UK: Stand Up to EU On Brexit | Global Trade Magazine
  January 4th, 2018 | Written by

UK: Stand Up to EU On Brexit

Also: The World Economy is Picking Up Steam

Sharelines

  • The Germans won’t press the Brits over Brexit.
  • Europe still owes Britain dearly for coming to their rescue during WWII.
  • UK to EU: “Europe owes its very existence to us, and we’re calling in that card.”

EU ministers are still spooked by Brexit and what it all will mean. Expect them to huff and puff and threaten to blow Britain’s economy down, especially as negotiations continue to stall over the terms they had originally mandated. For its part, Britain will go deep into its playbook to negotiate its own version of what a favorable outcome looks like. And they know how to play the game. Keep in mind that for hundreds of years—right up until the beginning of the last century—England ruled the world’s economy. Trump may have written the book The Art of the Deal, but for the British, it’s in their DNA. The UK must remember it holds more cards than it may think it does. Here’s why: Together with the U.S., they liberated Europe from the Nazis.

In the end, the Germans won’t press them over Brexit because they are still deeply embarrassed by their actions in WWII; and the rest of Europe—including France, Belgium, Italy and the Netherlands—still owe Britain dearly for coming to their rescue. The UK would do well to remind them of that fact. Here in essence is all they need to say: “Look, we tried the EU and it wasn’t for us. We’re fine if you want to keep it going and if so, then enter into a free trade agreement between the EU and the UK. But don’t try to penalize us in any way because you owe your very existence to us, and we’re calling in that card. End of story. What the UK needs is a strong, Churchill or Thatcher-like leader to stand up and say it.

Never mind concerns over the TPP, NAFTA, or Brexit. The world economy is picking up steam, and it’s only the beginning. We are heading into a 10-year—or longer—cycle of global growth the likes of which the world has never seen. Exports are going to accelerate as 2018 unfolds and will continue to grow well into the 20s, as in the 2020s. Sometime before next June, the U.S. economy will break into four-percent annual growth. As for the stock market, earnings will catch up to PE multiples, which will continue the rally well into the next few years. If you’re a manufacturer, now is the time to be expanding your global footprint. That means exploratory trips to attend more international trade shows and sign more international distributors. And if you’re a 3PL or carrier, you need to step up your efforts to win more market share. There are fortunes to be made and they will be, either by you or your competitors. Get cracking.

It’s no surprise to global traders that components for flat screens are made in Asian countries, shipped to the ports of Los Angeles and Long Beach and then trucked to Mexico for assembly duty free and then re-exported back to the U.S. duty free. It’s been said that the U.S. can’t compete with low cost Mexican labor. Au contraire. We have plenty of cheap, readily available skilled and unskilled labor available right now in the form of 2 million inmates that populate U.S. prisons. That’s a gigantic, untapped labor pool. The Department of Labor should be leading the cause to have private industries open up secured assembly plants adjacent to prisons and allow inmates the ability to learn a skill and earn some money on the side that they can either send to their dependents or keep in a trust account to build a nest egg for when they are released. As the saying goes, “Idle hands are the Devil’s workshop.” Why not rehabilitate prisoners by giving them work to occupy their days? Giving them a job to do and allowing them to produce products with their hands can only help ease their transition back into society upon their release. It would even make social and economic sense to allow tax credits for companies that build manufacturing or assembly facilities adjacent to prisons. Obama would have thought of 20 reasons why this couldn’t be done, chief among them pressure from worker unions who may view prison labor as competition or from bleeding heart libs who somehow would mistake this as exploiting the inmates. Preposterous. Let’s give them jobs and teach them skill sets they can take with them when they are released. And give them an opportunity to earn “good conduct and/or product” awards to make them even more marketable. As for pay? Don’t regulate it. Let the market determine wages, which will vary state to state. Whatever wages are paid will go a long way for them buying shoes, clothes or school supplies for their family back home and give U.S. industry a competitive advantage over foreign wages.

So, the dinner conversation went something like this …

SAYS HIM: I think it’s plain wrong that the Chinese can copy intellectual property or re-engineer a product and violate patents.

SAYS THE OTHER GUY: Yes, but they don’t see it that way. To the Chinese or the Japanese for that matter, once you put a product out on the market for everyone to see and use, then it becomes fair game to copy. That’s their business culture. It’s not our business culture but those are their playground rules.

SAYS HIM: But that’s not right. Don’t they have any moral compass?

SAYS THE OTHER GUY: Look, when we were at war with Japan and we came across some great new product that they created, do you think we would have any compunction about copying and manufacturing it ourselves?

SAYS HIM: Well, that’s different. Under your example, we were at war. Different rules apply.

SAYS THE OTHER GUY: Exactly. But make no mistake, we are at war right now with China and with many other countries throughout the world. Sure, no one is shooting at each other and we can visit each other’s country in a friendly way, but nonetheless, we are at economic war with them so they don’t see it as “copying.” They see it as fair game, just as we did when the bullets were flying.

So, I ask you … who’s right and who’s wrong, and why?


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