Johnson's dangerous decision

TEHRAN, Aug. 17 (MNA) – A recent visit by US National Security Adviser John Bolton and British Prime Minister Boris Johnson on Britain's exit from the European Union showed clearly that Washington was trying to impose some of its demands on London. This is something that Boris Johnson will probably agree with. Better yet, London will once again become a victim of US policies in the international system.

As BBC reported, Donald Trump wants the UK to be “first in line” for a trade deal with the US, according to his national security adviser John Bolton. Speaking following a meeting with Boris Johnson on a visit to London, the White House official said the US could focus on striking bilateral trade deals in certain sectors like manufacturing and car-making and work out more complicated areas later. A prior American president said that if the United Kingdom left the European Union, it would go to the back of the queue on trade deals,” Mr. Bolton said. “To be clear, in the Trump administration, Britain’s constantly at the front of the trade queue, or line as we say.”

He added, “I think here we see the importance and urgency of doing as much as we can agree on as rapidly as possible because of the impending 31 October exit date.”

“You could do it sector by sector, you could do it in a modular fashion in other words,” Mr. Bolton said. “You could carve out some areas where it might be possible to reach a bilateral agreement very quickly, very straight forwardly. “That would then lock that in and when the other areas that might be more difficult were concluded later, you could combine it in one overall agreement.” So the objective is either one document or a series of agreements that would be comprehensive.

“In order to expedite things and enhance the possibility for increasing the trade and investments between the two countries, doing it in a sector-by-sector approach or some other approach that the trade negotiators might agree with, we are open to that.”

Asked whether piecemeal trade agreements are allowed under WTO rules, Mr. Bolton said, “our trade negotiators seem to think it is. The idea of doing it in pieces rather than waiting for the whole thing is not unprecedented.”

The UK is barred from opening talks with a third country before exiting the EU on 31 October, at the earliest.

Mr. Bolton also said the UK and US could avoid discussing contentious issues like Iran, China, and Huawei until after Brexit. “The message I wanted to convey on Iran, and on some other issues in which I include China, 5G, Huawei, that cluster of issues, is that the President and the US government fully understands that in the next few days the UK government has a singular focus on the Brexit issue, so that we are not hoping for anything on these broad and complex questions,” he said.

“We just ask that, as issues come up, we resolve them individually and we reserve the time to have a larger conversation on some of these important issues at a moment that is really right for the new government. We just felt we owe them that. “Obviously, we have views on these issues, I think that is appreciated by the new government. They said in particular that looking really from square one on the Huawei issue that they were very concerned about not having any compromise in the security of telecommunications in the 5G space.”
He added, “we don’t want to put you under pressure on these issues. There will be time enough to talk, that is really all we ask for.”

In May 2019, the US published its negotiating objectives for a future trade deal with the UK. These suggest that Britain will not enjoy softer treatment compared to other US allies in any trade deal.

The blueprint indicates that the nation would demand greater access to food markets, allowing it to sell the UK chlorine-washed chicken and hormone-pumped beef. The objectives also suggest “full market access for US products”, which could potentially lead to spiraling NHS drug costs.

Mr. Bolton criticized the EU for its approach to Brexit while talking to journalists after his meeting with the prime minister. “The fashion in the European Union when the people vote the wrong way from the way that the elites want to go is to make the peasants vote again and again until they get it right,” he said.

He added that it was “hard to imagine” people in the UK did not know “what was at stake” when they voted to leave the EU in 2016.

The objectives also suggest “full market access for US products”, which could potentially lead to spiraling NHS drug costs. Mr. Bolton criticized the EU for its approach to Brexit while talking to journalists after his meeting with the prime minister. “The fashion in the European Union when the people vote the wrong way from the way that the elites want to go is to make the peasants vote again and again until they get it right,” he said.

He added that it was “hard to imagine” people in the UK did not know “what was at stake” when they voted to leave the EU in 2016.

So there's been some progress, but not yet enough. “You can't simply roll over everything - these existing agreements will have references to EU law, so you cannot avoid some negotiation," says Alan Winters, director of the UK Trade Policy Observatory at University of Sussex. Some countries may also be apprehensive in signing deals right now, given that it is so unclear what Brexit will ultimately look like, adds Prof. Winters.

So what could the consequences be if trade arrangements are not fully in place and the UK leaves the EU with no deal? With the countries where the UK has no formal trade agreement, both would have to trade under the rules overseen by the World Trade Organization (WTO).

Trade would not stop if this were to happen but some barriers would go up, says Alex Stojanovic, from the Institute for Government think tank. “There is a reason you have trade agreements, it's that they give you better trade preferences than WTO terms. “So some businesses will be harmed by tariffs coming into play," he says.

Trump envoy’s cheap Brexit promises

Also Politico reported that John Bolton's proposal for sectoral US-UK trade deals post-Brexit has caused excitement in London, but cynical trade experts are not convinced.

Promises come cheap, they point out. When the US asks Britain to sign on the dotted line, it will be Congress, US farmers, and Trade Representative Robert Lighthizer who dictate the conditions, not Trump's national security adviser.

“What Bolton is proposing is not realistic," said Sam Lowe from the Center for European Reform. "Why would Congress sign off on anything that doesn’t have agriculture included?”

Any trade deal with the US needs to be ratified by Congress — where Democrats have a majority in the House of Representatives, and interest groups, in particular farmers, work to make sure any trade deal is in their favor. “All Congress cares about is agriculture and dismantling the EU’s regulatory approach to food and chemicals,” Lowe argued. Any deal that falls short of that would not be ratified, regardless of Bolton's assurances.

Case in point: Congress has been holding up Trump's new USMCA deal with Canada and Mexico for months over dairy exports, lumber tariffs, and weak labor rights protections. It has made clear the US won't even consider negotiating a trade agreement with the EU that doesn't include market openings for US beef and chicken.

Bolton did not mention this inconvenience during his visit in London, likely because he had other goals in mind. “For Bolton, the promise of a trade deal is a carrot to get UK cooperation on security issues,” Lowe said. The need for Boris Johnson's administration to show that Brexit will be a success has not gone unnoticed in Washington. Promising trade deals gets Bolton friends in Downing Street without costing anything.

“Remember that Bolton is not a trade expert. All he cares about is getting leverage to get the UK to follow the US on Huawei, Iran, and China.”

David Henig, director of the UK. Trade Policy Project, pointed out another flaw in Bolton's proposal: "Partial trade deals that reduce tariffs in one sector are not legal under WTO rules."

While "Trump and Bolton have shown before that they care little for WTO rules, the UK, on the other hand, needs a well-functioning WTO," he added. It's what London will have to rely on to trade with the EU and other countries if it leaves the bloc without a deal. A Department for International Trade spokesperson said: “We have already laid the groundwork for an ambitious, creative trade deal with the US and are working hard to take advantage of the golden opportunity to increase trade between our countries as we leave the EU. We will set out our approach to negotiations in due course.”

So a trade deal along Bolton's lines is unlikely to ever see the light of day. As Lowe put it: "The US didn’t get to where they are in the world by being unnecessarily nice to countries that are slightly desperate.”

Boris Johnson takes note of Trump's game theory to keep EU guessing on Brexit

As “The Guardian” reported, two cars are hurtling towards each other down a narrow country lane. Both have the option to pull over but neither driver wants to give way first. What happens next?

This is the sort of scenario that lies at the heart of game theory, the use of models to show how rational decision-makers interact with each other. Game theory is big in economics and, in the current circumstances, that’s hardly surprising because two key political issues lend themselves to game theory analysis.

The first is the US-China trade war, with the two cars heading towards each other down the country road being driven by Donald Trump and Xi Jinping. The vehicles have already ignored plenty of passing places along the way and a head-on crash is a distinct possibility.

Both drivers are aware of the risks but neither wants to lose face in the game of chicken. Trump has made getting concessions out of China a totemic issue for his political base; Xi is another self-styled strongman already facing an internal threat to his authority from the protests in Hong Kong.

Last week, trade talks between officials from Washington and Beijing were held in Shanghai. This was seen as a hopeful sign – an indication that the leaders of the world’s two biggest economies were fully aware of the dangers of protectionism.

But Trump’s way of playing the game is to keep his opponent guessing. So he chose this moment to announce something unexpected: plans for a 10% tariff on $300bn of Chinese imports into the US, which – if actually implemented on 1 September – will mean virtually nothing China sells to the US will be exempt from duties.

Trump says he wants a deal with Xi and that is true. But he wants a deal that involves Xi slipping into the passing place while he zooms past. His strategy for getting what he wants involves putting his foot on the accelerator rather than on the brake. The White House is assuming that this is a rerun of the Cuban missile crisis – another classic example of game theory – in which John F Kennedy’s threat to push the nuclear button forced Nikita Khrushchev to back down.

Xi, meanwhile, has continued to trundle down the road at a steady pace. He thinks Trump will be wary of spooking the stock market and of making American consumers pay more for their smartphones and laptops. After four decades of rapid economic growth, Beijing reckons it is in a much stronger position today than the Soviet Union was in October 1962.

In the real world, head-on collisions happen relatively rarely. More often, both drivers slam on their brakes at the last minute and after waving their fists at each other grudgingly work out a way to pass. But accidents do happen. And when they do they cause lots of damage.

The “game” between the US and China has been between two well-matched opponents. Up until now, the “game” between the UK and the EU over Brexit has been much more one-sided. Michel Barnier, the EU’s chief negotiator, operated from the outset on the assumption that for all her tough talk, Theresa May would always be the first to blink. And in the negotiations that culminated in the draft withdrawal agreement last autumn, he was proved absolutely right.

The dynamics of the game, though, have changed since the start of the year when it first became clear that the inclusion of the Northern Ireland backstop in the withdrawal agreement meant May could not get her deal through parliament. May’s failure to actualize the result of the referendum led to the rise of the Brexit party, which came first in the elections for the European parliament. Conservatives – aware that the party is facing an existential crisis – dumped May and replaced her with someone they thought could see off the threat posed by Nigel Farage.

Boris Johnson has arrived in Downing Street and has reshaped the cabinet so that it is run by Brexit true believers rather than those who backed remain in the referendum. Preparations for a no-deal departure have been ramped up in order to show the rest of the EU that the government means what it says. Johnson has made it clear that he is in no hurry to start negotiations and, by spraying money, is creating the impression that he would be willing to call a general election in order to get a mandate for his tougher Brexit approach. From a game theory perspective, all this makes complete sense. Like Trump with Xi, the prime minister is trying to keep the EU guessing.

What is potentially helpful to the new prime minister is that the Eurozone economy is in worse shape than it was a year ago. Germany, in particular, is struggling. Its manufacturing exports have been hit by the global slowdown and Berlin fears it will be targeted by Trump when he launches the second front in the trade war. Angela Merkel does not want a no-deal Brexit. So far the EU has kept to its course, refusing to countenance the idea that it might need to reopen the withdrawal agreement. That is because it thinks parliament will wrench the wheel out of Johnson’s hands at the last minute to prevent a crash.

That may prove correct but the new sense of nervousness in Dublin is a measure of how the nature of the UK-EU game of chicken has changed. Leo Varadkar is worried about the impact of a no-deal Brexit on the Irish economy. What should also concern the Taoiseach is whether the EU would be prepared to sell Ireland out in order to avoid one.

MNA/TT

News Code 148958

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