Trade – John Vincent

Flying, Democracy and Safety 8.

Halfway through 2020. What a different kind of year than the one we’d expected. With 20-20 hindsight I’m sure we’d have approached it differently too. In that phrase, 20-20 is a reference to good vison but it could equally have been a joke on the year 2020. Now it’s July and Germany’s EU Council Presidency starts. Their theme is: “Together for Europe’s recovery” #EU2020DE[1].

It’s strange that during the years of Brexit debates those who supported it said that leaving the European Union (EU) would mean a break from competition rules to give Britain the opportunity to boost its own industries. What has happened recently has been the complete opposite. In the face of COVID-19, European Governments have been providing support to their aviation sector, but the UK has not provided similar support.

Now, UK Prime Minister Johnson repeats that the UK is ready to walk away without a deal with the EU if no agreement can be reached in what remains of the time available. At the same time, he’s “optimistic” that there’s a “good agreement” to be reached[2].

If the UK exits the mutually beneficial Withdrawal Agreement without a sound long-term deal, the effects will be felt by everyone[3]. With global tensions between many Countries and China continuing to mount, this is foolish.

Here we go again. The UK’s Conservative Government is getting more Brexity as the people of Britain are getting less Brexity. A recent European Social Survey has found support for Brexit has fallen to 35% of voters while a majority would prefer the UK to be in the EU[4].

The aviation sector hasn’t had a good week. Airbus plans to cut 15,000 jobs amid COVID-19 fallout. However, British politicians would rather talk about fishing than aviation. Yet, fishing contributes £1.4 billion to UK economy while aviation contributes £22 billion.

UK Foreign Office travel advice and the national quarantine continue to make it difficult for anyone to plan to travel. Portugal, a Country that the UK has always had excellent relationships with, has been left out in the cold.

The world’s biggest trading block is on the UK’s doorstep. The bare-bones of a trade deal could happen but making it more difficult to trade with the EU seems unwise to say the least. Again, it has been conformed that the British membership of the European Union Aviation Safety Agency (EASA) will come to an end on 31 December. Historians will look mystified at this period. Governments don’t normally work assiduously to diminish their place in the world.

[1] The programme for is now online on http://eu2020.de.

[2] LBC on Friday, 03 July 2020.

[3] https://www.ft.com/content/e4da78ae-a428-4466-9721-d3841cc0e005

[4] https://ldeg.org/en/article/2020/1366373/survey-finds-35-want-brexit-while-57-back-rejoin

Flying, Democracy and Safety 5.

jet cloud landing aircraft — Photo by Pixabay on Pexels.com

4-years ago on Magna Carta Day in the small Surrey town of Egham, I was campaigning to stay in the European Union (EU). On 11 June 2016, when referring to the UK referendum, I said: “I’d like to estimate that the overall experience indicated a better than 50/50 outcome is on the cards.” Meaning that remaining in the EU was a likely outcome of the UK referendum but only by a small margin of votes. As we know it went the other way by a small margin of votes.

In the whole of history, 4-years isn’t much, a blink of an eye, but in that time the UK’s political, social and economic landscape has changed by quite a lot. I’d argue that it has changed for the worse and that huge opportunities have been thrown away because of dogma, groupthink and a blindness to the reality. If we’ve learnt anything in those years, it’s that when a UK politician says something is certain it’s likely to be far from certain.

Despite all the rocky road and ups and downs of 4-years, no one was adequately prepared for a transformation that nature threw at us. The COVID-19 pandemic will go down in history as one of the biggest challenges the world has faced in modern times.

UK economic growth fell by over 20% in April, the largest fall since monthly records began. Aviation has been hit hard. It’s said that at least 70,000 jobs are on the line in the UK aviation industry[1]. There are pleas for the UK Government to act to protect jobs and support the long-term viability of the sector. Many other Countries have stepped in to support their industries.

Although a slight recovery of air traffic is underway[2], we are heading into the most painful time. As the UK Government’s Coronavirus Job Retention Scheme[3], or furlough scheme closes to new entrants, so industry layoffs are likely to increase. Businesses are reorganising to stay alive during an extended period of low demand for air travel. It’s going to be grim for at least the next year.

I’m optimistic for the long-term future of air travel. I always find it surprising that only about 5% of the world’s population have ever stepped foot on an aircraft, even now. I think, wanderlust is set in our core. Just as the low-cost operators made it possible for today’s young people to explore more than previous generations, so I don’t think they will wish to give that up. Aviation shrunk the globe and it will continue to do so.

But what of UK politics? The transition agreed as part of the UK’s withdrawal from the EU, ends on 31 December this year. The agenda for the second meeting of the EU-UK Joint Committee on the implementation of the Withdrawal Agreement (WA) has been published[4]. This key meeting takes place on Friday 12 June.

The UK is saying that it will not ask for an extension to the current transition period. This flies in the face of what business and industry wants. This seems to be illogical given the combination of the circumstances of COVID-19 and an abrupt termination of the WA.

I believe most of the arguments against extending the transition period are either tribal Party political or bogus or both. The reality is that more time is needed. The reality is that ratification of any new deal will need time. The reality is that brinkmanship doesn’t deliver good results. The OECD[5] is saying of the UK: “The failure to conclude a trade deal with the European Union by the end of 2020 or put in place alternative arrangements would have a strongly negative effect on trade and jobs.”

That is not a state of affairs to be welcomed.

[1] https://www.theguardian.com/business/2020/jun/10/airline-job-losses-could-be-on-scale-of-1980s-mining-industry-report-warns

[2] https://twitter.com/eurocontrolDG/status/1271135184562380800?s=20

[3] https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

[4] https://ec.europa.eu/info/sites/info/files/brexit_files/info_site/provisional-agenda-for-the-second-meeting-of-the-joint-committee-12-06-2020.pdf

[5] https://www.oecd.org/unitedkingdom/

Flying, Democracy and Safety 4.

It’s possible that a gradual recovery in air traffic is slowly starting to take shape across the globe[1]. Individual Countries, businesses and industries are in dire situation and long-term plans are being dramatically changed. However, if the whole air transport sector is considered, there’s reason to think that a recovery from the shock of COVID-19 is in its infancy[2].

This week, the International Civil Aviation Organization (ICAO) Council adopted a report and recommendations designed to restart international air transport and aligning its recovery[3]. It’s good to see international efforts to work together are baring some fruit.

This week, when reading comments on social media its almost as if a section of the population has disconnected from the facts. The facts are that Brexit has been delivered. It happened on 31 January 2020. Ever since that date people, governments and businesses have been consumed with the difficulties of responding to COVID-19. Nevertheless, as of the end of this year the UK is a “Third Country” in respect of the European Union (EU).

To everyone’s benefit, a period of transition was established to enable a new relationship to be defined between the UK and EU. Now, the original period defined for the transition is inadequate given the unforeseen change in circumstance that has occurred. In a purely objective, rational, and reasonable world there’s not much to argue against the need to extend the transition period to do a good job of negotiation between former partners. Sadly, what’s rational and reasonable and the political climate of the times are directly opposed to each other.

UK Government Ministers pretend that there’s ample time available to reach a new UK-EU agreement. However, listening to Conservative MPs in the House of Commons its clear they are still fighting the battles of 1993[4]. Atypical Eurosceptic speeches are followed by a degree of paranoia that’s difficult to comprehend given that the UK has left the EU. The UK Government says it will not extend the transition period beyond the end of 2020 and this is enshrined in UK law.

So, what happens in such situations? This week, there’s been further disappointments as both UK and EU negotiators indicate little progress has been achieved.

It’s clear the EU won’t compromise on the principle that a Country will not enjoy the benefits of belonging to the EU once it’s no longer a member.

It’s clear the UK continues to cite independence and sovereignty as if these are inviolate. As if the UK had never been an EU Member State for 40-years.

What happens in such situations? If divorces are anything to go by then a protracted period of bitterness and recrimination with little or no compromise on either side. Years of unproductive waste that only water under the bridge can cure.

Yet, all we hear is Panglossian optimism about everything coming together in October.

A No Deal outcome may seem counterintuitive to me, but it’s not for those who have desired such an outcome for the UK-EU talks from the start. There’s a certain political thinking that disruption per-se is good. That if the UK is to leap forward to the “industries of future” it’s exactly what is needed, whatever the overall costs. This is a brutal philosophy, but some people genuinely believe that the UK can deregulate and become super-competitive overnight.

I suspect, to the benefit of the UK, leverage might have been possible if COVID-19 had not occurred. Now, the problem is that the UK has performed badly in response to the virus. At the same time, the EU’s focus has moved to its economic recovery during the next budgetary period. One looks to its shoes the other to the skies.

Negotiating a new partnership between the UK and EU was never going to be easy. Where we are at this moment, Panglossian optimism seems entirely misplaced.

[1] https://twitter.com/AireonLLC/status/1265271791074906118?s=20

[2] https://twitter.com/OAG_Aviation/status/1268123362041217026?s=20

[3] https://www.icao.int/Newsroom/Pages/ICAO-Council-adopts-new-COVID.aspx

[4] https://publications.parliament.uk/pa/cm5801/cmagenda/ob200604.htm#_idTextAnchor005

Aviation, Brexit and COVID19 (ABC) 10

blur cartography close up concept — Photo by slon_dot_pics on Pexels.com

Now, the topic for writers is what will the new normal look like for civil aviation, and everything else for that matter. That’s the new normal post-COVID-19. Inevitably there’s a great deal of expert speculation wrapped-up in such writings. Without a tried and tested way out of the different national lockdowns there’s a fair degree of guess work going on. That said, public support for the lockdowns remains high, but beneath this, people are having quite different lockdown experiences.

The first recognition of Europe Day was by the Council of Europe in 1964. On Tuesday, the Council of Europe[1] turned 71-years-old. Its 47 Member States are dedicated to the protection of Human Rights, Democracy, and the Rule of Law. Its work is more relevant now than it has ever been. Especially, when on Friday, we recognise the sacrifices that were made during the World Wars. Many people will be marking the 75th anniversary of VE Day[2] in their homes as the coronavirus outbreak prohibits public gatherings. History is clear, supporting a strong relationship between the UK and Continental Europe is essential for all our futures.

Also, this week trade talks between the UK and US have kicked-off. This maybe a big mistake having not completed negotiations with the European Union (EU) and during the COVID-19 crisis. Defeating the pandemic should be the UK Government’s sole focus for months to come. At the moment, there’s a lack of seriousness coming from Westminster.

Initially, the UK Government downplayed the risks of COVID-19 but now the world has succumbed to the reality of the pandemic. Trying to fix international relationships covering most of the UK’s trade and travel at a time of great turmoil is unwise. The unprecedented economic and social challenges posed by COVID-19 means we could lock ourselves into arrangement that subsequently turn out to be detrimental but fixed.

In the UK, the Pilots’ Union is saying that civil aviation is in a “death spiral”[3]. This language may seem emotive but there’s good reason for it given the downsizing that aircraft operators are planning. Job losses are certain. A smaller industry will result.

Last year, a part of the Article 50 EU withdrawal process was the possibility of a No-Deal Brexit which in the end both parties avoided. That was a temporary respite. This year, there’s another deadline in prospect; the end 31 December 2020. Last time the brinkmanship practiced produced an agreement but there was no global downturn in progress. This time is a billion times different. Brinkmanship is not the right formula in 2020. It’s plain foolish and reckless.

[1] https://www.coe.int/en/web/portal

[2] Victory in Europe Day on 8 May.

[3] https://www.independent.co.uk/travel/news-and-advice/coronavirus-uk-flights-airlines-aviation-pilots-union-a9498766.html

Brexit, Aviation and the Withdrawal 7

imgid153119926 One of the popular illusions that Brexit supporters carried off during the campaigning of the last few years was to persuade people that the European Union (EU) was atypically bureaucratic. A false comparison often suggested that the UK should be more like the US and therefore less bureaucratic. This nonsense did seem to get into the public consciousness. Tabloid newspapers peddled the mirage of complete free trade. Even though it’s, as I say, complete and utter nonsense.

Just a few second of reading the US Federal Register[1], as I often did in my past roles, quickly shows the complexity of the legal and regulatory processes and structures in the US. Docket No. USTR–2019–0003 a “Review of Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute” doesn’t make pleasant reading for the EU or the UK[2]. In fact, there’s nothing to choose between how hard these measures hit EU Member States or the UK. Brexit doesn’t exist in this dispute.

The outcome of the review is that there will be an increase in the additional duty rate imposed on aircraft and parts imported from the EU and UK, effective from Wednesday, 18 March 2020. Rightly, the UK’s International Trade Secretary has expressed concern and disappointment[3]. It’s interesting to speculate what this will do to future trade negotiations. This isn’t the zero-tariff world that Brexit supporters promised. In the real world, President Trump’s tariffs are popular amongst his supporter base and it’s an election year in the US.

European manufactures are also concerned and disappointed[4]. The sad aspect of this escalation is retaliation and that it’s likely that the EU will impose tariffs on new large US aircraft later in the year.

My view is that, imposing tariffs on aircraft parts is in no one’s interest and harmful to not just the commercial health of the aviation industry but flight safety and security too.

By the way, on a lighter note US fedearal administrative language is a gem: For purposes of the subheading listed below, the informal product description defines and limits the scope of the proposed action and is intended to cover only a subsection of the subheading.

[1]https://ustr.gov/sites/default/files/enforcement/301Investigations/Review_of_Action_Enforcement_of_U.S._WTO_Rights_in_Large_Civil_Aircraft_Dispute.pdf

[2] https://www.latimes.com/business/story/2020-02-14/trump-tariffs-europe-aircraft

[3] https://www.gov.uk/government/news/update-on-airbus-dispute?utm_source=1e391616-b697-49ed-bb9a-bc178465499b&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

[4] https://www.airbus.com/newsroom/press-releases/en/2020/02/airbus-statement-on-ustr-decision–15-feb-2020.html