“Can we trust the Tories on trade?” Well the easy answer is – no we can’t!
The Tories once spoke about new trade deals ‘putting rocket boosters’ under the UK economy after Brexit. In indeed last year David Davis told readers of the Sun, “We can negotiate a free trade area twice the size of the EU. Deals with the US and China alone will give us a trade area almost twice the size of the EU – and of course, we will also be seeking deals with many others.”
And he claimed that these would be all in place before the date of Brexit itself.But instead what we have seen since last year is the Prime Minister, Liam Fox, David Davis and Boris Johnson trying to convince themselves – and the country – we can do off the shelf trade deals.
Japan trade deal
The recent events in Japan with the PM jetting to Tokyo to try to set up a trade deal are just the latest example of things going not going according to plan. Before Theresa May had even touched down in Tokyo Japanese officials had told our press that they were in no hurry to rush into a trade deal with the UK.
Why? Because they are prioritising Japan’s deal with the EU!
The media eventually reported she had got what she set out to do – to prepare the ground for a deal with Japan which would replicate an EU – Japan deal – in fact “a cut and paste deal”, which still means we will have to wait for the deal with EU – Japan to be signed off – and for Brexit to take place.
This and feeble attempts to look busy are a far cry from the their envisaged ideal of Liam Fox travelling the globe to usher in a new era of free trade.
The bitter reality is that wherever the Tories pitch their tent – be it Tokyo, Delhi or Canberra – they’re going to hear the same answer.
Only Donald Trump – making one of his many ‘’off the cuff” remarks said the US would do a “big beautiful trade deal with the UK”. Given his record – I don’t think anyone believes it. Obama was perhaps more accurate in 2016 when he said the UK would be at the back of the line in terms of trade deals.
In any event Trump’s priority – having sunk TPP – is to sort out the NAFTA mess, while keeping a eye on other trans-global deals involving South Asia, China and Australia, but not the USA.
Comrades, no country is going to sign a trade deal with the UK until it becomes clear if we will retain access to the Single Market and a customs arrangement with Europe.
And irrespective the Japanese government’s priority will be to protect companies such as Nissan, Toyota and Honda in the car industry and other investments in the UK economy.
For decades Japanese firms were told that they could safely invest in the UK as it would be a gateway to the entire European market.
‘Far more complicated’
So it’s time for the Tories to face the facts. Brexit is proving far more complicated to negotiate than they believed.
It’s not just about telling Michel Barnier to ‘go whistle’ – it’s impossible to separate future trade deals from the outcome of the negotiations.The government have neither the capacity – nor the political coherence to negotiate with Brussels and other countries on an equal footing.
The idea that Whitehall is going to prepare a series of ‘off the shelf’ trade deals to sign on Brexit Day in May 2019 is not plausible.For a start – where are our trade negotiators?For forty years we have relied on the EU to do it for us.
If we look at TTIP or CETA – the Americans, Canadians and Europeans all deployed armies of negotiators, economists, experts and officials.
Even then – after years of talks – they only succeeded in getting one of those deals over the line – CETA – and only just. In the case of TTIP, that failure was due in no small part to the successful opposition and campaigns mounted by unions.
‘Big beautiful deal?’
And that takes me to my next point. Even if the government had the capacity; even if they had the time – and weren’t restricted by the Customs Union; even if they had the political nous or the diplomatic clout to get a major country to the negotiating table; even then — what are these new trade deals going to look like?
Our fear is that they’ll look exactly like the old ones.
We know that alongside the Commonwealth countries such as Singapore, India and Australia the prize that Fox is really eyeing is a deal with the USA or China.
We can easily imagine what Trumps ‘big beautiful deal’ will include. Donald Trump’s ‘America First’ administration will extract every last drop from us for a ‘quick deal’. No amount of mad dashes across the Atlantic for private chats with Wilbur Ross, the US Secretary of State will help.
Ross is well known to our comrades in the United Steelworkers union as a tough negotiator and investor.
He is a turnaround specialist and knows how to strike a big deals in his interests.A few days after meeting Wilbur Ross, Fox headed down to Mexico.
Mexico has cheap labour, low tax zones, with government appointed unions who ignore labour laws, health and safety, and have a dubious human rights record.
As former presidential candidate Ross Perot warned years ago on NAFTA – that “loud sucking sound” was the sound of good manufacturing jobs going from the USA and Canada heading south to Mexico.
Any deal with the USA would also involve our public services and would be opened up to further privatisation to US corporations – as would our NHS – while food standards would plummet to US levels. This is the price we will pay for a quick deal.
And, as Unite’s partner union in Workers Uniting the United Steel Workers told us, the CETA trade deal placed Canadian manufacturing at a huge disadvantage and is likely to cost thousands of skilled jobs.
Similarly, in the case of China, we aren’t under any allusions as to what Beijing will demand. China is continuing to push for ‘market economy status.’ Unite is in little doubt that it’s something the Tories would support in exchange for a trade deal and the results for British industry would be disastrous.
The impact of Chinese ‘dumping’ on the British steel industry has been well documented – and it far from over.
Yet steel is not the only industry thrown into turmoil by Chinese dumping – the ceramics, paper, glass and tyre industries could all go to the wall if China were to be granted market status.
This is one reason why Unite, alongside the TUC, GMB and Community, have worked with a number of trade federations representing these industries to propose a series of well thought through trade remedies structure which must form part of any new trading regime.
These remedies are informed by the excellent work undertaken by the Steelworkers in the United States and Canada who regularly take on – and win – trade disputes cases in defence of their members’ jobs.
The ability for trade unions to take on trade disputes directly – without being reliant on the government to represent us at the WTO – must be a vital part of any new trade deal.
This must sit alongside a complete rejection of TTIP-style undemocratic ‘investor state dispute’ mechanisms.
Similarly, all trade deals must contain strong labour rights chapters – which are enforceable. Unite argues that as a minimum this should include ILO conventions, but our ambition must go way beyond that. And I know Labour agrees with us on that point, not just in Westminster but also in the European Parliament.
Where the UK is the junior signatory, such as any deal with the US, such a chapter must defend working rights and standards and our public services and the NHS must be protected.
Yet where the UK has more clout we should use these trade deals to raise the labour standards of other countries.
With those protections secured – the UK would not return to the old days of smash and grab trade deals. Instead we would use these deals to promote and extend protections for workers across the world. That of course is not an agenda the Tories have any interest in pursuing, which is why it must not be left to them.
Finally, when we are considering what a trade deal with the US or China would look like we should also consider what a trade deal with the EU would look like, as it becomes increasingly likely that it is the form our new trading relationship will take.
One area of concern for UK manufacturing is the EU threshold for ‘country of origin’ regulations. That is to say ‘how much of a product needs to be built in Britain for it to be considered British’? In the deal between the EU and South Korea this threshold was set at 55 per cent.
As it stands this would be calamitous for the UK automotive sector. The ‘best in show’ example, Jaguar Land Rover, stands at 41% UK components, with JLR’s cross channel supply chain extended across Europe.This exposes a desperate need to re-shore our supply chain production in the UK.
This takes me to my final point. If there are to be trade deals then no, we have no faith in the Tories to negotiate them. Unite is not opposed to trade, it is part of our lifeblood – but a new approach is needed and it needs to be underpinned by an ambitious industrial strategy to defend and develop manufacturing.
It is Unite’s view that this can only be achieved by our movement and by a Labour government, working in conjunction with unions, open and transparent, not cobbled together to replace something we already have.