What’s Next for Britain?

In the December 12, 2019 election, the Conservatives ran on the message “Get Brexit Done”. Now just two months later, Brexit is indeed getting done. After three and a half years of dithering and obstruction under the weak leadership of Theresa May and the shenanigans of parliament under Speaker Bercow, Britain has finally left the EU, officially and will leave it completely December 31.

Now what? Having achieved his main electoral promise in a little over a month, Boris Johnson has to get on with the next five years that will define his premiership. There’s a lot to be done. Important decisions about Huawei and HS2, new trade deals have to be negotiated with the USA, the EU, Japan, and the commonwealth countries of Canada, Australia and New Zealand. 

The first decision has been made already about Huawei. Boris Johnson has just given the green light to Huawei building a large part of the 5g infrastructure although with restrictions. Johnson feels that Huawei needs to be allowed in because they are more advanced in 5g development than others and he also wants to develop trade with China as part of his post-Brexit strategy. He may also have been trying to avoid looking like he caved in to pressure from the USA.

Johnson has restricted Huawei to no more than 35% of the system, limited them to the periphery and banned them from critical secure infrastructure like military bases. We’re being told that the government has no choice because banning Huawei would cause years of delay and cost billions of dollars. If that’s the case, then how can 65% of the system be built by suppliers other than Huawei? How will military bases and nuclear installations function without Huawei technology? How will our allies in the United State and Australia get by without Huawei? It appears likely that the U.K. will be the only country in the Five Eyes security sharing alliance that allows Huawei on its 5g network. I doubt this can be sustained. Before long, the U.K. will have to either abandon Huawei or have a much more distant relationship with her allies.

There is no way of ensuring that Huawei won’t build into the technology a way to give access to the Chinese government and threaten national security. They most likely have already built the technology to spy on their own people and won’t shy from using it against their western adversaries. Antennae may be on the periphery, but they transmit everything. Johnson’s advisors claim that they can manage this. Many people disagree. If they are wrong, in a few years the entire system may have to be replaced after billions of pounds have been expended. Rather than advancing Britain’s 5g technology, this would set Britain back by years. Johnson is promising that he will work with other suppliers to advance alternative technologies. If he doesn’t want this to turn into a national security and economic nightmare , he should plan on removing Huawei sooner rather than later. 

Its increasingly clear that the decision has not gone over well with the United States. President Trump and his allies, along with his opponents like Nancy Pelosi have made their displeasure with the British decision well known. Pelosi told reporters recently in Brussels “You cannot sell the privacy of the people of your country down the river,”. I don’t think that the United States will block a trade deal over this, but there likely will be limits in the telecommunications sector and technology exchanges.

Another big decision is HS2. The cost is now estimated to exceed £100 billion and may grow well beyond that as construction hasn’t even begun. Johnson sees it as an important part of his northern strategy, but many in the north don’t even want it. A recent Yougov surveyreported in The Guardian found only 35% or northerners support HS2 while 41% are opposed. There’s no doubt new rail capacity was needed in the north, but HS2 is the most expensive way possible to satisfy that need. Much money has been spent already and completing the first phase may now be the most expeditious way to add capacity to the rail system. 

Boris Johnson has ordered commencement on the first phase and claims to be looking for cost reductions in the second phase. Major cost reductions are needed. If the final cost is anywhere near the £106 billion estimate, it will be a white elephant that will set back the government budget for years. The cabinet has to look into the management of the project. As the Chinese have suggested, this project can be completed far more cheaply and more quickly than its being done. Past governments have allowed mismanagement to price big infrastructure projects out of reach. That needs to end if Britain is to get on with needed projects in rail, flood control and power.

The final area of focus is new trade deals with the EU, the United States and beyond. David Frost, the country’s chief negotiator with the EU has set a goal of achieving a Canada style trade deal. Michel Bernier has previously offered such a deal but the EU is now backtracking claiming that any deal must include “level playing field” provisions tying Britain permanently to EU regulations. This has to be resisted. The UK must be prepared to walk away from negotiations if the EU insists on attaching level playing field provisions to a trade agreement. The whole point of Brexit is to give Britain the flexibility to set her own rules to her own advantage and stop following EU regulations designed to benefit its member states. 

The biggest prize from Brexit will be increased trade with the United States under better terms of a free trade deal. Much has been made of chlorinated chicken, but that’s a side show. American health standards are as strong as Britain’s. There’s no danger from chlorinated chicken. Chlorine is already in British drinking water and used to wash salads. The British have argued that it’s really about humane animal husbandry standards rather than public health. That shouldn’t be enough to preclude importation of American chicken, but perhaps it should be clearly labeled if chlorine washing is part of the processing. Consumers can decide for themselves if cheap chicken is more important than the most humane standards of growing them.

More important will be opening trade in financial services, technology and automobiles. With free trade between Britain and the United States, the auto industry can combine its close ties to European manufacturers with its American trade to become a major manufacturing and trade hub producing cars for Europe, North America and the world. 

In financial services, Britain offers the best in the world. With improved access to the United States, and her existing advantage in European and Asian markets, the City stands to become ever more prosperous. There will be more competition from New York based companies as well, but that should make the industry stronger on both sides of the Atlantic. The most important thing the government can due to ensure success of the British industry is to maintain free market rules with as little regulation as possible. 

Due to the Huawei decision trade in technology could be a bit trickier. The United States will need guarantees that her intellectual property is safe in a Britain that is wide open to Chinese spying. This is an area where American trade negotiators should assert maximum pressure to bring the UK back on board with the western allies. Britain needs to be prepared to guarantee a timetable for a complete removal of Huawei from her communications systems. 

In other areas, Britain is in discussions to join the Transpacific Partnership of Pacific rim countries and has opened trade talks with Australia. The Australian talks should be expanded to create a CANZUK trade block including Canada, Australia, New Zealand and the UK. These are natural allies, all members of the commonwealth, all parliamentary democracies and all sharing the Queen as their sovereign. The ultimate goal should be completely open trade with national treatment among the four nations, possible with freedom of movement. 

Despite his large majority, the immediate future will be tricky for Boris Johnson. He has difficult decisions to make and how he handles this could determine the future both of his premiership and the United Kingdom. 

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