Fearmongering by president Obama and the UK “Remainers” regarding US-UK trade negotiations following Brexit is all the more humorous by a trio of interesting headlines.
Back of the Queue
On April 22, president Obama warned Brexit Would Put UK ‘Back of the Queue’ for Trade Talks.
Obama argued that he had a right to respond to the claims of Brexit campaigners that Britain would easily be able to negotiate a fresh trade deal with the US. “They are voicing an opinion about what the United States is going to do, I figured you might want to hear from the president of the United States what I think the United States is going to do.
“And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done”.
He added: “The UK is going to be in the back of the queue.”
Obama Stands by Back of Queue Brexit Warning
On June 25, The Telegraph reported Obama Stands by Back of Queue Brexit Warning.
On October 15, 2015, The Telegraph reported Major blow for Brexit campaign as US rules out UK-only trade deal.
US-UK Trade Bill in Congress One Week After Brexit
On July 1, HeatStreet reported US-UK Trade Bill In Congress Just One Week After Brexit Vote.
Despite claims that the US would banish Britain to the “back of the queue” if it dared to leave the European Union, Congress is already considering measures to boost trade with the UK.
A bill to lock down current trading arrangements, and fire the starting gun on a bilateral deal, was introduced to the US Senate yesterday.
The United Kingdom Trade Continuity Act mandates the US to keep trading on exactly the same terms after Britain leaves the EU.
Negotiations Underway
What Happened?
Obama lied.
He wants to preserve his idiotic Trans-Pacific Partnership (TPP) trade agreement that Hillary Clinton, Donald Trump, and Bernie Sanders are all against.
Hopefully we can now take that ridiculous proposal and put a torch to it. TPP contains 5,544 pages negotiated secretly over five years but now available in the preceding link.
Curiously, Clinton, Trump, and Sanders are against TPP because they do not believe in free trade. I am against it because the proposal has little to do with free trade.
Instead, TPP will create an “unaccountable supranational court for multinationals to sue states”, precisely what one might expect after five years of secret backroom deals led by Obama.
Lagarde Points Finger at Trump
On July 7, I noted Lagarde Flip-Flops Again on Brexit, Warns of “Disastrous” Trump-Style Protectionism.
Lagarde is correct on one thing. And it’s a very big thing: “Waves of protectionism in the past had preceded many wars. Protectionism hurts growth, hurts inclusion and hurts people“.
The solution is so simple it’s beyond Lagarde’s comprehension.
The EU, US, and Asia ought to work out a genuine free trade agreement not a mind-numbing set of rules and regulations that encompass the EU, nor secret agreements like Obama’s proposed Trans Pacific Partnership (TPP) that has little to do with free trade.
Lagarde finally issued a statement on trade that made sense. But it was buried in a series of flip-flops and conflicting ideas that makes it clear she really does not understand what free trade means.
Nonetheless, her warning about trade is correct. A global trade war could indeed have disastrous consequences. And it’s not just Trump who could start one.
Clinton, Trump and Sanders have all made similar statements on trade. For details, please see Today’s Quiz: Donald Trump, Bernie Sanders, Hillary Clinton – Who Said It?
Free Trade on a Napkin
TPP, Tariffs, WTO, Free Trade Discussion
- April 7, 2015: Obama’s Trans-Pacific Partnership Fiasco vs. Mish’s Proposed Free Trade Alternative; How Will TPP Function in Practice?
- April 11, 2015: Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP
- May 30, 2016: Stacked Deck: US Bullies WTO, TPP Revisited
Free trade is simple. Any trade agreement that takes more than 100 pages, let alone 5,000 pages, is about restricting trade, not fostering trade.
Mike “Mish” Shedlock
“When goods don’t cross borders, soldiers will.” — Frederic Bastiat.
Seems Lagarde is dimly aware of history.
Also: “If soldiers are not to cross international boundaries, goods must do so. Unless the shackles can be dropped from trade, bombs will be dropped from the sky.” — Otto T. Mallery, “Economic Union and Enduring Peace”
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Obama is unfortunately one of the worst presidents the US has ever had.
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He literally has accomplished nothing while running up the debt 23 Trillion
( add debt and fed debt ) and nothing.
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His mindset seems to be, upset no one and throw money at any issue no
matter the cost. From Solyndra to Fisker cars, to the FED it has been
a foolhardy disaster for the American people.
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Well soldiers already crossed the border. What soldiers? Tens of thousands from the last empire Religion of antiquity, (Islam) And you are correct, they will have a negative impact on trade.
Only for cheaper beer and chicks
I thought it more like when hundreds of thousands of low educated people from the last empire religion of antiquity (Islam) cross borders, well, soldiers already did, soon after goods stop and hell follows.
Yeah living through WW1 really scarred Lagarde.
Mish:
What is your opinion regarding exports that are subsidized by the exporting government, eg recently Chinese steel that we slapped tariffs on. I understand Milton Friedman believes we should accept the gift of foreign government subsidized exports to the US as it will hurt them in the long and make our industries more competitive in the long run. In the long run we are all dead, so I wonder if his theory does or doesn’t work out so well in practice.
Harold
AS much as I admire Milton Friedman, I agree with only half his statement. US industries suffer in the long run too. While subsidized goods enter the US, US industries sales decline, and investment in equipment and talent becomes less. There is less capital available for growth. There is less reward for research and development investments. Once the subsidized goods ebb, US industries are further behind than where they could have been.
In order for a foreign government to subsidize one sector, it must necessarily pull the money from others, rendering them less competitive. Conversely, by subsidizing steel, the Chinese government is indirectly subsidizing each and every industry that uses steel as an input, in the US and elsewhere. While simultaneously taking that subsidy back from their home market companies, in order to pay for the steel subsidies.
So, the net result is the Chinese government subsidizing a low value add, albeit politically well connected, industry at home, while disproportionally subsidizing higher valued add industries abroad. Any way you look at it, it’s a better deal for foreigners than for the domestic Chinese. Which shouldn’t come as a surprise, because, as Friedman has pointed out, the Chinese government is taxing it’s own people, in order to pay for free gifts to foreigners.
If we would only be so lucky…… Of course, the Chinese collectively aren’t nearly stupid enough to not understand that. So the whole “subsidize” gift we’re supposed to be getting from China is, in reality, nothing more than the figment of some congressman-on-the-take’s imagination, planted there by the lobbyists for whatever LBO shop happens to have bought the steel maker that paid for his campaign.
It’s the easiest money in the world if you’re connected: Find a US company that is struggling, buy it for a song, then call your captive Congress drones and tell them you’ll fund their next campaign, if they just pass some law that makes you whole 100 times over.
Excellent commentary
It is an excellent commentary, yet the contrary comment above appears valid as well. What happens when the “subsidizer” China in the above example has the resources to completely dominate an area. (Take rare earth metals for an example) so much so that the foreign capacity for that production is withered, and then eventually that nation due to its own internal debt crashes. Multiply this and stress and wars are often the result with.
I guess I am perceiving that we are a global economy, and a China collapse, or an EU collapse is not healthy for us as well, in the long run. “Protectionism” steals from everyone.
But If government is not needed in one of man’s most important activities maybe people will start questioning its presence in other endeavors.
Can’t have that. I mean, what would all those really important people do if they weren’t needed?
Obama’s birther issue never was really resolved. My put on it is that Obama was never born at all, but is really a robot created by Goldman Sachs.
Last I heard of French president Hollande was his scathing attack on Trump … that is, uh, till today … and the dude has George Constanza hair!
…
People are reacting with shock, anger and humor since a government spokesperson confirmed the existence of an official presidential hairdresser who makes 9,895 euros ($10,994) per month and travels everywhere with Hollande.
On an annual basis, the taxpayer-funded salary works out to nearly $132,000 a year. That’s roughly five times the salary of a typical French hairdresser.
http://money.cnn.com/2016/07/14/news/france-francois-hollande-hairdresser/
Of course a disgusting little narcissistic worm like Hollande sees nothing wrong with having a personal hairdresser at a taxpayer-funded salary of $150,000 a year.
After all, some Socialists are more equal than others.
Hollande’s cooks and personal staff no doubt make much more than the underpaid hairdresser, who should file a discrimination suit with the EU. A USA White House valet, cook, etc make just as much, if not more when they have seniority. Secretaries at USA.gov in DC, also over 100k. But for some reason we consider it awful if a hairdresser partakes of the same bounty. Sometime watch the Eddie Murphy movie, Distinguished Gentleman, a good critique on Congressional staff salaries. Gov is a good feeding trough.
Free trade will never work. Absolute free trade requires governments to relinquish control which they never do.
Free trade is simple. Mish
So is protectionism. Are either fair?
That depends since:
The implicit social contract in the US, for example, has been to allow the government-privileged banks and the most so-called creditworthy, the rich. to legally steal the purchasing power of the workers and general population in exchange for better, less expensive goods and services AND GOOD JOBS.
Well, now the good jobs have been and are being automated and outsourced away so the implicit social contract has been/is being broken.
So what do you expect the workers and those who hope to work for a decent income to do? Be for free trade to cut their own throats?
We can justly share the profits of free trade and automation or we can suffer the consequences of an increasingly divided and dangerous society.
+1. Ideology trumps politics in theory. Politics trumps ideology in practice.
If your ideology doesn’t include political consequences, you’re just building mind castles.
Ideologies are beliefs and should be relegated to those who hold them – like religious beliefs are.
It took thousands of years and cost many millions of lives, but mankind, after trying all other possibilities, concluded that religious beliefs should be personal and not political. Not understanding that political beliefs should also be personal will most likely be our downfall.
Man can’t become human until he stops being an animal. I don’t think that is possible.
Clinton is not against TPP, she’s just lying… sher standard mode of operation.
^this^
If elected, HRC would pass/sign TPP w/in the first 6 mo. of her term.
Hillary is THE globalist pro-TPP candidate… nobody believes her campaign rhetoric, herself included.
It’s well past the time to call-out these candidates on their obviously false campaign promises/positions… let’s start by not pretending that HRC is anti-TPP, because she isn’t.
Trump will not start a trade war. He can and will negotiate better deals because we hold the upper hand in every trading relationship. Americans represent almost 27% of world’s consumer market, almost 4 times greater than any other country.
Presidents never negotiate trade deals, attorneys do. The President just signs off.
Charles Payne interview with Nigel Farage – some warnings:
Hi Mish:
I have been following many of your comments on the possibility of a free trade deal between the Great Britain and the US. While many of them are quite justifiable, there are a few items that should be mentioned:
• Great Britain is a member of the EU at this time, and until Article 50 is invoked. Therefore, while negotiations could occur before Article 50, such a free trade deal could not be signed until Article 50 is invoked.
• Article 50 will not be invoked before Great Britain is ready to proceed, likely not before early 2017.
• Great Britain has not had any trade negotiators for some time, since the EU did negotiations. These people will need to be hired, trained/prepared, etc., before any negotiations take place.
• Switzerland is the one country that has negotiated trade deals with the EU. However, these trade deals (~10 major; ~100 minor – according to my readings) are very specific, and have taken 25 years to negotiate.
While it is all very well and good to talk about such all-encompassing trade deals, how many years do you think will be needed?
Keith Buchanan
Faster than Expected
Assuming you have your facts correct
Deal with UK in a year after article 50 filed
UK can give thanks they ignored Obama and Brexited, or they’ve have more of this.
FYI – Terror Attack In Nice France During Bastille Day – Dozens Killed, Truck Rams Large Crowd…
http://rlv.zcache.com/im_with_stupid_hillary_obama_2016_shirt-re8c0200eae044a7ab8f9411070d26214_jg4de_512.jpg
Now for the correct link!
FYI – Terror Attack In Nice France During Bastille Day – Dozens Killed, Truck Rams Large Crowd…
https://theconservativetreehouse.com/2016/07/14/terror-attack-in-nice-france-during-bastille-day-dozens-killed-truck-rams-large-crowd/
An #ISIS Twitter account is linking #NIce’s Truck attack to the death of Omar Shishani
https://twitter.com/MohanadHageAli/status/753702862220357632/photo/1
Terrorist Attack in Nice, France – 60 reported dead
https://www.reddit.com/live/x99pqdwudg0l/
Update – AP: eyewitness says lorry driver crashed into Bastille Day crowd in #Nice and then emerged shooting many people dead
https://twitter.com/SkyNewsBreak
Attentat à Nice + incendie à la Tour Eiffel…. Génial ce 14 juillet.
https://twitter.com/Laxtitia/status/753715563134849024/photo/1
Terror attacks are in fact “surreal”….the “personage” really takes these things lightly until some mystical “line” is crossed.
That line is invariably a bubble on Wall Street that implodes the whole “globaloney myth.” I’m not saying the Dow will open down 2000 points tomorrow…but so far two of my bubble criterion have been met namely The Jamie Dimon Bottom call and now Brexit as Bullish.
These are clear signs to me that undue amounts of “biased leverage” have permeated the financial markets and a “buyer behold” mentality is beyond saving.
Anyone who cannot get a proper price on debt (negative interest rates) is assuming massive risks when going long equities as even a minor sell off in the debt markets can “yield” a catastrophic failure in the equity space.
The total lack of oversight in public spending as well as two massive Wars having been initiated against both Russia and China will put upward pressure on interest rates as well.
“Investors” have been lulled into a false sense of security with the crash in energy, metals, soft commodities, refined product, etc as somehow “bullish.”
I common sensical argument can be made that the exact opposite is in fact true.
And of course “speaking of a false sense of security” we now have Bastille Day plus the Black Lives Matter attacks…these are just the ongoing wars “ramping up.”
You missed one final clause:
Trade will use silver, gold, or other commodity for settlement.
The problem with calling it “free trade” when Mexico can keep devaluing the Peso is that it IS a subsidy and tariff to the extent the exchange rate moves.