trump presidency, is a slow-motion in-progress disaster. 

Saturday, July 22, 2017

Rivals

Since just about any logic is possible in Trump world, it could be that his obsession with Abu Bakr al-Baghdadi is due to his mistaken belief that the elusive ISIS leader was Time Magazine's Person of the Year in 2015. He wasn't. He was the runner up, to Angela Merkel -- a lineup that must have driven Trump crazy. Trump's strange tweet this morning seems fixated on 2015, because that's when the New York Times story which he blames for the missed hit on Abu Bakr al-Baghdadi appeared. 

Wednesday, July 19, 2017

Real News

On 21 June, 2017, the day that the news broke that Prince Mohammed bin Nayef (MBN) had been removed as Crown Prince of Saudi Arabia in favour of his cousin Mohammed bin Salman, the Iranian media ridiculed the move as a "soft coup." The general reaction was to send congratulations to Riyadh.

A flood of reporting today confirms that it was in fact a soft coup. MBN was detained until he agreed to the transition, he was accused of addiction to painkillers (a harsh accusation since the pain originated in a terrorist attack), and he remains confined to his palace without his own security.

Sometimes, the Iranians are right!