On Global Trade & Investment
Published By:
The Global Business Dialogue, Inc.
Washington, DC  Tel: 202-559-9316
No.11 of 2020

Click HERE for yesterday's quote from Senator Grassley.

 "[T]his country is leaving its chrysalis. We are re-emerging after decades of hibernation as a campaigner for global free trade."

Boris Johnson
February 3, 2020
Ten days ago, Prime Minister Boris Johnson gave a speech on trade – a big speech – at the Royal Naval College in Greenwich.* The speech was given in the Painted Room, beneath James Thornhill ’s famous fresco, Britain’s Sistine Chapel. And the Prime Minister began his talk with a few words about the painting:

The Vatican has Michelangelo. Greenwich has Thornhill, who spent 20 years on his back on top of the scaffolding, so rigid that his arm became permanently wonky. … Look at these well-fed nymphs and cupids and what have you.

His topic wasn’t art. It was trade. And the speech, in its breadth and ambition was every bit as large as the setting. On the one hand, it was deadly serious, effectively setting out negotiating positions with key partners. On the other hand, it had several of those lighthearted flourishes for which Boris Johnson is now well known. Flourishes like this one:

[H]umanity needs some government somewhere that is willing at least to make the case powerfully for freedom of exchange, some country ready to take off its Clark Kent spectacles and leap into the phone booth and emerge with its cloak flowing as the supercharged champion, of the right of the populations of the earth to buy and sell freely among each other.

And here in Greenwich in the first week of February 2020, I can tell you in all humility that the UK is ready for that role.

You will want to read the whole speech if you have not already. Essentially, Mr. Johnson wants to open trade negotiations with the world. Here, however, we shall limit ourselves to a few comments on how he sees his country’s trade talks with the United States and the European Union and his view of Britain’s role in the World Trade Organization. 

Trade Negotiations with the EU.  Ridicule is not too strong a term for Boris Johnson’s take on the EU’s insistence that the UK must continue to abide by a host of EU regulations. He highlighted several areas in which, from his perspective, the UK practice and UK regulations are well ahead of those of the EU. On state aids, for example, the UK’s record is better than that of France, Germany, or Italy, if one is to judge by the number of enforcement actions against each. And as for regulations, Mr. Johnson sees the UK as being ahead of the EU on everything from maternity leave to single-use plastics. 

Having made that case, he then put the question:

Will we stop Italian cars or German wine from entering this country tariff free, or quota free, unless the EU matches our laws on plastic coffee stirrers …?  … Of course not.

In the same discussion, Prime Minister Johnson repeatedly referenced his desire to see a UK-EU deal along the lines of the trade agreement (CETA) that the European Union has with Canada. The either-or of that wish is perhaps best summarized in the more staid prose of Mr. Johnson’s February 3 submission to Parliament on UK/EU relations. There he wrote:

The question for the rest of 2020 is whether the UK and the EU can agree a deeper trading relationship on the lines of the free trade agreement the EU has with Canada, or whether the relationship will be based simply on the withdrawal agreement deal agreed in October 2019, including the protocol on Ireland / Northern Ireland. In either event the UK will be leaving the single market and the customs union at the end of this year and stakeholders should prepare for that reality.

Trade Negotiations with the United States . The debates, the inevitable debates, in these negotiations are nowhere near as far along as those in the UK’s quarrel/negotiations with the EU. So this section was shorter and consisted primarily of a few markers and a bit of advice to UK skeptics. As for the markers, Mr. Johnson wants the punitive tariffs on Scotch whisky lifted and the U.S. regulatory regimes for insurance fixed so that British firms can more easily compete in U.S. markets. Oh yes, and on the UK side, the National Health Service is off the table. (No surprise there.)
All of that said, Boris Johnson wants a trade deal with America and some of his comments were reserved for critics in the United Kingdom, as in this passage:

I say to all the naïve and juvenile anti-Americans in this country if there are any – there seem to be some - I say grow up – and get a grip.

The US already buys one fifth of everything we export.

On the WTO.  Early in his remarks, Mr. Johnson noted that in Geneva, earlier that day, “our ambassador J ulian Braithwaite moves seats in the WTO and takes back control of our tariffs schedules.” Clearly a strong supporter of the WTO, the prime minister praised the achievements of the Uruguay Round and lamented the failure of the Doha Round. Discussing that failure, he singled out for blame the U.S. and the EU for, in his words, “their refusal to compromise on farm subsidies.”

As for the UK’s future role in the WTO, it was, in a sense, another Superman moment when he said:

I don’t wish to exaggerate our influence or our potential influence, but then nor would I minimize the eagerness of our friends around the world to hear once again our independent voice again in free trade negotiations and our objective is to get things started again not just because it is right for the world, but because of course it is right for Britain because this people’s government believes that the whole country will benefit.
Unsurprisingly, Mr. Johnson invoked the names of the great free traders of old, Adam Smith, David Ricardo , and Richard Cobden , the 19th Century Manchester manufacturer and crusader against the corn laws. He quoted the Cobden line that free trade is God’s diplomacy. 

And yes, that is our quarrel with Boris Johnson and this remarkable speech. There is more than a little irony in listening to the British prime minister credited with winning back for his country control of its borders, laws, and trade seemingly prepared to surrender much, if not all of it, on the altar of free trade. 

From our perspective trade is many things. Certainly, it is the free exchange of goods among private parties. It is also, of course, an instrument (or rather several different instruments) of national prestige and power. The ability of the state to step aside is, therefore, limited. That said, we’ll give Boris Johnson a pass here. In a sense, he was simply following the advice of the 16th Century Spanish painter, Francisco Pacheco . In advising painters on their use of color, Pacheco wrote, “it [the coloring] must be rather on the light side, because time will darken it.”  Politically, free trade is a bright color, and a little bold painting is in order.

Finally, as we have said, Prime Minister Johnson can make you smile, as when he told his Greenwich audience:

We do extraordinary things as I never tire of telling you.
Tea to China, cake to France, TV aerials to South Korea and so on.
Boomerangs to Australia - Nigel Farage to America. Then he came back of course.
At the Old Royal Naval College is a link to the text of Prime Minister Johnson February 3 speech on the UK and Global Trade as published by the UK government.

UK/EU Relations is a link to Prime Minister Boris Johnson’s written statement on this topic, which was published Hansard, the proceedings of the House of Commons for February 3, 2020.

*The Greenwich Foundation is the Wikipedia entry for this historic site.

Time Will Darken It is the title of a novel be William Maxwell. The epigraph that heads the story is an extended quote from Francisco Pacheco. That was our source for the quotation by that artist in the Comment Section.
Or Other GBD Notices, click below.