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Hello from Brussels. Brexit day is tomorrow, the goodbye parties are under way and next week the EU’s going to start sorting out its mandate for the talks with the UK. This week, though, there was more interest in the UK’s decision to allow Huawei into building its 5G network, defying intense pressure from the US. You have to admit it’s cute timing, just a few days before leaving the EU, for the UK to side with the growing Huawei-tolerant European tendency against their hostile Anglospheric cousins.
Today we’ll have a look at what that means for Huawei in the EU and for UK-US relations, and how the UK thinks about trade deals anyway. For the Tall Tale of Trade, we’re squeezing yet more nourishment, as it were, out of the chemical-washed chicken debate. Charted Waters looks at German export sentiment.
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Britain comes over all European about 5G
Britain’s decision on 5G essentially followed France’s lead, allowing Huawei only into the noncore parts of the network. This isn’t necessarily a workable pan-EU model, mind you. Both countries have a much more impressive cyber intelligence capacity than most European governments and reckon they can manage the risks.
Leaving aside that judgment (on which we have zero knowledge base from which to opine), the episode underlines the changing governance of globalisation. Increasingly it takes place outside formal trade agreements, let alone the WTO. It also frequently gets mixed up with national security, and the two substances don’t necessarily form a stable compound.
Within the EU, 5G strategy remains overwhelmingly a member state issue. The European Commission is concerned about the role of Chinese companies in 5G and other technologies. But, as we’ve written before, and unlike its empire-building efforts in areas like investment screening and public procurement, it has prudently taken a softly-softly approach to trying to cajole the member states into limiting Huawei’s role.
France, usually in the lead when it comes to centralising power and taking on China, has stood back on this issue because of its own relative confidence on 5G. Yesterday the commission released a “toolkit” to allow member state governments to assess and mitigate risks of letting companies like Huawei into core infrastructure, but sensibly hasn’t tried to coerce them.
It remains unclear what damage the UK has done to its relations with the US, one of its main targets for an early bilateral trade deal post-Brexit. Certainly it has deeply disappointed some of the national security types in Washington, Britain’s traditional allies.
Ironically, these were exactly the people previously clamouring for the UK to be given an easy ride on trade. The Arkansas Republican senator Tom Cotton, a China super-hawk, rather dramatically said this week that allowing Huawei to install a 5G network was akin to having the KGB build the UK a telephone system during the cold war. (A bold analogy for a Republican to make in Donald Trump’s Washington, you have to admit.)
Tom Cotton said that allowing Huawei to install a 5G network was akin to having the KGB build the UK a telephone system during the cold war © Erin Scott/Reuters
This was the same Tom Cotton who last year rounded up 45 Republican senators to sign a letter calling for the US to help the UK in the case of a no-deal Brexit. It was a response to the House Democratic leadership’s view (encouraged by the Irish-American caucus) that the UK should be refused a trade deal as long as London was threatening a hard border in Ireland. In the event, Boris Johnson capitulated on the Irish border and the issue became moot.
So will the UK disappointing the Congressional hawks mean it doesn’t get its trade deal? At the margin it’s negative but not definitive. Trade in Washington tends to have a momentum of its own. The US doesn’t have to be best foreign policy buddies with another country to sign a trade deal with it. The Trans-Pacific Partnership contained countries like Vietnam, not exactly in the first rank of US allies.
The obstacles to a UK-US deal are likely to be the workaday ones that have been evident for years: chemical-washed chicken, pharma pricing, regulatory alignment. Sonny Perdue, the US agriculture secretary, told reporters in Brussels this week the US wasn’t trying to play the UK off against the EU. But that was in the context of both of them admitting the now-infamous poultry, for more detail on which see Tall Tales below. As a consolation prize, the US would still be delighted to get the UK as a chemical-washed foothold in Europe.
More interesting is what this decision says about the UK’s priorities. Those in the know suggest it’s been pushed hard by Dominic Cummings, Johnson’s familiar, who cares a lot more about Britain’s tech capacity and other domestic policy than about trade deals. Cummings’ lack of interest in trade is well known. In a Twitter exchange with the author in 2017 (before he deleted his account), he expressed the somewhat unreconstructed view that trade economists should essentially stick to David Ricardo, whose most famous work celebrated its 200th birthday a few years ago.
One of the big battles to watch over the coming months will be inside the UK. What happens when the urge to sign preferential trade deals conflicts with other priorities? In round one, the PTA zealots comprehensively lost. Let’s see what happens next time.
Charted waters
German business confidence unexpectedly dropped in January, cooling hopes that the downturn in the export-led manufacturing sector was on track to stabilise.
Tall Tales of Trade
We’re taking an unusual approach this week by turning the microphone over to agriculture secretary Perdue (see above). Perdue was in Brussels this week meeting the trade and ag folks and making his usual pitch that US chemical-washed chicken was safe to eat and Europeans should stop blocking imports of it. Perdue said it was a bit of a myth that American farmers used chlorine to clean their poultry and actually they used peracetic acid, which “is vinegar, essentially”.
Not being chemists, even with the help of Wikipedia, we aren’t going to get into that latter claim, but does he have a point about the chlorine myth? The US Chicken Council says only about 10 per cent of processing plants use chlorine, and it’s mainly for cleaning equipment. So it’s not totally wrong, because chlorine is still authorised for use and employed in some places. But it’s most of the way there. We’ll remember always to call it “chemical-washed chicken” from now on. Yes, yes, water’s a chemical too. You know what we mean.
Perdue asserted it was a bit of a myth that American farmers used chlorine to clean their poultry and actually they used peracetic acid © Melanie Stetson Freeman/ Christian Science Monitor/ Getty
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Source: Economy - ft.com
