Britain’s trade secretary, Liam Fox, will be a star of this week’s meeting in Buenos Aires of the World Trade Organisation. This won’t be for anything he has to say so much as for being the representative of the UK as it nears the European Union’s exit door.
Most economists expect that a hard Brexit – which Fox prefers to a deal that keeps the UK entwined with EU institutions – would damage global trade. A soft Brexit is expected to be a modest blow. This might not matter had global trade not been going through a rough patch over the past couple of years. In 2014 and 2015 it slumped as foreign investment slowed, developed nations rowed back on outsourcing, sanctions on Russia bit and Brazil’s corruption scandals hit some of the country’s biggest businesses.
This year is proving to be much better with the International Monetary Fund forecasting growth of 3.7% and the investment bank ING saying it will be more like 4.2%, up from its measure of below 2% last year.
Next year, though, is likely to see a slowing again as China seeks to source more services internally, offsetting a return to more buoyant trade figures from Russia, Brazil and the US.
Fox, though, says he is in the Argentinian capital to talk about rules governing the export of digital services and information without costly customs duties and to make domestic regulations in other countries more transparent for the UK’s small and medium-sized businesses.
On these points he is considered by anti-poverty campaigners and developing world nations to be just another mouthpiece for big corporations.
Google, Amazon and Facebook are desperate to open the doors of nervous developing world countries and gain access to the information held on their citizens. Fox and his colleagues in the G7, believing they have lost the race for domination in the trade of goods, want to make sure the digital services revolution remains firmly in their hands.
Global Justice Now, the charity previously known as the World Development Movement, says digital services are “the new oil” of the global economy and that developed countries “want rules to ensure they can use and abuse this data as they wish – moving it around the world without restriction or responsibility”. It adds: “This stops countries being able to adequately tax and regulate these companies so that all can benefit from new technology.”
The charity wanted to be in Buenos Aires to protest at moves to write into the WTO’s rules the digital dominance of western businesses, but Argentina’s president, Mauricio Macri, banned it and 62 other activist organisations from entering the country.
The Norwegian activist organisation Attac Norway has already seen its representative deported in a show of strength by Argentinian authorities.
All the non-governmental organisations were accredited by the WTO before Macri stepped in to crush any potential dissent. As a way of stopping another Seattle, where anti-globalisation activists rioted for two days in 1999, the president’s actions have cut off protest at the source.
But as an advert for the benefits of global trade and globalisation, it reveals a nervousness that appears to make protest more than justified.
The debate about e-commerce, in the view of many charities hoping to attend the event, was a distraction from discussing farm subsidies, fishing rights and the development agenda that is supposed to promote the efforts of poorer countries to grow in a more sustainable way than their rich counterparts.
The US, among others, wants to limit India’s protections for its farmers and consumers. Rich countries want to lay down blanket rules on subsidies for fishing that ignore local concerns. It’s a focus on artisan fishing in poor countries that ignores the industrial-scale scouring of the ocean floors.
Roberto Azevêdo, WTO director general, is concerned about tackling government support for “unfair and unsustainable fishing practices”. But his support for helping smaller businesses “to participate more fully in international trade” is seen as a distraction when most trade is conducted and controlled by the biggest companies.
Bitcoin’s hardly our first bubble. But where are the regulators?
Fear of missing out – or Fomo, as chroniclers of investment bubbles call it – is the lust for unearned and easy money that drives even conservative types to speculate wildly, although they know the music could stop at any moment. Bitcoin is at the full-blown Fomo stage. The digital currency is the talk of offices, pubs and newspaper front pages – and that’s just the UK. The mania is said to be most frenzied in Asia, especially China.
Few people, one suspects, could explain how bitcoin’s blockchain technology works or describe what a bitcoin “miner” does. But everyone knows punters are sitting on stunning profits. One unit of the currency cost $750 a year ago, fetched $10,000 10 days ago and hit $16,000 at the end of last week. A 60% return in 10 days? It’s a speculator’s dream.
Should the rest of us – those shaking our heads and muttering about how it can’t last – care? Before now, no. When the bubble burst, the losers would have only had themselves to blame.
Yet we’ve now reached a point where regulators cannot simply sit on their hands. The theoretical value of bitcoins in circulation is £200bn and the mainstream financial world is moving in. Two Chicago exchanges want to offer trading in bitcoin futures, or derivatives of the digital currency. That changes the game, and potentially makes it seriously messy.
Derivatives allow the opportunity to bet with leverage and borrowed money, and thus create the possibility of losses rebounding through the system. Should trading in bitcoin futures even be allowed? Perhaps: but regulators should insist that any firm speculating with other people’s money has the approval of end investors and can show it can absorb heavy losses.
Regulators should also tell us what they are doing to protect the integrity of the financial system. If bitcoin is only directly useful for fraudsters and money launderers, as bankers keep telling us, who is looking out for society’s interests? We don’t mind speculators getting burned – but we expect zero tolerance of tax evasion. It’s time officials showed they’re on the job. Their current silence is alarming.
Could walkouts at Ryanair spell the end for O’Leary?
Could the unthinkable be happening at Ryanair? In a decade marked by grassroots uprisings against established order, from the Arab spring through to Brexit to Trump, the Irish airline’s leader has, so far, blithely faced down all dissent from the ranks.
Michael O’Leary, who refuses to recognise trade unions, said complaints aired by pilots and crew were concocted by unnamed “competitor” airlines, and has been dismissive of any threatened staff action.
However, a shortage of pilots left the chief executive unusually contrite this year over outspoken comments about his staff – and some believe this is the time for a showdown.
Ryanair pilots are due to walk out in Portugal and Italy this week, and colleagues elsewhere may join, despite the risk of sanctions.
Ryanair pre-emptively cancelled thousands of flights this winter because of a lack of pilots on the roster – a decision which, according to some analysts, O’Leary preferred to the risk of leaving the airline stretched and exposed to industrial action. Don’t expect to see the statues of O’Leary toppled in Ryanair’s Dublin HQ soon.