Most Favoured Nation: Computer Says No
UK-NZ trade talks, the Home Office, the political economy of tariffs and why COVID is messing with reciprocal visa schemes
It’s August and most people are on holiday which means that, other than a newspaper campaign to stop the British government murdering an alpaca called Geronimo, things are fairly quiet. Too quiet. But behind the scenes the UK’s Department for International Trade’s deal making machine rumbles on, and an Agreement in Principle with New Zealand is still expected to be announced later this month.
Now these negotiations should be pretty easy. As with Australia, the UK just needs to say “yes” to everything the Kiwis ask for on agriculture and Bob’s your uncle. “Trade deals? Completed it mate.”
But … it’s never quite that easy. And in practice there are a couple of sticking points that still need sorting.
(ICYM MFN-10: One of New Zealand’s negotiating oddities is its demand for a Treaty of Waitangi exception, which leaves New Zealand with the right to discriminate in favour of the Maori, even if the positive discrimination breaches the terms of its FTAs.)
A big sticking point is that for some reason New Zealand doesn’t make any contractual services suppliers (CSS) commitments in its trade deals. Which is something the UK is generally quite keen on.
CSS commitments are pretty standard and lay out the terms under which a person working for a services firm in country a can go and deliver a contract in country b. For example, CSS provisions might be relevant to a British environmental consultancy hoping to send staff out to Nigeria to deliver a contract for a Nigerian oil company.
As I said, CSS commitments are something the UK likes (to a point), what with them [theoretically] being useful to services firms and all. In its trade deal with Japan, subject to terms and conditions, the UK committed to let Japanese contractual services suppliers come to Britain to fulfil a contract so long as the length of stay is “not more than six months in any 12-month period or for the duration of the contract, whichever is less.”
But yeah, New Zealand doesn’t go in for this kind of thing. Look at New Zealand’s mode 4 commitments in the CPTPP, for example: nothing on CSS, unlike Australia, Mexico, etc. I don’t know why New Zealand doesn’t like CSS but I assume it has something to do with LOCAL JOBS FOR LOCAL PEOPLE EMPLOYED BY LOCAL FIRMS, maybe. It’s usually something like that.
Anyway, how much the UK cares about not getting anything on CSS needs to be worked out. Or maybe New Zealand will fold and give the UK something. Maybe, and hear me out, the UK will give New Zealand something it wants in exchange for New Zealand giving the UK something it wants. Trade negotiations ftw.
On a slightly related note, there is now an issue with the UK and New Zealand’s reciprocal youth mobility schemes, which allows for Brits aged 18-30 to work in New Zealand for close to two years, and vice versa (subject to terms and conditions). The problem here is that the UK’s annual allocation of visas offered to young New Zealanders under the scheme (above a 1000 visa floor) is linked to the last recorded annual number of visas New Zealand offered to young Brits. And. Well. New Zealand’s borders have been closed for the past year or so because of Covid, so we can assume that the number of visas offered to young Brits was close to zero. Unideal.
Home Office Gonna Home Office
On that note, some of you might not have seen this classic of the ‘UK Home Office behaving like the UK Home Office’ genre. In short, many live entertainment companies (festivals, theatres, gig venues and the like) have a “sponsor licence” which allows them to sponsor visas for foreign artists looking to perform in the UK. The number of foreign artists these companies are allowed to sponsor varies, but lots of the sponsor licences operate on a rolling basis, with companies allowed to sponsor the same number of foreign artists they did the year before.
Enter COVID-19 and travel restrictions. (You can see where this is going …)
The problem now is that the companies using this rolling system sponsored exactly zero foreign acts last year because of *waves hands at the pandemic* so therefore are allowed to sponsor zero acts this year.
Now the obvious solution is for the Home Office to acknowledge that last year was an anomaly, and let companies sponsor the same number of foreign acts as they did pre-COVID.
But no. Instead wannabe sponsors need to either wait months to sort out the issue, or pay the Home Office £200 to fast track the process.
(You can read about exactly how silly it is over at Free Movement.)
I enjoy putting Most Favoured Nation together, but assembling all of the content usually takes up one of my evenings each week, when I could otherwise be watching Netflix, wasting time on Twitter, or something. So if you appreciate the MFN content, and would like to receive MFN in your inbox every week, please consider signing up to be a paid subscriber. You will be helping me out, and indirectly putting food on my child’s plate.
There are three options:
The free subscription: £0 – which gives you a newsletter (pretty much) every fortnight
The monthly subscription: £4 monthly - which gives you a newsletter (pretty much) every week and a bit more flexibility.
The annual subscription: £40 annually – which gives you a newsletter (pretty much) every week at a bit of a discount
The political economy of tariffs
A country’s approach to tariffs can tell you quite a lot about its political economy, and particular which domestic industry groups have the ear of government, or not. In the UK, for example, the government’s willingness to drop tariffs on pretty much all food products other than long-grained milled rice in its trade negotiations, tells you that it is not really paying any attention to the general British farming lobby, but is terrified of the narrowly targeted lobbying might of Big Rice.
Anyway, a new paper by Douglas Irwin and Anson Soderberg confirms that US tariff policy, left to its own devices, is generally determined by firm and worker lobbies, rather than what is best for the economy. Gah.
Consulting on how to consult
The EU-UK trade and co-operation agreement mandates the formation of a domestic trade advisory group (DAG) and says:
“each Party shall consult on issues covered by this Agreement and any supplementing agreement its newly created or existing domestic advisory group or groups comprising a representation of independent civil society organisations including non-governmental organisations, business and employers' organisations, as well as trade unions, active in economic, sustainable development, social, human rights, environmental and other matters.”
So, to that effect the UK government is now consulting stakeholders on how best they would like to be consulted under the consultation mechanism of the trade and co-operation agreement. If you would like to be consulted on the consultation requirements you can find the consultation here.
Let it never be said you were never consulted, about being consulted.
As ever, do let me know if you have any questions or comments. And do join me, Dmitry Grozoubinski and Anna Isaac over at Dmitry’s twitch feed on Monday at 19:30 UK time where we’ll be discussing the usual trade shenanigans.