It is an interesting week to be in Delhi. While everyone is trying to work out the implications of Donald Trump’s shock victory, Indians are also coming to terms with their own domestic political earthquake.
UK commentators have spent recent weeks debating the opportunities offered by the EU’s ‘equivalence’ regime for companies outside the single market. The concept was significantly expanded by Michel Barnier to encourage global adoption of EU rules and simply commits the EU to go beyond its formal WTO commitments for countries that meet its regulatory standards. In the London-centric Brexit debate, it has become a point of contention about the consequences of ‘hard Brexit’ for the City of London. Advocates of a clean break argue equivalence is a ready-made substitute for single market passports; those aiming for an ambitious UK-EU deal argue it is incomparable to legally-enforceable rights to national treatment, and only offers conditional tolerance for UK-based firms to provide services to institutional investors through a branch in the EU27.
Ed Vaizey made a splash at Global Counsel’s breakfast “Digital Tech: Bridge or Barrier to Social Mobility?” when he suggested that self-employed platform workers should receive the minimum wage. The former Minister of Culture and the Digital Economy was responding to a succession of controversies over working conditions in the so-called “gig economy”: Deliveroo riders have protested changes in their remuneration structure; the courier service Hermes is potentially facing an investigation from HMRC; and an employment tribunal ruling against Uber could fundamentally transform their self-employed business model.
Germany’s EU Commissioner, Günther Oettinger, is no diplomat. He has been accused of racism, homophobia and sexism following a speech he gave last week in which described Chinese diplomats as “slitty-eyed rascals”, joked that gay marriage might soon be made compulsory in Germany, and implied women only get jobs through quotas. It is not the first time he has been accused of causing offence, which is why patience with his careless use of “slang” (as Oettinger subsequently described it) appears to be wearing thin in Brussels, particularly among MEPs. There have been calls for him to apologise (no sign of that yet) and quite a few who say it is time for the serial offender to step down.
A British think tank rather definitively announced last week that it had added up the potential tariff bill for EU-UK trade in a ‘hard Brexit’ scenario – and declared the EU the bigger loser by some margin. Applying the EU’s existing tariffs by tariff line to existing trade flows gave them a ‘bill’ for EU exports of around £13bn. The implied tax on UK exports to the EU was less than half this. Inevitably this has got quite some media coverage, although it largely reflects the volume of flows in both directions – i.e. the UK’s deficit in goods trade with the EU. However, to see this differential purely as UK leverage in a future negotiation with the EU requires you to ignore two basic things about trade.
In the months since Brexit there have been murmurings about whether, post-Brexit, Britain could adopt a ‘Singapore model’. A number of Brexiteers in the financial sector have suggested that Britain could become a “super-duper Singapore” through deregulation and focusing on new markets in Asia.
After a rough week in Namur, Wallonia’s capital, EU member states and EU trade policymakers will be reflecting on what CETA's near death brush with elected politicians means for future trade deals. So what are they likely to conclude?
According to one major newspaper, the UK Government is developing a “nuclear” Brexit negotiating threat in the form of a corporation tax cut to 10%. The logic goes that the prospect of an aggressively low-tax “offshore” UK on the doorstep would scare the EU into accommodating British preferences for the future UK-EU relationship. But as with all nuclear deterrents, the question boils down to one of credibility: could and would the UK actually deliver a CT rate of 10%?
After 10 months of political uncertainty and two general elections, Spain will now get a government, but one that will be severely constrained. Incumbent interim centre-right Prime Minister Mariano Rajoy will now face, and win, an investiture vote in the Congress of Deputies at the end of the week. This follows the decision by the centre-left Socialist Party at the weekend, who held the balance of power, to reluctantly abstain in the vote. Faced with the possibility of a third round of elections, the Socialists decided to unilaterally abstain, without any negotiations or policy concessions from the governing People’s Party. While Mariano Rajoy will now govern as a minority – with nearly 50 seats fewer than his party had when it governed as a majority – the prospect of significant policy change remains unlikely.
Donald Trump’s performance in the third and final presidential debate seems unlikely to do much to stem his plummeting popularity. It is not unusual for presidential campaigns to be tawdry affairs but the last couple of weeks has seen the race between Trump and Hillary Clinton shock even seasoned political commentators. The clip of audio revealing Trump’s amused commentary on how his status allowed him to grope women has been followed by a slew of further accusations and now an apparent willingness to refuse to accept the election outcome.