Almost exactly two years ago I wrote about post-truth politics in the UK. At the time, the example I discussed was then Home Secretary Priti Patel’s lies about a visa application centre in Calais for Ukrainians fleeing the Russian invasion. While the Home Secretary insisted that she had established such a centre, factual evidence suggested the contrary. The past few weeks since my last post have shown that post-truth politics have become an established element of post-Brexit British politics. Trade has become the area in which this is most conspicuous. The most egregious case was Secretary of State for Business & Trade Kemi Badenoch’s claims about negotiations of a free trade agreement (FTA) with Canada.
Are there trade talks taking place between the UK and Canada?
Two years ago one section heading of my post was ‘Is there a UK visa application centre in Calais?’ Today I can use a similar heading regarding the trade negotiations between the UK and Canada. In late January, it was widely reported that negotiations about enhancing the interim agreement from 2021 – that had rolled over the EU-CDN trade relationship after Brexit – had broken down. The reason was primarily differences about meat and cheese exports.
Part of that interim deal concerned rules of origins notably for manufactured goods in the automative sector. Under the agreement parts produced in the EU could still be considered being produce in Canada and the UK for the purpose of rules of origins (so-called ‘cumulation provisions’). Given the close integration of UK car manufacturers’ supply chains with EU supply chains, this was needed for UK manufacturers to be able to continue exporting tariff free to Canada. However, these interim arrangements expire on April 1, 2024; Posing a significant threat to the competitiveness of UK cars in Canada – a top 10 export market for UK car manufacturers – as the chief executive of the industry body SMMT noted in a letter to Labour MP Liam Byrne the the chair of the Commons’ Business & Trade Select Committee.
Yet, Badenoch had claimed on January 29th, four days after she had unilaterally suspended the talks, that discussions about food standards and the ‘cumulation provisions’ were still ongoing. Her words in the Commons were that she wanted to “state explicitly that the talks have not broken down.” Remarkably, those words were officially contradicted by Canada in a letter sent to the Commons’ business committee by Canada’s High Commissioner to the UK Ralph Goodale. The letter – sent on February 16, 2024 – states as explicitly as the Business & Trade Secretary had done that “there have been neither negotiations nor technical discussions with respect to any of the outstanding issues - including British access to Canada's Tariff Rate Quotas for cheese and the approaching expiry of cumulation provisions respecting Rules of Origin.” The chair of the Bussinss & Trade Select Committee Liam Byrne then raised the issue in the Commons sardonically asking “How do we get to the bottom of whether these trade talks are going on in the Secretary of State’s mind or whether they’re happening in real life?”
Post-truth politics thrive on normalisation. After the 100s time the PM, a Secretary of State, a minister, or an MP has lied, we start accepting it as normal. So, it is useful to just recap in somewhat more general terms what has happened here, to remove it from the UK post-Brexit context where this level of dishonesty barely seems newsworthy: A Cabinet minister lied to Parliament stating that trade negotiations with a foreign country were ongoing when she herself had suspended them a few days earlier. A government representative of the foreign country concerned then writes to the UK Parliament to contradict the Cabinet minister’s claims about something very factual, that probably only few people would think you can lie about on the record and get away with. Yet, getting away with it she did.
In my post from two years ago, I used Hanna Arendt’s distinction between philosophical truth and factual truths. While the former always will be and should be debatable, factual truths shouldn’t. Whether or not the UK government is negotiating a new trade deal with Canada is such a factual truth. One may be forgiven to think that such a blatent lie by a cabinet minister in Parliament would have consequences. But lying to Parliament has become so common in British politics, that I do not think there were even claims for Badenoch to resign. To the contrary she is still considered as potential future Tory leader (alongside Penny Mordaunt whose popularity mainly rests on her having held a ceremonial sword for over an hour). This may be because people know that misleading Parliament and thus breaching ministerial code is not considered a resignation matter anymore in post-Brexit Britain; or perhaps because Badenoch has admitted other very serious – possibly criminal – acts – namely hacking into an opposition MP’s website – without there being any consequences; Or else, maybe Badenoch is simply involved in too many public rows and spats – such as the one involving former Post Office chair Henry Staunton – for anyone to be able to keep up. Regardless, the fact that such behaviour goes largely unchallenged and completely unpunished in post-Brexit Britain illustrates the state of British political culture, which will take decades to rebuild once the current government has been ousted from power and the Conservatives can hopefully return to sanity.
The politicisation of trade
But let us turn from personalities to the substance, i.e. trade policy: I have repeatedly written about the interesting phenomenon of the politicisation of trade deals in the wake of Brexit (see e.g. here and here). The UK-Canada trade negotiations are just another example of this trend where trade policy has become part of a symbolic policy for domestic consumption rather than a technical matter expected to lead to real-world improvements in UK trade performance.
An important element in the government's strategy to use trade policy for domestic purposes are the memoranda of understanding (MoUs) that the Department for Business & Trade is negotiating with individual US states. In the absence of any progress on an actual Free Trade Agreement with the USA, Brexiters have moved to try and convince the UK population that MoUs with individual states are just as good. The latest one was signed by Badenoch and Texas Governor Greg Abbott last week.
Trade Minister Greg Hands took to Twitter (X) to celebrate the fact that the UK has now signed state-level pacts with eight US states ‘boasting a combined GDP of £5.3tn’ (the states concerned are Indiana, North Carolina, South Carolina, Oklahoma, Utah, Washington State, Florida, and Texas). Similarly, HMG’s official press release stated that the MoU took “the number of agreements with US states up to eight – worth a combined GDP of £5.3 trillion, which is greater than that of Japan and equivalent to a quarter of the US economy.”
These statements – as always in the case of Brexiters’ statements about trade – are of course dishonest and highly misleading in two fundamental respects.
First, they try to convince people that the size of the economy you are concluding ‘trade deals’ (more on that later) with, is a direct indication of the benefits it will bring to your economy. That is only partly true. Much will depend on what your companies have to gain from access to the partner markets, i.e. what your companies will be able to sell there. Conversely, much will also depend on what the partners’ companies will sell in your country and whether that will improve consumer welfare (e.g. through lower prices or higher quality for instance) and how it will impact your own companies‘ selling the same products.
The Governor of Texas’s web page announced the deal noting that ‘Texas is No.1 among the states for exports to the United Kingdom’ and ‘the United Kingdom have invested $8.6 billion in capital investment through 326 projects in Texas, creating more than 18,200 Texas jobs.’ The first of these statements may be great news for UK consumers, as it may imply, they can buy goods they would not have otherwise access to, or they can buy them at cheaper prices. However, for UK firms it may mean more competition. That in turn may force them to increase productivity, which is one of the often assumed benefits of trade integration. Yet, increased competition may also be the result of firms being able to sell more cheaply because they work to lower standards in terms of environment, labour rights, health and safety and the like. Again, it depends on the precise terms of the agreement to know whether this is indeed the effect, but making it easier for Texan companies to access the UK market may constitute considerable challenges for UK producers given the increasing productivity gap between US and European companies. Perhaps that’s not a bad thing, given that competition may increase incentives to carry out those productivity enhancing investments that the UK so desperately needs. But in the absence of access to suitable sources of financing or some other reasons for not undertaking those upgrading investments it may simply mean that some domestic firms will go out of business. That’s what happened to many companies not just in the UK, but also the US – especially the Midwest – when China joined the World Trade Organization (WTO) and consumers started buying Chinese goods instead of domestically manufactured ones and firms started off shoring manufacturing to China (the so-called China shock). (And those trends also directly relate to support for Trump and Brexit).
Similarly, the second statement by Governor Abbott – the fact that UK firms have invested $8.6bn in Texas creating 18.2k jobs there – can be either good news or bad news for the UK. It is good news if that investment is the result of UK companies’ expanding due to access to a new market. It is bad news if it is the result of UK companies preferring to produce in Texas rather than in the UK. Which one it is would require a much more in-depth analysis of the evolution of UK-Texas trade and investment relationships than I have space here. But suffice it to say that reality is a lot more complicated than Brexiter propaganda allows for and the devil – as always – is in the detail.
The second way in which the official press release about the UK-Texas MoU and ministers’ statements around it are misleading is the fact that it actually is not a free trade agreement that has been signed. As many people have noted before me, these MoUs are declarations of intent to cooperate and collaborate. The one with Texas is titled a Statement of Mutual Cooperation (SMC) and is strewn with phrases describing the purpose of the agreement in terms such as ‘identify’ obstacles to trade, ‘address’ (not ‘remove’) trade barriers, and ‘sign-post opportunities’ and ‘encourage cooperation’ through ‘sharing of best practices’, and even simply ‘reaffirming existing obligations’ when it comes to public procurement under the WTO Agreement on Government Procurement (WTO GPA).
The most concrete provisions in the SMC are those stating what the MoU is not, namely an FTA. Thus, section 10 point 2 states that ‘This SMC is solely an expression of the Participants’ intention to establish a mutually beneficial relationship and is not an international agreement or treaty and as such does not create legally binding rights or obligations under domestic or international law.’
Most importantly, of course, US states do not have the authority to remove tariffs and many non-tariff barriers to trade, because they simply are the primary authority of Congress and the Federal Government. As such, Badenoch’s statement that thanks to the UK-Texas SMC and the other seven state-level MoUs ‘UK firms now have access to states with a combined GDP of £5.3 trillion - equivalent to a quarter of the whole US economy’ is misleading in the sense that of course UK firms had access to these states before and significantly improving market access would require removing tariff and non-tariff barriers, which in turn can only be done via an FTA with the US government.
The bright side of MoUs
That is not to say that these MoUs with US states are completely useless. The point I am trying to make here is that the UK government is using them as symbolic policy and that its communication about what they are and what they can achieve is misleading.
A very recent report by the British American Business Network takes a close look at the MoUs the UK has concluded with US states so far. The report notes that the one common objective in all eight MoUs is to “address barriers to trade and/or investment,” but that only three cite “increasing investment” in both places as an objective of the agreement (North Carolina, Florida, and Texas). Others do not mention investment at all.
The report also notes that only the first MoU signed (the one with Indiana) mentions “removing trade and investment barriers” as an explicit objective, and only the ones with Indiana and North Carolina mention “removing trade and investment barriers,” while all others – perhaps more realistically – only talk about “addressing trade and investment barriers”.
The report also highlights the relatively limited extent of the MoUs in terms of the means of cooperation, which are limited to “visits and missions,” “information sharing/best practice exchange,” “joint symposia, seminars, workshops exhibitions, and training”, “academic cooperation,” in one case (Oklahoma) a “social media campaign”, as well as “private sector partnerships,” and in some instances unspecified “capital investment.”
These means of cooperation are ‘neither legally binding nor do they change tariffs or market access,’ but according to BABN ‘this kind of trade promotion activity can have real value’ in activating local stakeholder networks and increasing visibility of opportunities.
The one area where the MoUs may open opportunities for market access of UK companies concerns public procurement, which is included in all MoUs and would improve at the very least information about public tenders in some US states, but in some cases comes with a (legally non-binding) commitment to improve treatment of UK companies compared to companies from other US states or third countries.
Yet, BABN also concludes that ‘a lot hinges on the execution of the commitments that have been made by both sides.’ Some of the MoUs have indeed led to resource commitment – e.g. the UK establishing a Government Office in North Carolina and South Carolina ‘contemplating’ opening a UK office, in addition to its European office in Munich. Such activities can increase the visibility of opportunities, which is crucial to the value added by such MoUs.
However, here, my pessimistic interpretation of trade policy as largely a symbolic act used to cover up the failure of signing promised FTAs with big players like the US and India, leads me to be very sceptical of the value of these MoUs, because it is doubtful the government has any consistent strategy to follow through with the necessary resourcing and implementation steps. It should be noted for instance that no other Government Offices like the one in North Carolina (which incidentally was established in 2020, i.e. two years before the MoU was signed) have been opened. My pessimism seems to be confirmed by the BABN that notes that “[s]o far there is not much available [in terms of public information and visibility-enhancing activities] beyond the MoU texts and Working Group statements.” That may change, or it may not, depending on how serious the UK government is about the real-world potential of these agreements.
Be that as it may, it is important to note that whatever these state-level MoUs amount to, they are extremely unlikely do offset the loss in trade due to the loss of access to the EU single market and certainly are not a substitute for the promised FTA with the US in terms of market access.
Finally, an FTA with India!
While the UK government seeks to convince people that post-Brexit trade policy is a great success, the news reached us that an actual FTA had been concluded with India. Only, it was not the UK, but the European Free Trade Association (EFTA) that has manged the feat of concluding an FTA with India. After the India-Australia and India-United Arab Emirates FTAs, this is probably India’s third most significant FTA. Ironically, the announcement came the same week that UK and Indian negotiators announced that their last ditch efforts to conclude a UK-India FTA before elections in both countries had not succeed and negotiations were now put on hold.
So, how did the four small economies of Iceland, Liechtenstein, Norway, and Switzerland manage what neither the EU nor the UK have managed so far?
The first thing to note is that it took a long time to reach a deal (16 years) and serious progress was only made after 2020 when India decided to abandon the Regional Comprehensive Economic Partnership (RCEP) with 15 other Asian countries, which the Government of India (GoI) deemed too dominated by China. India’s exit from RCEP made the GoI more interested in an FTA with European countries and the small EFTA economies proved pragmatic enough to take advantage of this opportunity.
A key element for the successful negotiations was the openness of EFTA states to accept Indian request for relaxation of work visa requirements, notably for service sector employees and the self-employed. Plus, managerial staff of Indian companies working in EFTA countries can now bring their families, while Indian students may qualify for post-study work visas, albeit not for permanent work permits (see here in German).
This is of course precisely the area in which the UK government – committed as it is at least since 2010 to bringing down net migration – has very little leeway in its negotiations with India, which has proven to be one of the key stumbling blocks in the process. It should also be noted, however, that Switzerland is not in a dissimilar position, given that a popular referendum a few years ago has led to a constitutional commitment to give Swiss workers priority over foreign workers (I wrote about this mass-immigration initiatives a few years ago). Here, the details of the deal with EFTA may be insightful for British negotiators (see Annex 6c on movement of persons supplying services).
Another important element of the EFTA-India FTA that reportedly was key to a deal concerns the chapter on investment promotion. Here the EFTA states promise foreign direct investments of U$D100bn and the creation of a million jobs in India over the next 15 years. The Neue Zürcher Zeitung’s commentator [in German] calls this provision ‘very unorthodox.’ For one, the sum seems enormous, given that to date the EFTA countries only have invested a combined U$D10.7bn in India. For the other, it is also unorthodox in the sense that the governments of the four EFTA countries can of course not direct private companies to invest in India. Indeed, the promise has been interpreted as a bet on India’s growth. Indeed, the potential seems enormous given that India only accounts for 3% of world GDP compared to China’s 18% while both countries have similar populations. So, the EFTA states may simply rely on the fact as India catches up with China, EFTA FDI into India will automatically reach the U$D100bn in the next 15 years.
(incidentally, it is telling that the BBC reported on the EFTA-India deal using the misleading language of a ‘$100bn free trade deal,’ when that figure merely refers to the intended amount of FDI from EFTA into India over 15 years. The $100bn are not additional wealth created by the deal, or wealth directly accruing to the countries that are part of the deal, even less to their populations. Perhaps Brexiter thinking on trade is starting to infect how the British media in general reports on these matters, which would be another regrettable Brexit damage).
In the meantime, for EFTA exporters the agreement has very concrete benefits, most importantly a very significant reduction of import tariffs – e.g. of 20% in the case of watches and machine tools – providing them with a considerable competitive advantage compared to EU and UK exporters.
This contrasts with Brexit Britain where the Trade Secretary – fighting the ever more oppressive weight of the reality of trade damage (see for instance this latest CER report) – has to resort to the silly trick of claiming a British post-Brexit export boom by simply not adjusting figures for inflation. That may sound like a technicality, but as Chris Grey put it brilliantly, it essentially is ‘like someone who earns £30K a year saying that they are much better off than their granddad was because he only earned £25K when he was their age.’
Badenoch, like any fanatic, remains unperturbed by reality and boasted in the pages of the Express about Britain’s’ alleged leading position as trading nation. That boast was merely based on the number of trade deals concluded since Brexit; completely ignoring the fact that the vast majority of them were simply rolled over from pre-existing EU agreements (e.g. the UK-Canada one mentioned above) and that those who were not are of very little value (e.g. the ‘gargantuan’ CPTPP agreement with Pacific nations is expected to add 0.08% to UK GDP) and some are indeed damaging to the UK economy.
But all that said, it is of course pointless to hope that Brexiters will care about the economy or the living standards of British people. Rather, as Badenoch suggests, in Brexit Britain even trade policy is primarily about nostalgia and the pride of a country that was ‘[o]nce mocked as a nation of shopkeepers’ but wants to ‘stay true to our heritage as a global trading nation that ruled the waves.’
Inverting the red lines
Badenoch’s reference to a Britannia that rules the waves illustrates a key feature of Brexitism that I have also previously written about, namely the believe in British exceptionalism and supremacy as illustrated by a glorified past. This core feature of Brexitism is increasingly becoming the only thing that is left of the whole project.
Lee Anderson’s defection from the Tories to Reform UK last week and his justification that he ‘just’ wanted his country back further illustrates Brexitism reducing to its ugly core; namely politics exclusively geared towards the selfish-pursuit of power, while appealing to parts of the population’s longing for a simpler, safer, and more economically secure time. As Chris Grey convincingly shows in an excellent comment on what it means to want one’s country back, most people look for that simpler time in the past, even though we know they will be looking there in vain.
Yet, in British politics it has become a taboo to call out people who ‘just want their country back,’ because politicians of all colours seem to buy into the argument – or at least do not dare completely rejecting it – that this is what a majority of people (or at least ‘millions of people up and down the country’) want. It is the fear that Lee Anderson and other Brexiters indeed speak for the ‘Red Wall’ voter that has led Labour to a level of cautiousness about Brexit that borders on impotency. It is this fear that explains Kier Starmer’s many red lines on Brexit (no rejoining, no single market, no customs union, no free movement of people…).
The longer the Brexit drama continues, the more visible the economic and political damage becomes, the less this approach seems tenable. Rather than having red lines imposed on us by those who grabbed power after an ill-advised and ill-designed Referendum eight years ago, the rest of the country needs to be given a voice and needs to be allowed to say just how much Brexiter shenanigans we are willing to put up with. At one stage someone in British politics will need to have the courage to stand up and tell Brexiters that enough is enough. Somone needs to tell them: ‘Right, you won in 2016 and 2019 and we’ve let you have a go at ‘getting your country back.’ We’ve looked on while you were trying to turn your nostalgic fantasies into reality. We told you it won’t work. You’ve had eight years. Look where we are now. Here is our red line: This much damage and no more!’
In other words, it is time to invert the red lines and tell Brexiters that they have squandered their chance to prove us – Remainers – wrong. The red lines in UK-EU relationships cannot be defined by those brought to power thanks to a chance majority in a badly designed referendum. Rather, the red lines need to be defined in terms of the very real damage Brexiters are doing to the UK economy, politics, and the country as a whole.
That does not mean dismissing the grievances that led people to vote for Brexit, but rather to start a serious conversation about what the causes of these grievances were, what role the EU did and did not play in them, and what sort of economic and political reforms are needed to find real solutions rather than the perhaps cathartic, but ultimately self-defeating Euroscepticism.
Will this happen any time soon? No doubt not before the General Election – and that may make some strategic sense given that all that seems required for Labour to win the election is to avoid any huge mistakes and let the far right (Conservatives and Reform UK) continue devouring themselves.
After the election, however, it will be crucial to invert the red lines and do what is best for the country not for the screaming and screeching minority of nostalgic fantasists who want their country back. Of course, the plutocrat owned right-wing press will rip into anyone challenging the notion that the Brexit mess is what a majority of real Brits want. But it needs to be challenged if we are ever to be free from the shackles of self-destructing far-right nationalism and if we want to get out of the hostage situation in which a small, well-funded minority of far-right extremists has held the country since 2016.
While taking on the Conservative Party with its newspapers and rich donors and Reform with its increasingly loud platform GB News may be a daunting prospect for anyone on the frontline of British politics, they may take courage in recent polling figures. They indicate a genuine electoral wave away from the Conservatives, reducing support for the two mainstream far-right parties to the core of unconditional supporters. And that core is far from a majority of the electorate. Indeed, the most recent polls have the Conservatives at 19% of voting intentions and Reform at 15%. That’s a total of 34% intending to vote for far-right parties, which is nearly 10% less than during the 2019 GE. It is unlikely that people who still support the Tories or Reform would ever vote for a centrist party or abandon their strong believes about returning to a mythical British past. As such, they are most likely a lost cause for any party who wants to move British politics back onto more reasonable ground with forward-looking policies.
Conversely, the 66% of people who would not vote for either of these parties most likely will also be increasingly more worried about real world Brexit damage than about ‘red lines’ regarding the technicalities of the relationship between the UK and the EU. An interesting report by the Conservative Group for Europe suggests that there could even be space for cross-party agreement on a rapprochement with the EU. This would be particularly the case if a second electoral wave gathers pace and other extremists follow Anderson’s example of abandoning the Conservatives for Reform, allowing the Tory party to return to a more centrist, ‘one nation’ path.
Overthrowing the tyranny of the loud Brexiter minority will take courage and resilience given the hateful and dishonest style of politics Brexiters have become so proficient in. But someone will have to muster that courage. The politician who manages to rule the current electoral waves may be able to steer Britain away from its current course, which the country simply cannot afford to pursue for much longer.