A new trade vision for the UK

I find some of the media and email arguments I read  and hear about our trade future bizarre. Remain politicians and spin doctors are still peddling the lie that we cannot live with any changes to our  current tariff  free trade arrangements with the EU, whilst we must not enter into a tariff free  Agreement with the USA.

There has always been a central lie behind the Remain position on  trade, based on  the so called gravity model. This states that trade with near neighbours is both more likely and more important than trade with countries further away., The model’s economic forecasts are  weighted so EU trade matters and rest of the world trade doesn’t, for no particularly good reason.

In recent years our single biggest national trading partner is the USA, not Germany or France. 3000 miles has beaten a few hundred miles of distance. Our trade with China on the other side of the world has grown far more quickly than our trade with the low countries, near by.  This is despite facing tariffs on our non EU trade and no tariffs on our EU trade. How much more could we   trade with  the TPP and the USA on a tariff free basis?

The dislike of opening a Free Trade Agreement with the USA predates President Trump but has been intensified by Remain’s distaste for the present incumbent of the White House. There has been an orchestrated attempt to disrupt good relations between our two countries, and to vilify US food. The people who do so have often flown across the Atlantic and enjoyed US meals in hotels and restaurants without a murmur then about what they are eating other than to sometimes praise it and their hosts.

In a few posts I am going to explore some of these issues one more time. Today I wish to stress four obvious truths from the figures concerning our trading patterns in recent years.

  1. Our trade has grown more quickly with the rest of the world than with the EU in recent years, despite EU barriers and tariffs and despite distance. Non EU trade is now the majority of our trade.
  2. Our non EU trade shows you can have a substantial and profitable trade without a special FTA in place. FTAs are helpful but not essential to trade, expanding it a bit.
  3. If you enter a Free Trade Agreement with another country you do not have to obey their law codes, and you do not have to buy products they make which you do not want or like.
  4. Once we are fully out of the EU we will decide on our animal welfare and food growing standards.

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Some questions on the virus

We are waiting for the science to catch up with events. It is clearly not easy understanding and combatting a  new virus in a hurry, when crucial information has to come from patients suffering from the disease willing to submit to various treatments to see what happens. We have, however, had all too many cases and deaths, so soon perhaps more knowledge will be forthcoming.

We need to know, for example, whether any of the proposed existing licenced medicines for other complaints can help alleviate symptoms, ease severity or reduce the time the illness lasts. The UK has now approved remdesivir, but there are other remedies taken on their own or with others that might help. We need an update.

There is the question of the Oxford/Astra Zeneca vaccine. This is going into production before the results of clinical trials. We are told there may be results early autumn. There are also other vaccine hopes around the world.

The UK has  now  been testing random samples to represent the population as a whole to find out infection rates. This should enable a more accurate R or transmission rate to be calculated. When will we see proper graphs and charts of these  numbers with a better evidence base for R? This could be helpful in making decisions about the  pace of further easing, which is much needed for the sake of livelihoods.

What is the expert view on why the new case rate and death rate has stayed as high as it has during a strong lock down? Shouldn’t they have subsided more. How was the virus  being transmitted during this period? Can we now use track and test to head off further  localised outbreaks?

Are we now in  the position where too many deaths are  being attributed to CV 19 when it is not even known whether some had the disease or not, or when they also had other serious conditions that might have been the true cause? How comparable are our figures with other counties, that follow different criteria for reporting deaths?

Much now rests on making a success of test and trace. That requires the willing collaboration of the public, taking tests if and when they develop covid like symptoms they do not normally suffer. It needs the rest to agree to self isolate if they have been in close contact with someone who has the disease.

We cannot keep the whole country in  lockdown for more months, with just the NHS and a few basics up and running. It was possible to borrow and print the money for a couple of months, but it does not work if you try to do that as a  new lifestyle with no limit on the cash .

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Hong Kong

The Chinese authorities attempted to introduce a right of appeal of Hong Kong court cases to the mainland, seeking to put HK law more firmly under China’s control. This deeply unpopular move sparked many protests in Hong Kong and led to running fights between the police and the protesters. A hapless Chief Executive tried to persuade a split legislature that this was an benign and sensible move, without success.  

Grasping the opportunity of the Covid 19 preoccupations of the rest of the world, China has now moved to legislate her supremacy in Beijing, bypassing the Hong Kong legislature. The new law will allow either the Hong Kong police or Chinese officials to determine if someone’s democratic protest amounts to treason or sedition. Wanting independence is banned.

Mr Trump has responded strongly to this development. Each year by law the President has to confirm that Hong Kong is still sufficiently independent of China to qualify for the continuing special trade deal it enjoys with the USA. He says he is not willing to do so, given the new incursions on Hong Kong independence. This will mean Hong Kong business will face the same tariffs, bans and penalties as trade from mainland China to the USA does.

The UK is the co signatory of the Treaty  with China to establish Hong Kong  as part of China under the one country two systems mantle. The two systems were meant to encompass the right of Hong Kong to settle many of its own matters and court cases in return for maintained access and privileges to western markets. What action should the UK take to seek to  uphold this Treaty? Is it right to offer UK residence to Hong Kong citizens?

The famous clauses 18 and 19 which provide for Hong Kong judicial and law making independence do also contain a provision allowing the imposition of Chinese national laws when there is a break down in government in Hong Kong.

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IAG need to understand the anger about BA job losses

Yesterday in the Commons some MPs were allowed to ask questions of a Transport Minister over the bad news of possible job losses and worse terms and conditions of employment for BA staff who keep a job. All felt the same, that IAG are treating BA employees badly after years of profiting from prime slots at Heathrow and from the successful UK based international travel business.

The Minister pointed to the deferral of VAT payments, the Covid commercial finance facility and the Job retention or furlough scheme as government help to the industry. She expressed regret about the job losses at BA, Virgin and Easyjet. She told us the Job retention scheme money being used by BA was not “designed for taxpayers to fund the wages of employees only for those companies to put these same staff on notice of redundancy within the furlough period.” She said the government has “set up a restart, recovery and engagement unit to work with the aviation industry on the immediate issues affecting the restart of the sector and its longer term growth and recovery”.

She said she did not have legal powers to remove landing slots from BA nor did she set out any legal means of using leverage from the Job Retention grants. When challenged about the proposed worsening of terms of employment, she said she expected companies to “treat their employees with the social responsibility that one would expect.”

I am following up with a letter to the government asking them to show more urgency over the threats to BA jobs, and asking them to take a tougher stance over IAG’s actions. IAG have large cash reserves, will want to run airlines as we recover and has profited a lot in the past from its U.K. investment. So why is it picking on U.K. staff for redundancies?

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I wish the USA well in restoring peace and good policing

I have had a number of emails from people understandably concerned about the death of George Floyd and the riots in the various US cities.

Before replying I decided to read what the President and what Mr Biden said to have some greater understanding. These are matters for the USA to resolve. As their friend and ally we wish them well in doing so.

The words of the President capture the problem. He said:

“All Americans were rightly sickened and revolted by the brutal death of George Floyd.  My administration is fully committed that, for George and his family, justice will be served.  He will not have died in vain.  But we cannot allow the righteous cries and peaceful protesters to be drowned out by an angry mob.  The biggest victims of the rioting are peace-loving citizens in our poorest communities, and as their President, I will fight to keep them safe.  I will fight to protect you.  I am your President of law and order, and an ally of all peaceful protesters.

“But in recent days, our nation has been gripped by professional anarchists, violent mobs, arsonists, looters, criminals, rioters, Antifa, and others.  A number of state and local governments have failed to take necessary action to safeguard their residents.  Innocent people have been savagely beaten, like the young man in Dallas, Texas, who was left dying on the street, or the woman in Upstate New York viciously attacked by dangerous thugs.

“Small-business owners have seen their dreams utterly destroyed.  New York’s Finest have been hit in the face with bricks.  Brave nurses, who have battled the virus, are afraid to leave their homes.  A police precinct station has been overrun.  Here in the nation’s capital, the Lincoln Memorial and the World War Two Memorial have been vandalized.  One of our most historic churches was set ablaze.  A federal officer in California, an African American enforcement hero, was shot and killed.

“These are not acts of peaceful protest.  These are acts of domestic terror.  The destruction of innocent life and the spilling of innocent blood is an offense to humanity and a crime against God.

“America needs creation, not destruction; cooperation, not contempt; security, not anarchy; healing, not hatred; justice, not chaos.  This is our mission, and we will succeed.  One hundred percent, we will succeed.  Our country always wins.”

He went on to offer National Guard help to State Governors, urging them to enforce the law and protect people and businesses from violence.

Mr Biden said:

“These last few days have laid bare that we are a nation furious at injustice. Every person of conscience can understand the rawness of the trauma people of color experience in this country, from the daily indignities to the extreme violence, like the horrific killing of George Floyd.

“Protesting such brutality is right and necessary. It’s an utterly American response. But burning down communities and needless destruction is not. Violence that endangers lives is not. Violence that guts and shutters businesses that serve the community is not.

“The act of protesting should never be allowed to overshadow the reason we protest. It should not drive people away from the just cause that protest is meant to advance.

“I know that there are people all across this country who are suffering tonight. Suffering the loss of a loved one to intolerable circumstances, like the Floyd family, or to the virus that is still gripping our nation. Suffering economic hardships, whether due to COVID-19 or entrenched inequalities in our system. And I know that a grief that dark and deep may at times feel too heavy to bear.

“I know.

“And I also know that the only way to bear it is to turn all that anguish to purpose. So tonight, I ask all of America to join me — not in denying our pain or covering it over — but using it to compel our nation across this turbulent threshold into the next phase of progress, inclusion, and opportunity for our great democracy.”

This was a more dignified statement than Mr Biden’s comment “you ain’t black” if you vote for Trump.

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Bring back the fish counters

Sainsbury’s and Tesco cut back their fresh fish counters to tackle the hoarding demand for other groceries at the start of the lock down. It is time to bring them back. Indeed, it is time to open  more and reverse the trends of recent years. where  some retailers were closing fresh fish and meat counters anyway.

The UK fishing industry had become  very dependent on the catering trades and on export for its fish sales. Retailers are busily importing packaged fish. The Covid 19 policy assault on the hospitality industry, and the end of the Common Fisheries Policy, provides an ideal time for a re think.

The aims  of getting control of our fishery back is twofold. We both wish to catch less to allow stocks to rebuild from the damage of the CFP, and greatly increase the proportion of the catch to be landed in  the UK so we can eat  more of our own fish. This is not difficult given the huge amount of fish taken by other countries every year under the CFP.

So now is a great time for the supermarkets to work with the fishermen and women to  offer contracts for more UK fish to be sold direct to customers in shops. It is ridiculous that this island nation set in a sea of fish has major supermarkets that do not allow us to buy fresh fish from the UK.  I trust the government rejects any idea of giving much of our fish away in some new deal after we have properly left the EU in December. This provides commercial opportunities for the fishing industry and for retailers. Decent contracts from  major retailers would allow the UK fishing industry to borrow to invest, to expand its capacity to serve the local market.

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Death rates and methods of control

There are a number of emails and comment around claiming the UK and the US have the highest death rates. They often go on to blame their two governments which  they do not like and argue there should have been an earlier and tougher lockdown.

The authors should check their facts. We need to look at deaths per million, not at the absolute level, as of course larger countries are likely to record more deaths than smaller countries. On the published figures Belgium has experienced the highest death rate so far, followed by Spain, and then the U.K. The US is considerably lower, below France and Italy which are a little below the U.K.

There are differences in how the figures are compiled. The UK has gone out of its way to maximise deaths attributed to CV 19 by including care home and community deaths when other countries concentrated on hospital deaths. The U.K. has also recorded many care home and community deaths as CV 19 when no test was taken to see if the patient had it, and when it may have been other serious medical conditions they suffered from that killed them.

The Uk death rate is worrying , as are the rates of most European countries. In the USA the worst figures have been recorded in New York where a Democrat Mayor enforced a tough lock down early. It may be that very large cities like NY and London are particularly prone to virus spreading, so the absence of such huge cities in countries like Germany that have done a lot better may be part of the reason.

Sweden adopted social distancing but no lock down. Her figures are better than Belgium , France, Italy and Spain who went for a full lock down.

Now UK government officials claim they can test 200,000 people a day and have recruited a lot of trackers it is important every new case is followed up on notification to understand why and how it has been transmitted. There is no simple identity between tough and long lockdowns and low death rates on the numbers we have seen.

We also need evidence from the experts on which health systems have achieved the best recovery rates for patients and which treatment does most to lower the death rates in serious cases. There has been no full statement at U.K. government news conferences about recovery rates from intensive care and which treatments have worked best.There has been the recent adoption of an existing anti viral drug as a helpful treatment after initial resistance to the idea that current drugs could help, whilst we are told some other approved drugs are being tested on CV 19 patients. How did Germany and the USA achieve lower death rates?

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The EU response to the pandemic

Despite the protestations of pro EU contributors that I should not be  writing about the EU  now we have left, I  note that my recent post on the German Court and the Euro got a much bigger response than many other items I write about. I remain interested in our neighbours and wish them well. Today I need to consider the scale and nature of their possible response to the economic damage of the pandemic on the continent.

The Franco-German deal to propose raising Euro 500bn on the strength of the EU’s total  budget and to pass it on to member states to help with Covid 19 recovery has now been transposed into a Commission proposal. They recommend  Euro 750 bn, two thirds for grants and one third for loans to member states to help them recover. As in the original idea the EU as a whole will borrow the money against the security of its budget. It will fall due for repayment sometime between 2028 and 2058.

In a new twist the Commission states that it will need to raise the overall level of EU taxation on  member states and their citizens from 1.2% of GNI (total national incomes) to 2%, a tax hike of 66.6%. The tax rises will take the form of new emissions taxes, carbon border taxes, digital taxes and the like, to be determined in the future. Each of these taxes will need negotiation and legislation.  The disbursement of the Euro 750 bn will take place over an unspecified period within the next seven year budget cycle.

The EU seven year budget from next year will of course have to deal with the loss of 15% of its income with the departure of the UK, and a further drop from the decline in the EU economy being experienced this year. If we put this at a  modest 5% decline only, that means they are short of one fifth of the budget next year. The proposed rise in  tax would therefore only deliver a 33% increase in revenues in the first year, even if all the new taxes were in place as early as that.

The document is silent over how the Euro 750 bn will be divided between countries. The largest heading for spending will be a Recovery and resilience facility, with rules to be designed. There are smaller sums to promote the existing budget agenda of support and subsidy for the green deal and for digitalisation.

This package will need unanimous support as it is a matter relating to the 7 year budget settlement. Each country will be able to pick away at the tax proposals to finance it, and at the distributional issues which are unclear over payments. If it is to be a first essay in solidarity, bringing German and Dutch taxpayers to assist Italian and Spanish businesses and people, it will need to find ways to route more money proportionately to these latter countries under the various headings of the funds and programmes.

This does not look like a major gamechanger. Though a large headline sum of money, it will be spread out over the years ahead. The tax rises may be damaging, and imply a more inward looking and protectionist EU as they find ways to tax foreign digital success stories and overseas produced goods on grounds of their carbon content. It is good the U.K. should be free of the anti business and anti trade taxes about to be planned.

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Has lock down worked?

On 23 rd  March the UK was put into lockdown to reduce the number of Covid 19 cases, to reduce pressure on the NHS and to limit the deaths from the disease.

As the proposers of the policy thought, admissions to hospital with severe forms of the disease peaked 9 days later at 3121 cases on April 2nd. Peak use of NHS ventilator beds was hit a week later on April 10, which was also the day of peak deaths. I have taken these figures from the latest Downing Street briefing graphs. The method of counting has changed over the period, increasing the number of deaths recorded as time passed.

This implies limiting contact was the way to slow the progress of the virus, and did lead to an important reduction in serious cases and deaths. So far so good.

What does need more examination is why it has taken so long to secure faster and more dramatic declines in serious cases and deaths after success in changing the trend in early April. You would have expected the figures to come down quite quickly to low levels. After all we are advised that a person with the disease is clear after seven days, and a person getting it before symptoms show should be clear in 14 days. Thus we would expect a sharp fall off after the  14 day point from lockdown.

As we enter the test and trace era, it would be good to hear from the medical and scientific advisers why they think the diseases has lingered at relatively high levels for so long during lock down. Are all the cases now concentrated amongst the small proportion of the population that go to  a physical place of work? Are hospitals and care homes now a  main source of spreading the disease? Or is the disease somehow still spreading – at a slower rate – through the population that are staying at home? If so, how is it being transmitted?

These become important issues so that we know who to isolate and consider what other measures to take in the Test and Trace phase. Do we need better infection control in those health and care settings that do get the disease? Are there issues with deliveries to households? What more can be done to rid items and surfaces of the disease? Has the UK investigated the use of UV light machines to destroy the virus on surfaces? I will pursue these questions with the government.

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Test and track

I am writing today to Matt Hancock, Health Secretary, to clarify how the Test and track system will work. It is in all our interests that it is used to keep us safe whilst allowing many more people to work and go about their daily lives more normally.

The idea of the system is people self isolate and get themselves tested if they develop new Covid 19 like symptoms. We are told that the testing may take 48 hours during which time no contact outside the household has to self isolate. If the test confirms the presence of the virus then “recent close contacts” of the infected person should also self isolate and will be contacted by the system.

The government document does seek to define recent close contact. It says it includes spending more than 15 minutes within 2 metres of the infected person,  and face to face contact of under 1 metre. The document tells us this could result from travelling even a short distance with someone in a car, or on a plane. It could also include people in  the same school or workplace.

So I would like to have more guidance on

  1. Travelling in a train or tube carriage with someone who is infected. How could contacts be discovered, and can this represent a threat to a traveller? What is government advice on train travel? If someone travels by train and another passenger notifies as having the virus do the other passengers have to self isolate?
  2. How many people in a workplace or school would need to self isolate if one of their number is discovered with the disease? Would there be an assessment of who had come closer than 1 metre? Presumably it will not require all people at that location to self isolate?
  3. Can we assume that after someone has self isolated for 7 days who has the virus, and for 14 days who might get it, they are no longer able to infect anyone else?
  4. Why has the government decided to use the WHO guideline of 1 metre separation rather than the U.K. 2 metre? Have government advisers reconsidered the 2 m requirement given WHO advice of 1 metre and Germany’s use of 1.5 metres?

The more knowledge of the transmission of the virus that can be shared with the public the more effective social distancing will be and the more co-operation there will be with the policy of Test and Trace.

Posted in Uncategorized | 243 Responses
  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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