The 'Commercial gents' have lost their importance

Readers of Patrick O'Brian will be familiar with the author's benign contempt in the Aubrey / Maturin novels for the 'commercial gents'; rich city merchants, florid and grandiloquent, who wear patriotism like a cloak but whose only real interest is their own wealth. They are never entirely above suspicion of being willing to trade or deal with the King's enemies, of putting profit above patria, and O'Brian paints them unsympathetically. Yet trade and commerce are indeed the nation's 'life blood' - and today only the extraordinary success of British business has placed the UK fifth in the world's GDP league. 

But not all trade and commerce is good trade and commerce. Not all of it benefits the country and its people more than it benefits its owners - and that's the test. Why should UK trade policy be developed for the benefit of global shareholders whose activities have frequently disadvantaged both the country and its people? This issue has become much clearer in the minds of the electorate during the three years of Remain sabotage of the Brexit vote, with the CBI now dismissed as no more than a creature of the global corporates, and the car makers rightly identified as global hippies with no anchor to any nation, who will screw EU and government subsidies to put their car plants anywhere that pays their global shareholders maximum profit. Let's take a look at them -

Here you have the true importance of car making in the UK - it's almost exactly the same size as Romania's car industry, and substantially smaller than Poland's. And if you expanded the graphic to the whole world, we're exactly nowhere. The effects of globalism mean that the 'commercial gents' have lost some of their importance - and in this election, and in any future trade talks, their voices may be the loudest but that doesn't mean we should pay them the greatest heed.

Take fish and British waters. Farage talks a load of bollocks about this - as the Speccie explains -

Farage’s current predicament is rooted in a disastrous strategic decision he and an inner-circle of yes men took on the day Boris Johnson unveiled his new Withdrawal Agreement. Within minutes (possibly before the document had even been published) they decided to rubbish Boris’s deal as “not Brexit”. Farage bet the farm on being able to win that argument in the country. His aim was that the Brexit party would then take permanent possession of the huge Leave electorate, much of which had coalesced around it at the European elections.

Soon the Brexit party resorted to depicting things that applied only in the transitional period as if they would be permanent. There were claims Britain would be locked forever in economic alignment with the EU, unable to pursue an independent foreign policy or be in charge of what happened in UK fishing waters. It was even said the new Northern Ireland-only features could spell the end of the Union.

This position led inexorably to the logic that the Brexit party, as the only true Brexit option, must stand in every British mainland constituency at the general election. All other options – from standing aside altogether with a warning to Johnson that the Brexit party would be on his back during the next phase of future relationship negotiations, to fighting only a limited number of safe Labour seats in abandoned former industrial and coastal towns – were dismissed. But despite stirring up some of his Twitter followers against the Boris deal, Farage lost the argument among Leavers as a whole.

But Nigel's disastrous and mistaken strategy for BrexitCorp™ doesn't mean that fishing and our waters aren't important - but how important?

France is already making clear that it will block any trade deal unless the EU continues to have a right of access to UK waters. That's how important it is. On our own side the commercial gents from the City keep telling us that fishing represents a piffling little piece of the British economy, that financial passporting and the access of the City's merchants to European markets are far more important, and if it comes to push versus shove we should sacrifice our fish and waters for the good of the City of London.

Boris today moves the final days of his campaign to the Leave towns of the North. Voters here aren't dumb, and if they vote BXP it won't be because they've swallowed Nigel's distortions. It will be because they don't trust Boris not to give away the UK's fishing waters during a post-Brexit trade deal for the good of the commercial gents. And that, Prime Minister, is your key challenge in the North - to make it clear that British waters aren't up for negotiation.

Internet shopping post-Brexit

I am an inveterate internet shopper. This is generally because I am an ingrained price-chaser and source stuff from across the world - including knock-off Poulsen luminaires from China, still a third of the cost of the originals even with shipping and customs duties and VAT added. So I am used to the process, which is simple and efficient here. The Post drops you a card with a URL and reference, one logs-on to the website, enters a few details, scans a couple of documents and makes a SOFORT transfer and then the goods are delivered. Not a problem a few times a year - but what about those regular weekly / monthly purchases from UK suppliers or UK eBay?

Well, those regular suppliers, you won't be surprised to know, are already ready for Brexit. Everything bought via the internet from outside the EU needs a customs sticker as the delivery of a couple of memory sticks from 7-day shop yesterday shows -

After Brexit the value will be the critical factor. No VAT is payable on imports under €22, and no customs tariff on imports below €150. UK suppliers who are VAT registered will in future make sales to EU customers free of UK VAT. Thus purchases under €22 will (I expect) be 20% cheaper - like my memory sticks.

One of my other regular monthly buys is from Screwfix (the Kingfisher group's success story).  Screws, fixings, blades and discs, sealants, adhesives mostly - much cheaper than local. They offer free delivery to Europe on orders over £50 and looking at my order values over the past year -

They're all well under the €150 customs duty limit - the UK cost will (I expect) be 20% lower, local VAT will be payable at 20% so the net result is zilch.

There will always be a few exceptions that will no longer be economic. Pallet deliveries, mostly. I've become used to booking my own pallet deliveries online, for as little as £160 a pallet. Stone floor tiles from Italy, a nation whose border is fifteen minutes drive away, cost no less than £65/m2 plus delivery (a minimum of €200 per pallet load) from any of the EU27 but can be bought from the UK for £27/m2 plus delivery. Yes, the exact same tiles from the same quarries. I need another 14m2 for an unfinished bathroom so will have to figure this out after Brexit. 

But so far, the personal impact of Brexit looks to be .... nil. Bring it on.

NHS? The EU has already put it up for grabs

Two grunts have been emerging from the ill-educated Remain sector over the past few days - 'NHS' and 'Chlorinated chicken'. I guess like most silly Remain prejudices, these fears are born of ignorance and the mendacity of those who know better stirring up the pot.

Firstly, every supply, service or works contract for the NHS above a threshold value must currently, under EU law, be offered to every eligible firm in Europe. Threshold values are currently £181k for all supplies and services and £4.5m for works contracts. Search the OJEU database as I have just done, for NHS tenders, and it will return 514 pages of results, 34 contracts on offer from just yesterday alone, including the vasectomy service in Bristol and the pathology service in Worcester;

Now if a medical firm from Romania can bid to snip the testicles of Bristol's men, why not one from Boston or LA? If a Hungarian path lab operator can bid to analyse oncology samples in Worcester, why not one from Virginia or New England?

There's no rule that says contracts have to be awarded out of the UK - only that the bid evaluation process is open, fair and transparent (until you get to stuff over £20m or so - which is where EU corrupt practices, kickbacks, EU organised crime involvement and so on kick in) and Bristol's vas deferens could easily end up being severed under hands that have travelled no further than a few miles from the Avon.

Nor is there any rule that medical services performed in-house by the NHS' 106,000 doctors, 286,000 nurses or 22,000 midwives in commissioning groups, trusts and GP practices should be up for grabs - and no UK/US trade agreement will act to involuntarily privatise the NHS - God knows, the EU have been trying to do this for years without success. Just that instead of / in addition to EU firms bidding for contracted-out sevices and the supply of materials and equipment, US firms can also do so.

As for chlorinated chicken, well, if you've bought a ready-to-eat salad pack from your local supermarket in the past few days, you will have eaten chlorinated lettuce, in many cases using  chlorine wash stronger than that used to rinse Septic chickens.

So the Remainers can carry on grunting - hollow pots and so on.  

EU protectionism kills trade and innovation

I have commented before on a deeply protectionist, almost corrupt, culture of business in the EU that appears to offer advantages but in reality strangles innovation, stifles growth and deepens a sclerotic inefficiency that costs jobs. My old example was hairdressers; here a hairdresser must serve a three-year aprenticeship before she can pick up the scissors, whilst in the UK a 16 year old straight from school can hang her shingle without hindrance and get creative with hair. The result is that most women here look like their hair is styled by a Soviet camp tonsorist from a 1950s gulag, whilst Brit girls pioneer the world's most fashionable and glam hairstyles.

Over the Easter weekend I recalled another. I've known about this for three years but for some reason haven't written of it; it is the network of 'business only' suppliers here. It's the way in which buyers in these nations are forced to engage professional tradespersons by restricting or preventing other means of carrying out the work. Many firms simply won't deal with you unless you have a business registration number. There is no equivalent to UK Builders' Merchants for example - just the DIY stores or the 'profi' wholesalers. One can't buy glass at €8/m2 in stock pieces to cut yourself but must order each pane in a finished size at €35/m2 from a glass retailer. You can't have a palette of bags of mortar delivered next day or buy rolls of building membrane except at consumer prices.

There are ways round it for some things - Germans are slightly less constipated than Austrians, and consequently it's been cheaper, including transport cost, to order bulk plasterboard and insulation from Northern Germany than from the local stockists of the same-brand material down the road. It's always worth searching .pl and .si sites as both Poland and Slovenia sometimes carry German and Austrian made materials at a substantial discount.

The most absurd result of local protectionism is Travertine. I'm tiling the new bathrooms in Travertine stone tiles, quarried and cut in Italy, just to the south. You'd think they'd be cheap, then; wrong. You can't buy them for under €65/m2 anywhere here - but I can buy the same tiles from the UK for €22/m2. The transport costs were exactly the same. Now explain to me how it's cheaper to truck stone from Italy to the UK and back to Austria than direct to Austria?

Over the weekend I needed to order some German Häfele ironmongery for a project - you may know the name, we use it widely in the UK. No chance. Häfele only sell to the trade - and helpfully offer to put you in touch with a local profi to do the work for you. They even make their buyers sign a declaration to promise they won't resell the Häfele kit.

Well, you won't be surprised that all of these restrictive practices are unlawful in England - not illegal, but contrary to Common Law. Contracts in restraint of trade are unenforceable. My hinges are available here on the grey market for €24 a pair; I've ordered them openly from Birmingham, from a trade supplier, at £9 a pair and will have them within a week.

It's a small thing perhaps, but an irritating barrier to economic freedom. It's one of the reasons for the zero VAT threshold here - you're either a tradesman or you're not, with no room for the sub-threshold activity we have in the UK. But it will kill them - it's a system that can only work in the absence of the internet.   

Chlorine chicken

The UK has some of the highest food and farming standards in Europe. The US is committed to scientific, high-intensity farming using growth hormones for beef cattle and novel GM food ingredients. They wash their chickens in Chlorine, we wash our ready-to-eat salads in the same Chlorine. These differences, we are told, make a trade deal between us that includes food impossible.

Forgive me, but I simply don't see this. If we Brexit (which is in doubt) we will be in charge of our own food labelling regulations. Why should we not simply require beef from hormone cattle, GM foods and Chlorine washed products to be clearly labelled as such and allow consumers to make the choice?

No-one has produced any evidence that these American foodstuffs are dangerous - and as the US is one of the most litigious nations on Earth, one would have expected any actionable dangers to have been exposed long ago. Surely in an age of food banks we cannot quibble at allowing British citizens ($40k per capita GDP at PPP) to buy the same food as American citizens ($60k per capita GDP at PPP)?

I wouldn't choose to buy hormone beef or GM soya for myself. But then again I'm a food quality snob who wouldn't drink the flouridated ex human urine that Londoners call tap water ("It's very pure - it's been filtered through seven pairs of kidneys by the time it gets here") for twenty years. It's a matter of personal preference, surely?

Chlorine washed lettuce

Are we negotiating the wrong Brexit?

Trade and commerce post Brexit has been the core of all discussion since 2016. But when it's discussed, what is discussed is B2B - bulk trade; tankers and shiploads, containers, cheese by the thousand tonnes, wines by the lake. It's all based on the traditional model of shippers, wholesalers and retailers. But just exactly how robust is this model? 

We know that web-enabled B2C - business to consumer - trade volumes are substantial enough to have hollowed out our high streets, and the effects do not stop at national borders. Once every ten days I place an order with Screwfix, and kit - including radiators - is delivered to my front door from the UK four days later. For Christmas I ordered a mixed case of Port from Portugal at about €8 a bottle compared with about €25 locally. English crisps, French cheese, Italian stone tiles are all ordered either directly from producers or their local agents. My music CDs are from the Netherlands and my English bookseller ships via a postal aggregator in Hungary. My work shirts are ordered direct from the US. When I ordered a knock-off Poulsen light from China at a quarter of the £500 price tag of the real thing I had to pay thirty-odd Euros in import duty and VAT - to the postman, all of whom carry cash wallets here as COD remains common in Austria.  

It's not just postal-sized items, either. I saved €1,200 including transport by ordering loft insulation from Germany rather than locally; my snow blower was €250 cheaper from the Czech Republic and I source other plumbing and heating kit from Kotly.com in Poland - a building store that has embraced a Europe wide B2C trade model. The cost of a pallet load from the UK is about £160.

I'd be really interested to know just what the figures are for this sort of business - including the post and pallet-carrier and courier firm jobs. From my point of view, the global consumer market place is now so well established that it is impossible to sever a single limb. And if, after Brexit, I buy my goods from Screwfix at Zero VAT rate and the local postman has to collect it here, the cost is the same to me - but the frictional costs of the tax transaction pass from the UK to the EU. Of course, if vehicle fuel prices increase substantially it would wreck the model - but what are the chances of that?

If anyone has a source for UK-EU B2C trade balances, please do share them.