The G20 has produced no answers to the burning  question of future trade relations between the USA and China. Mr Trump tells us he had a great meeting with President Xi, and talks will resume on the outstanding issues. He has conceded that he will not press ahead with the extra tariffs he threatened, whilst China has conceded that the tariffs already imposed remain whilst new talks are underway.

The USA has raised serious strategic and security issues over technology which are not easily resolved for the sake of a trade deal. The Huawei ban clearly worries China considerably, and the USA has given a little there as well.The USA has difficulties believing new Chinese promises to respect Intellectual Property and to trade fairly. The US wants China to take her tariffs down to US levels as they are currently skewed heavily in China’s favour.

For her part China does not want to give in to what it sees as US bullying. Chinese military power and reach grows by the day, and China is extending her military authority throughout the Asian region. The US defence establishment is concerned about this, and seeks to preserve freedom of navigation in international waters.

The US President also keeps mentioning  the big imbalance of trade the USA has with Germany/EU, especially in cars. He may wish to open a new front in  his trade war over that. EU tariffs are four times the level of US tariffs on cars, which the US understandably challenges.

Most economists regard the trade war as a negative for the world economy and damaging to the US as well. Mr Trump sees extra Treasury revenues from the tariffs and expects the tariffs to lead to more domestic production and fewer imports. It seems likely that China – and Germany if the US attacks them too – have more to lose from this trade war. Their huge trade surpluses have led to this action by the USA, and the asymmetric tariffs and trade practices do need sorting out. They have many more exports at risk than the USA.

A few months ago Mrs May was condemning Russia for the poisonings. The EU imposed sanctions when  condemning  Russian activity in Ukraine.

Yesterday Mrs May met Mr Putin and shook his hand. Doing so with a cross look does not  get away from the fact that this  was a significant change of stance from the broken relations of recent months.  This was  a recognition that the UK needs a relationship with Russia. Germany led the support for the restoration of Russian votes in the Council of Europe, showing they as  leader of the EU wishes  to have an improved relationship with Russia. Mrs May appears to be marching in step with Germany.

Crucial to the underlying position is the German and EU decision to press on with Nord Stream 2, a large gas pipeline to sell Russian gas to Germany and the rest of the EU by pipeline under the Baltic Sea. This major commitment will increase continental Europe’s dependence on Russian gas. It undermines the position of the Ukraine, which could lose pipelines revenues for the gas currently routed from Russia to the West via that link. I find it difficult to understand why they wish to undermine the Ukraine in this way when they claim to be so concerned about its fate.

It is difficult to comprehend why we hear the angry words and see the sanctions imposed when Germany is so determined to improve its relations with Russia and keen to increase her dependence on Russian gas. Mrs May may brief that she had a frosty exchange when meeting Mr Putin, but the truth is she met him and shook him by the hand. The EU will carry on complaining about Ukraine, but they have no intention of taking any action to reclaim Crimea which might well vote to stay with Russia should they be given another  vote  supervised  by independent observers. The Russian supervised vote was strongly pro Crimea being part of Russia.

The EU and Mrs May have also been complicit in strengthening Russia in the Middle East. I did not want us intervening  militarily in Syria, but if the EU/UK   aim is to block Russian power they  should have taken more action in Syria at a time when Russia moved into the power vacuum created by NATO’s limited involvement. We allowed  Russia and Assad to do  most of the fighting to remove ISIS, leaving them in charge of most of the country.

On June 24 with full support from France and Germany Russia’s voting rights in  the  Council of Europe were restored.

Clearly the EU has decided to improve its relations with Russia and to increase its commercial dependence. The rest is just spin.

One of the oddest things about this out of touch Parliament is the refusal of most MPs to talk about how we should spend the windfall from leaving the EU without signing the Withdrawal Agreement. Worse still the Opposition parties rush to tell us we must go on paying large sums to the EU come what may, and even some in the government seem to be dreaming up ways to go on funding the EU after we have left. Given how central to the Leave case saving the money was, this is denying us our democratic decision. There is no legal basis to justify payments to the EU after we have left. The origins of the large £39bn Treasury forecast, itself an underestimate, comes from Mrs May’s wish to delay  our exit for 21-45 months  which of course would lead to big additional payments, and her wish to dilute Brexit so we could remain entangled with new financial commitments thereafter.

Margaret Thatcher recognised that the UK had a bad deal on financial contributions, and got a substantial improvement to our deal as PM. Mr Blair gave away some of that improvement on the promise of a thorough reform of the Common Agricultural Policy which never happened. Many UK taxpayers and fed up with having to pay more tax to send to rich countries on the continent. These contributions give us no benefit at home, and add to the deficit on the balance of payments.

At a time when the world economy is slowing, and when Mr Draghi of the European Central Bank recommends some government reflation from tax cuts or spending rises, the UK needs a growth budget. Using the substantial money we save from October 31 if we just leave could give us the boost we need. We can spend all of the net contribution we save, whilst paying the same level of farm grants and other sums that the EU sends us from the high gross contributions we make to the EU.

The deliberate misinformation about EU grants throughout the referendum campaign sought to persuade voters that we would lose these payments when we left. They should have pointed out that as we sent them the money in the first place to pay these grants, we can simply pay them direct. More importantly, we save all the money we send and do not get back  as well. We can boost the UK economy by 1% of GDP out of the savings and the tax overshoot this government has gone in for.

No Deal is a misnomer, like much of the rest of the Brexit debate. No deal means leaving without signing the Withdrawal Agreement, but with a number of other agreements in place governing trade facilitation, aviation, haulage and government procurement. It would also mean using the extensive rules and regulations of the WTO to govern our trade with the rest of the EU just as our trade with the rest of the world is governed today.  The Withdrawal Agreement was not of course allowing exit any time soon, as it was a decision to delay exit for 21 to 45 months, with uncertainty about how to get out thereafter.

The Withdrawal Agreement has been three times rejected by Parliament, and overwhelmingly defeated in the European elections with only 9% supporting the party that proposed it. It is possible a new Prime Minister will be able to negotiate enhanced arrangements before October 31 that add to the various agreements available for exit then without the Withdrawal Treaty. The new Prime Minister should offer a comprehensive free trade agreement, with a text based on EU/Canada and EU/Japan. We could then proceed to leave without imposing tariffs if the EU agrees to negotiate such an agreement.

Some say Parliament can block leaving without signing the Withdrawal Agreement. That would be very difficult for Parliament to do. If the new Prime Minister wishes just to leave he need not ask for a further delay to our exit after 31 October, so we will just leave. How would Parliament be able to make a Prime Minister seek a delay when he does not wish to do so? Parliament anyway cannot legislate to require a delay, because a delay not only needs a Prime Ministerial request of the EU but also a positive response by the EU. Mrs May decided she wanted a delay and asked for it regardless of the view of Parliament last time this arose. European law is superior to UK law all the time we stay in, and under EU law we are out on 31 October unless something else happens.

In this issue the PM is central. If the PM is determined to leave without the Withdrawal Agreement and keen to keep to the specified date, it would be very difficult for Parliament to find a way to stop him.

All those who write to me to complain that the UK might sign a Free Trade Agreement with the USA not to their liking might like to concentrate on the Free Trade Agreements we have to accept, entered into by the EU for us. This week the EU has signed a new agreement with Viet Nam.  There has been no debate in Parliament about it, and the UK has no right to reject it or to require improvements and amendments.

It is a long and complex document. The tariff reductions are asymmetric, with 7 years to get EU tariffs to zero, and more than 10 years to get all Viet Nam tariffs to zero. Both sides pledge themselves to the doctrine of equivalence over sanitary and phytosanitary matters. The provisions on animal welfare are unclear.

EU trade with Viet Nam is  not large. The EU imports some clothing, telecoms products, computers and shoes. I think these agreements ought to be subject to proper Parliamentary control, with UK negotiators taking the views of public and Parliament into the negotiations.

Yesterday the government pushed through a tax hike from 5% to 20% VAT on solar panels. They did this to comply with EU law. I did  not support them.

What is it about Mrs May’s government that they are so wedded to the EU? We are leaving. We do not need to set our taxes in the ways they demand any more. The government says it wants to be more green, so why on earth make it more expensive to generate solar power?

I want a Brexit budget. That budget should include taking VAT off all green products like insulation, boiler controls, draught excluder and solar panels.

There is also a view in some parts of the government that we should give the EU some money after we leave if we leave on October 31 without signing the Withdrawal Agreement. I can see no legal basis for any such payment. Why do they want to sell our country down the river? Why put  the EU’s wishes before the interests of UK taxpayers?

 

The EU is busy trying to fill its senior positions without success yet.  They meet again on June 30th to try to reach agreement over who should be President of the Commission.

The EU Council  last week   revealed  its new ambitions to take more  control from member states.

The EU wants member states to press ahead more rapidly with plans to decarbonise.  Countries are being pressed to lower their CO2 output, to increase their renewable generation of power and raise their fuel efficiency. 2030 targets are being set, but the EU has still not agreed on a zero carbon target for 2050 which some wish to do.

The EU is keen to weed out fake news from social media. It will be interesting to see what they regard as fake news, and to see if they start to cross the line between unacceptable material and censorship of material that is inconvenient to the EU. It is setting out a new “framework for targeted restraint measures” which will include asking social media platforms to prevent material harmful to the EU.

The Euro area needs to consider how much further it should go with a joint  budget and whether it will start to borrow money in  the name of the EU to spend around the union. The Euro area meeting talked of intensifying the banking union  and capital markets union. There is also a wish to have more common taxation under a policy  that it should be “fair and effective”.

The EU wishes to take greater responsibility for its own security and defence, pointing the way to more common defence spending.

The EU wants to become more assertive in international affairs. It wants Russia to release the captured sailors from Ukraine and release the vessels, seeks free maritime passage there and wants Russia to reduce her influence in eastern Ukraine. The EU continued its sanctions against Russia. The EU also condemned Turkey for her alleged  illegal drilling in  the Eastern Med.

The EU is planning a tougher migration policy “to fight illegal migration and human trafficking and to ensure effective returns”. The detail on who they will make go back will  be interesting, and what their enforcement mechanisms will be.  They want to renegotiate the Dublin Regulation which requires a member state to offer safe haven to  a migrant if that state is their first place of arrival in the EU. The southern  coastal states resent this obligation on them.

We await the new Commission and new Parliament. The old one goes out with a set of conclusions that aspire to much more integration but lack real bite in achieving their full stated aims. Nonetheless the process of integration continues, with the EU using its position in international affairs and  negotiator of international treaties and commitments to gain more control over member states policies in everything from defence to energy and from economics to media.

Bring it on. There was no need to wait three years. The Withdrawal Agreement was an elaborate snare to try to stop us leaving.

“We don’t believe you”  thunder the people as the EU tells them that their international rules based system is right for people’s lifestyles and aspirations.  Populist movements around the EU are voting into office new parties that challenge the EU orthodoxy on austerity, the Euro, climate change, international relations, migration, control of the media and much else. Today there is a row over who should lead the EU as President of the Commission, given the very fractured party base within the new European Parliament.

 

There is a feeling amongst many voters that the EU does not advance living standards quickly enough. Its insistence on austerity economics through the Maastricht controls coupled with the statement there is no alternative produces the reply “We don’t believe you”

 

Its failure to control its external borders is allied to a foreign policy that supported Middle Eastern wars that displaced more people. The Dublin Agreement is breaking down, where the original member state offering asylum or a place for an economic migrant is meant to be responsible for housing and looking after them. The issue of migration reveals a growing gap between what the elite think and what the populists want.

 

The EU dislikes the social media which carries growing criticism of its policies as well as fake news and cyber attacks. The populists are suspicious of the extent to which the EU wants to regulate and control the media, and are scornful of any traditional media who just accept EU spin.

 

This gulf is not unique to the EU. Similar feelings in the USA led to the defeat of Mrs Clinton and to victory of Trumpism. The UK avoided the collapse of the major parties experienced on the continent in the 2017 General election, thanks to their joint support for Brexit which saved Conservative and Labour.When these parties delayed or deviated from Brexit they collapsed in  the European election. In Brazil there has been a populist tide as well.

 

In the EU it is remarkable how most of the great centre left and centre right parties of the twentieth century have allowed themselves to  be wiped out or blown away by new challengers owing to their rigid adherence to the EU and Euro policy mix. French politics is now a contest  between En Marche and National Rally, with the Republicans and Socialists also rans. In Italy Lega and Cinque Stelle dominate. Even in Germany, the one big winner from the Euro and EU policy, the SPD and CDU command less than half the vote between them these days.

 

What has led to this huge destruction?  The collapse of living standards at the end of the last decade and the slow growth since has not helped. The mass migrations were unpopular, brought on by backing Middle Eastern wars which displaced many people from their homes. The insistence on the Maastricht criteria and the austerity policies of tax rises and spending cuts have jarred over such a long time period. Ask Gilet Jaune protesters what they want and they will probably say tax cuts. The concentration on dear energy and restrictions on personal mobility to tackle global warming have also caused issues with the populists, visible in the Gilets Jaunes attack on speed cameras and demand for cheaper vehicle fuel.

 

Throughout the continent many voters disagree with the priorities of European government as well as with its policies.

John Redwood “ We dont believe you” book available through Amazon

In the run up to our exit planned for 29 March 2019 the EU passed a  number of measures to ensure continuity if the UK left without signing the Withdrawal Treaty. Measures included an aviation agreement to ensure the planes fly, a haulage agreement to allow road transport to continue, a rail agreement, “legal certainty for ship operators”, compensation for EU fishing businesses if they lose access to UK waters, continuity for students currently in the Erasmus programme, and more time for the Peace and Interreg programmes for Ireland and Northern Ireland.

In the update produced for the recent EU Council they also noted that rights of UK citizens currently legally settled in the rest of the EU will be protected. They are ensuring medicines  and Reach approved chemicals can continue to be traded, and have increased customs capacity at UK facing ports and transport centres to handle any need to introduce tariffs.

This of course all goes largely unreported by the Remain facing UK media, who carry on with silly scare stories based on an imaginary exit with none of these agreements in place.