Linking aid to trade – a Trojan horse?

By institutionally linking trade negotiations to aid, has Boris Johnson jeopardised the cohesion and strength of NATO by wheeling a trojan horse into the central plaza of the Foreign Office?

The trade and defence implications of the Government’s new Foreign Policy strategy include:

·       Regional loss of credibility, because while it is perfectly legitimate for the UK to hope that its security policies will generate goodwill, if they imply that the UK is defending e.g. Eastern Europe, in order to engineer a better trade agreement, rather than because the Government cares about democracy and deterring bullying by Russia, the UK will rapidly lose credibility in that region. The same applies to China and Britain’s standing in Asia.

·       Creating an opportunity for Russia and China to fill the political vacuum left behind in the Middle East and Africa by the United States and now the UK.

·       Rendering the UK’s status within the WTO a hostage to fortune, because at the end of the transition period (which is not being extended), in order to regularise its WTO schedules, the UK will have to negotiate with: the EU itself; the US; China; Russia; India; Brazil, and any trading nation or group of nations that matters, large or small, rich or poor, and it only takes one objection to hold up the talks because the WTO operates by consensus, not voting, which is one reason why WTO negotiations take so long.

The European Union and the United Kingdom have agreed a Withdrawal Agreement pursuant to Article 50 of the Treaty on European Union, which provides for a time-limited transition period during which European Union law, with limited exceptions as provided for in the Withdrawal Agreement, will apply to and in the United Kingdom (the “transition period”).

The communication from the United Kingdom (WT/GC/206), dated 1 February 2020, sets out more detail on the implications in the WTO of the United Kingdom’s departure from the European Union. Further information is also provided in the note verbale from the European Union (WT/LET/1462), dated 27 January 2020. The United Kingdom has communicated that the goods schedule of the European Union will continue to apply to the United Kingdom during the transition period afforded under the Withdrawal Agreement.’ https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm

What happens when the transition period ends?

‘Brexiteers argue that, out of the EU’s clutches, Britain will be the WTO’s star pupil, striking trade deals across the world…However, there is a snag. Britain is already a member of the WTO, but operates through the EU. To become a fully independent member, Britain needs to have its own “schedules”, WTO- speak for the list of tariffs and quotas that it would apply to other countries’ products… The most simple course… [is] for Britain to keep its schedules as they are under the EU, including the “common external tariff” applied uniformly by EU members to imports from third countries. The government has recently hinted as much. This avoids diplomatic wrangling. But simply to readopt EU-approved commitments hardly looks like “taking back control”. It would also lead to other problemsIf Britain kept the common external tariff in place then it might also apply to a company moving components between the EU and Britain. Such a firm could incur tariff charges each time a border is crossed. A WTO member might kick up a fuss if, say, one of its car companies with production facilities in both Britain and the EU suddenly found it more expensive to assemble a model. A related problem concerns the WTO’s “tariff-rate quotas” (TRQ’s). These allow a certain amount of a good to enter at a cheaper tariff rate. The EU has almost 100 of them…this is likely to become the most contentious issue in Britain’s re-establishment of its status as an independent WTO member… Some of these problems are surmountable…countries that stay in others’ good books find things easier. But so far, British politicians are also struggling on that front. Boris Johnson, the foreign secretary, has irritated his counterparts with clownish comments… When the reality of Brexit dawns, Mr Johnson and his fellow Brexiteers will find no trade deal to be especially appetising.’ The “WTO option” for Brexit is far from straightforward (The Economist 07.01.2017). 

‘To be more than an optimistic slogan, Global Britainneeds to rest on a clear, evidence based strategy. And once we have the strategy, we will need a consistent plan to deliver it

[Our] strategy should not be opportunistic or reactive, but based in principles. Brexit makes it even more important for the UK to have an international trade system with rules ensuring non-discrimination, fair competition and enforcement. Alone, we will be less equipped to cope in a trade environment driven by the bilateral and power based instincts of the new US administration and China, or indeed the sheer trading weight of the future EU. That is why we should remain a strong supporter of the WTO, and resist any temptation to short-circuit rules to score quick successes…

The Government has decided to prioritise other goals over our economic relations with the EU. This is fine, provided either people are prepared to pay the price in more expensive goods, less inward investment and lower growth, or we can quite rapidly find compensating alternative markets. There is also a risk, if the Article 50 exit negotiation does not go smoothly, that our future trade relationship will be negotiated not from the starting point of the status quo–integrated membership of a common market and regulatory space – but from outside, almost like any other third country. We should do our utmost to minimise this risk by avoiding gratuitous political friction and prioritising a smooth transition to new arrangements.’ The Tacitus Lecture 2017 – ‘The World is Our Oyster? Britain’s Future Trade Relationships’ delivered by Sir Simon Fraser.

If the Government’s strategy undermines the strength and cohesion of NATO, then linking aid to trade is likely to result in the UK losing influence not only around the world, but critically within Europe, and across the Atlantic if Joe Biden defeats Donald Trump. The decision to merge DfID and the Foreign Office therefore appears to be short-sighted and opportunistic, rather than principled.

See:

·       ‘Political vandalism’: DfID and Foreign Office merger met with anger by UK charities: https://www.theguardian.com/global-development/2020/jun/16/political-vandalism-dfid-and-foreign-office-merger-met-with-anger-by-uk-charities

·       Three ex-PMs attack plan to merge DfID with Foreign Office: https://www.theguardian.com/politics/2020/jun/16/foreign-office-and-department-for-international-development-to-merge

·        Tory Andrew Mitchell says Boris Johnson has made an ‘extraordinary mistake’ by abolishing aid department: https://www.birminghammail.co.uk/news/midlands-news/tory-andrew-mitchell-says-boris-18431116

·       Rory Stewart on Twitter: “Don’t merge @foreignoffice and Dfid:

·        Rory Stewart: DFID may come under greater FCO control (Devex) (27 June 2019):

·https://www.cgdev.org/article/rory-stewart-dfid-may-come-under-greater-fco-control-devex

 ·        What would happen if DfID and the FCO merged? Experts and insiders share their views: https://www.civilserviceworld.com/articles/feature/exclusive-what-would-happen-if-dfid-and-fco-merged-experts-and-insiders-share-their

·        Foreign Office boss Sir Simon McDonald to step down early after department merger plan:https://news.sky.com/story/foreign-office-boss-sir-simon-mcdonald-to-step-down-early-after-department-merger-plan-12010313

British cultural heritage diplomacy post-BREXIT

British cultural heritage diplomacy post-BREXIT

A strategic consequence of BREXT which appears to have been almost entirely overlooked, is that post-BREXT, Britain will cease to have any influence in shaping European cultural heritage diplomacy. Since ‘soft’ power is a strategic tool in international relations and British Foreign Policy, then post Brexit, as the UK makes its own way in the World, what is our policy?

Without a coherent and practical plan Britain is likely to fall behind the rest of Europe because the EU have recently placed cultural relations at the heart of international relations, and are evolving a unified strategic policy.

What are we doing?

EU international relations policy

On 8 June 2016, the EU High Representative and Vice-President Frederica Mogherini and Commissioner Navracsics put forward a proposal to develop an EU strategy to support international cultural relations. The aim was to put cultural cooperation at the centre of the EU’s diplomatic relations with countries around the world.

In February 2017, the ministers’ deputies adopted the Recommendation CM/Rec(2017)1 to member States on the ‘European Cultural Heritage Strategy for the 21st Century’, which was officially launched in Limassol, Cyprus in April 2017. 

On 6 April 2017 the Council of Europe (CoE) launched their “European Cultural Heritage Strategy for the 21st century” at a high-level conference in Limassol (Cyprus) in the presence of senior policy makers and stakeholders from CoE member states. The Strategy 21 pursues an inclusive approach and involves not only local, regional, national and European public authorities, but also all heritage stakeholders including professionals, (I)NGOs, the voluntary sector and civil society. The Strategy is a state of the art document inspired by the efforts the Council of Europe in shaping the heritage policies of many European countries and repositioning them.’ https://www.europanostra.org/european-cultural-heritage-strategy-21st-century-launched-limassol/

See also:

·       ‘Cultural heritage in EU policies: ‘https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621876/EPRS_BRI%282018%29621876_EN.pdf

·       ‘European Heritage Strategy for the 21st Century’ : https://www.coe.int/en/web/culture-and-heritage/strategy-21

·       ‘Toward an EU strategy for international cultural relations’’: https://ec.europa.eu/culture/policies/strategic-framework/strategy-international-cultural-relations_en

·       ‘A new strategy to put culture at the heart of EU international relations’: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_16_2075

·       ’Recommendation of the Committee of Ministers to member States on the European Cultural Heritage Strategy for the 21st century’: https://rm.coe.int/16806f6a03

·       ‘Cultural heritage in EU discourse and in the Horizon 2020 programme’: https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/642803/EPRS_BRI(2019)642803_EN.pdf

In May 2019 the Berlin Policy Journal observed,

‘The EU’s principal values of democracy, human rights, and the rule of law are being challenged both internationally and within Europe itself, by populist governments. Faced with such threats to its cultural identity, the EU needs to respond, including by cultural diplomacy.

The international system is undergoing rapid change. Power is shifting from Western states to rising powers; Russia and China are working to discredit civil and political rights; populists are eroding democracy by stealth; and America appears to be losing interest in upholding the liberal international order. The European Union, whose principal purpose is to protect human dignity by means of democracy, human rights, and the rule of law, finds itself increasingly challenged in the realm of ideas.

Faced with threats to its cultural identity, Europe needs to mount a cultural response. EU member states have long practiced cultural diplomacy as a form of “soft power,” and EU ministers have stated that culture must also be an integral part of the EU’s international relations. Under EU law, cultural policy is primarily a national competence, but the EU may support it, including in foreign affairs.

For many years the European Commission has subsidized mostly short-term cultural development projects in various regions of the world. However, it has set neither geographical nor thematic priorities, and current spending patterns do not amount to an integrated strategy. In practice, the EU operates not one, but three foreign cultural approaches that reflect the geographical and budgetary logic of the relevant Commission Directorates General, with one responsible for culture, another for development, and a third for relations with the EU’s Eastern and Southern neighbors.

Links with the EU’s foreign policy priorities are tenuous. The European External Action Service, the EU’s diplomatic and foreign service, is short of cultural expertise and largely depends on the commission to fund external actions. Fragmented, under-resourced, and lacking a sense of direction, EU cultural diplomacy is in need of reform. Foreign cultural policy should be integrated with other policy domains, including human rights, development, and citizenship.’

The UK faces the same geopolitical reality and challenges as the EU. However, as we diverge from the EU will we co-operate or compete in applying soft power through cultural heritage diplomacy?

While counter-intuitive, realpolitik requires co-operation in order to compete, e.g. to enjoy equal market access. That is a paradox of BREXIT, because in the real world before e.g. China, India, and the United States can conclude, ratify and implement an FTA with the UK, they must know the extent to which the UK remains integrated with the EU. Otherwise, how can they evaluate preferential access and agree terms? Therefore, the UK must first conclude a trade deal with the EU. Since trade negotiations are linked to existential issues that are the raison d’etre for the EU as a community, the question we need to ask ourselves is not ‘who are we?’ (i.e. what is our tribe), but ‘what is our community?’ (i.e. who are our strategic partners). The answer to the second question is the natural policy imperative that will shape our future relationship with Europe and the rest of the World. Therefore, our cultural heritage policy can be a foundation stone in building a bridge between post-BREXIT Britain, the EU, and the rest of the World, or it can cast us adrift from continental Europe, and suffocate the negotiation of trade deals.

What is the UK’s Cultural Heritage Policy in the event of a no-deal BREXIT? Is there a strategy?

See also:

· ‘BREXIT & Heritage’ – Report ESRC Funded Workshop (July 2017): https://eprints.ncl.ac.uk/file_store/production/239847/36F25C4A-7098-49A8-BC0B-5BC900655031.pdf

· ‘UK to end creative Europe participation post-BREXIT’ (March 2020): https://heritagetribune.eu/unitedkingdom/uk-to-end-creative-europe-participation-post-brexit/ 

No-deal BREXIT

A no deal BREXIT is almost certain unless the UK agrees to an extension (which the EU have offered and the Government have rejected).

‘If negotiators fail to reach a deal, the UK faces the prospect of trading with the EU under the basic rules set by the World Trade Organization (WTO).

If the UK had to trade under WTO rules, tariffs would be applied to most goods which UK businesses send to the EU. This would make UK goods more expensive and harder to sell in Europe.

Having WTO terms would also mean full border checks for goods, which could cause traffic bottlenecks at ports.

And the UK service industry would lose its guaranteed access. Qualifications would no longer be recognised and it would be much harder for workers to travel to the EU.

This would affect everyone from bankers and lawyers, to musicians and chefs.’

Brexit: What trade deals has the UK done so far?: https://www.bbc.co.uk/news/uk-47213842

The political calculation the Government is making is comparable to spinning the wheel in a game of roulette.

To Sanjay Raja, an economist at Deutsche Bank AG, a no-deal Brexit would halve the pace of growth next year to 1.5%. The U.K. in a Changing Europe, a research group, estimates gross domestic product could be crimped by 8% over 10 years as trade barriers and a reduction in productivity hit output.

“It may be less politically costly for the U.K. to do no deal in the midst of a pandemic, but economically I’m not sure about that at all,” said Jonathan Springford, deputy director of the Centre for European Reform. “It might be that they’re able to get away with it — but I don’t think it changes the view that no deal would impose quite sizable economic costs.”

Intergroup Inc. says the size of the shock could even force the Bank of England to take the controversial move of cutting interest rates below zero because fiscal policy and other tools may not be enough.

The additional debt firms are carrying will make adjusting to Brexit more difficult, according to Alan Winters, director of the U.K. Trade Policy Observatory at the University of Sussex.’

https://www.bloomberg.com/news/articles/2020-06-02/-no-deal-brexit-threat-looms-over-pandemic-ravaged-u-k-economy