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Will Britain ever manage to leave “Hotel California”?

It is now just six months before Britain formally leaves the EU. This article details the economic and political issues, followed by a commentary on the tactics being deployed by all sides.

The Duran

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Authored by Alasdair Macleod via GoldMoney.com:


Last thing I remember, I was
Running for the door
I had to find the passage back to the place where I was before
“Relax” said the night man,
“We are programmed to receive.
You can check out any time you like,
But you can never leave![i]


The Eagles lyric from the 1970s is nearly as old as the United Kingdom’s membership of the EU, but it is an apt description for her predicament. There are so many twists and turns in the EU’s corridors, that it is proving difficult for Britain to “find the passage back to where it was before”. Britain has checked out but cannot seem to leave.

The EU has firmly rejected Mrs May’s Chequers customs proposals, which is not surprising to those paying attention. Their chief negotiator, Michel Barnier, had already made his position clear. Last week, Mrs May sought to take her case to his superiors, effectively asking them to overrule him. It was a tactical error that backfired badly.

Fortunately for her PR machine, the blunt rejection by the EU, particularly the comments of President Macron, deflected the immediate blame of Mrs May’s failure to the EU leaders’ intransigence. Consequently, early signs of electoral opinion have firmed in favour of a no-deal Brexit. Merci, President Macron, for clarifying that point for the British electorate.

It is now just six months before Britain formally leaves the EU. This article details the economic and political issues, followed by a commentary on the tactics being deployed by all sides.

The economic case for Brexit

The economic case for Brexit centres on the law of comparative advantage. This law explains that rather than waste your time making or doing something someone else does better, you should buy it from him instead than wasting time trying to compete. It also explains that even though you might be very skilled at something but can add greater value to society by doing something else, you and the community as a whole are better off if you do that something else.

For example, Winston Churchill built a garden wall at his country home. He turned out to be an excellent brick layer, as visitors to Chartwell can confirm. But there were other competent bricklayers on the Chartwell Estate. Besides building walls as a hobby, it will be clear to everyone that Churchill added considerably greater value to society as a politician and an author and was paid more than he ever would be as a bricklayer.[ii]

What was true for the great man is also true for all of us. It allows us to maximise the potential for a community of producers by buying each other’s output in accordance with the law of comparative advantage. And what holds for a community scales up to nation states. If China can supply us with goods cheaper and better than we can ourselves, we should buy them from China, and not waste our time and resources doing it less effectively. Scarce capital resources, including labour, must be released for more profitable activities.

If China offers steel at a lower price than it can be made in Britain, British manufacturers who incorporate steel in their products would be stupid not to benefit. Meanwhile, British steel manufacturers should get out of the mild steel business, and perhaps produce high quality speciality steels to regain their commercial edge. This is what British Steel has done. The common European response is to protect their industries with import tariffs, and by the end of 2016 there were 12,651 known EU tariffs in force.[iii]

Only free markets, more specifically the consumer and also buyers of intermediate production, can decide where the comparative advantage lies. In free markets, the consumer is king, and the businessman who fails to respond to his customers’ demands should amend his offering.

Businesses try to avoid this truth by lobbying politicians to yield a monopolistic advantage. Business leaders present themselves to the political class as expert representatives for their industries, and they warn politicians of the supposed horrors of free competition. An established business would rather be regulated than face competition, because the regulator will help guarantee profit margins, and licence monopolistic behaviour.

This is crony capitalism, which is not free markets. It is everywhere, but more in some places than others. It is particularly virulent in Brussels, where big business effectively sets product standards to disadvantage smaller competitors. The law of comparative advantage is trampled underfoot.

Lobbying by special interests is not confined to Brussels, being a feature of Westminster life as well. The Cronies target Brussels where the Europe-wide power resides, as well as national governments in coordinated campaigns. The result is an institutionalised crony-based system bound together by a political class that has been bought by special interests.

To a businessman, a good politician is one who once bought, stays bought. On the one side of the Brexit tussle you have protectionism, which has become thoroughly institutionalised, and on the other you have free marketeers. Interestingly, the UK’s Conservatives are meant to be the party of free markets and individualism, yet even their ranks include ardent statists, their true colours exposed by the Brexit debate.

The political case for Brexit

The political case is simply one of democratic accountability. In the UK, parliament has always been sovereign, that is to say the elected members of the lower house form governments and make the laws. There has to be a general election at least every five years, to give the electorate a vote on the government’s competence. Furthermore, if during a government’s term it loses the confidence of a simple majority of MPs, it must call a general election. By these means, the British public exercises its democratic rights.

There is no such accountability in Brussels. Only the unelected executive can propose directives and regulations, and the parliament has an equal say in passing them. In practice, the EU parliament is packed with establishment MEPs and nothing initiated by the executive is rejected. Democratic accountability is a fig-leaf and never gets in the way of the unelected executive.

Very rarely, the electorate is asked for its view on a simple matter of principle by referendum. Referendums are technically advisory, but in practice a parliament that goes against the public’s wishes expressed in a referendum is denying the electorate its democratic mandate. Having called a referendum, if a government then fails to respect the result, what was the point in calling it in the first place?

The first referendum in Britain was held on 5th June 1975, where the question asked was, “Do you think that the United Kingdom should stay in the European Community (the Common Market)?” It was held two years after Britain had actually joined, but it was clearly on a simple matter of principle. There was another nationwide referendum on proportional voting, which was rejected. The 2016 Brexit national referendum was only the third ever held. They are not frequent events, though the device has been used regionally as well (i.e. the Scottish referendum).

At the time of the 1975 referendum, the EC was little more than a trading bloc, whose members traded freely with each other without tariffs, while significant tariffs were imposed on imported goods from non-member states. Communications were such that proximate markets were easier to service than distant ones. These were the important economic arguments for Britain joining at that time.

But since then, the EU has taken democratic accountability away from national parliaments principally through the Maastricht and Lisbon treaties and is on its way to becoming a fully-fledged super-state. Meanwhile, WTO tariffs have gradually declined to single figures, and the internet has made distances between suppliers and consumers far less of a hurdle to trade. With the importance of being in a trading bloc now a growing obstacle to global free trade, there is no valid reason to justify the loss of democracy.

This is the crux of the Brexit debate: the economic benefits have gone along with democracy. The Remainers deliberately avoid the democratic issue and instead deflect the debate into economic unknowns. The statist establishment both outside and inside the UK persists in threatening that Brexit will lead to a large fall in GDP, rise in unemployment, disrupt trade with the EU, threaten medicinal supplies, prevent planes landing, and so on. The list of these supposed negatives is extensive, but it is increasingly clear Remainers are only making up scare stories to avoid debating the democracy issue.

The EU’s position

The establishment in Brussels is rock-solid in its determination to continue on its course of devolving power from national governments to itself. Furthermore, the EU parliament has imposed its red lines as inviolable, the principal ones being:

  • Any transitional deal will be enforced and overseen by the EU’s Court of Justice (ECJ).
  • UK Citizens in the EU and EU citizens in Britain should be guaranteed reciprocal treatment.
  • The UK must adhere to EU environment and anti-tax evasion rules.
  • The UK should pay the EU costs that “arise directly from its withdrawal”.[iv]

As well as these red lines, there are the “four freedoms”, that are also sacrosanct: the free movement of goods, services, capital and persons. In order to satisfy these freedoms, the UK would have to remain in the customs union, or be out of the EU completely. It is that simple.

To ensure that Britain complies with the four freedoms in any half-way house, it would have to accept the jurisdiction of the ECJ, instead of the British courts. The European parliament’s position is less important than the four freedoms, because the parliament is little more than a rubber-stamp applied to pre-agreed policy.

Since the EU parliament’s resolution was passed, there appears to be behind the scenes attempts to persuade the British electorate to reconsider. The first strategy was to simply block all British attempts at achieving a negotiated settlement. This led to the British government offering an alternative compromise, the Chequers plan, which resulted in the resignations of the Brexit ministers, David Davis and Steve Baker, as well as the Foreign Secretary, Boris Johnson. The second strategy has been running concurrently with the first, and that is to undermine the Brexit case, in the hope a second referendum would reverse, or at least neutralise the Brexit referendum.

To this end, Brussels has covertly supported Remainers’ campaigns, a tactic that has worked before in referendums in other EU states when a first referendum rejected treaty proposals.[v] This brings us up to last week, when at an EU leaders’ dinner at Salzburg, Mrs May saw her Chequers plan firmly rejected in bluntly undiplomatic terms.

It seems after all that the EU is now prepared to negotiate a Canada Plus deal, as advocated by dissenting Conservative MPs. As a matter of fact, that has been more or less the EU’s position all along, believing it is far less attractive to the UK than staying in the EU. It was the free market alternative that was rejected by Mrs May in favour of her Chequers plan.

[The Canada trade agreement removes nearly all tariffs on goods but accepts some regulatory barriers to trade. There are limitations imposed on services. It gives the UK total control over immigration, it would be outside the customs union, have its own regulations, being not bound by a common rulebook. A joint committee between the UK and EU would resolve trade issues. This is roughly the agreed position with Canada and South Korea. A Canada plus deal would be an improved one based on this.]

There is probably more to the EU’s offer to discuss a Canada plus deal than meets the eye. It is always helpful to look at a problem from the EU’s point of view, so we can deduce what the thinking in Brussels might be. It is probably as follows. Mrs May wants to have the advantages of a being a member state without being in the customs union. She thinks the Chequers halfway house will appease the Remainers, many of which are her principal advisors. This is the only credible logic behind the Chequers proposal, which is a fudge to give the appearance of not being in the customs union. The Irish border question is a red herring, floated by the Irish Prime Minister and Mr Barnier. Mrs May has either fallen for it or is using it to justify her position to her cabinet.

Therefore, and of this Brussels appears to have convinced itself, the alternative of a WTO deal, or any deal close to it, such as Canada plus, is a bad outcome for Mrs May and her government. It is also undesirable for the EU, particularly Ireland, if Britain did leave the EU entirely. The reason it is important for Ireland is twofold: her main trading partner is the UK, and most of her non-UK European trade transits across the UK to the mainland by ferries and road. Those are the Irish issues that really matter.

The initial plan had been to stop Brexit. By proposing free trade negotiations, the EU might have originally reasoned it will never happen. Remember, the EU has had the international establishment (the IMF, central banks – visibly the Bank of England, big business and various back channels) working to overturn the referendum. The hope is a free trade agreement would not get through the UK parliament, and by assisting the Remainers in the UK who are pushing for a second referendum, it is thought the British public will change its mind. However, the EU’s thinking might have changed in recent weeks on the referendum issue, because it is almost certainly aware its plans are failing.

In conclusion, the EU is losing the battle for British hearts and minds in a second referendum. There can be no halfway house between being in or out of the customs union. If Brussels is to get its promised £39bn settlement, it will now have to embrace a free trade deal.

The British position

The Chequers plan was put together by Mrs May’s permanent staff, led by Olly Robbins. A charitable view is that Robbins’s plan was intended to achieve parliamentary support from a broad parish of Remainers and middle-of-the-roaders and neutralise ardent Brexiteers. She went over the heads of her own and the Brussels negotiating teams. Mrs May met a number of EU leaders on a one-to-one basis, including Angela Merkel, in the weeks before the Chequers plan was sprung on her cabinet, so it was widely assumed she had cleared it with them. Thinking she had a plan acceptable to her fellow EU leaders, she sprung it on her cabinet as a fait accompli. It was May’s way or the highway.

Instead, it has been a disaster because of the outright rejection by the EU leaders in Salzburg, who appear to have backtracked on their private meetings with her. This was hardly surprising, given Mrs May was arrogantly dealing over the EU chief negotiator’s head (Mr Barnier), who also attended the Salzburg dinner, and would have made his authority in the matter clear.

Despite this setback, at the time of writing, she is still clinging on to the Chequers plan. Her latest idea is to threaten the EU with the prospect of Britain lowering corporation tax to make Britain a corporate tax haven. This could be another tactical mistake, because Brussels is likely to read it as desperation to save a plan that is unacceptable.

Mrs May is now under increasing pressure to back down. And quickly, because she faces Conservative Party members at the annual conference next week. Salzburg was clearly a stitch-up that backfired, and she can only be clinging on to the assumption that her earlier more positive meetings with EU leaders are what really matters.

The evidence suggests this is a mistake, from which she must backtrack. It will never get the requisite support from Brexiteers, because it leaves the EU still controlling trade laws and regulations. This contravenes the democracy issue explained above. It is also likely to compromise Britain’s negotiating position with respect to free trade agreements with other countries.

Furthermore, a trade agreement which is far closer to free trade has already been proposed by both Brussels and the Brexiteers, based on the Canadian FTA. While the EU might have offered something that they thought would never be taken up, it is now in play.

That leaves the problem of how to get any trade agreement with the EU through Parliament. It is never certain that a no-deal or even a free trade agreement with the EU would find the necessary parliamentary support, given the strength of the Remainer lobby, and Labour’s insistence on staying in the customs union.

However, the Labour Party is badly divided on Brexit, and it is quite likely that if a vote was held on a Canada plus deal, the government would succeed in getting it passed.

Where to from here?

It is conference season, that time in the UK when the political parties invite their faithful members to come and listen to speeches from leading politicians. The Labour Party had theirs this week, and the Conservatives hold their’s in Birmingham next week. The problem for Mrs May is that apart from some vanishing sympathy over how she was treated by the EU leaders in Salzburg, her Chequers plan is deeply unpopular. If she thinks she can sell it at Conference, she is likely to be disappointed.

It is bound to be a topic in her closing speech next Wednesday. But Boris Johnson is due to speak in a fringe meeting, and he is immensely popular with the constituency members and a good orator to boot. He is also controversial with all shades of media opinion, which means he is box-office. The day of Mrs May’s speech is likely to be swamped with news headlines about Boris. If she is to avoid a PR disaster, she would be well advised to urgently ditch her Chequers plan and embrace the concept of Canada plus.

Whether she does we will find out next week. If she refuses to move, then I expect a leadership challenge by Christmas. Why? Because for the Brexiteers, the first option was to persuade Mrs May to drop Chequers and oversee negotiations on Canada plus. If that fails, then MPs face the next general election with the prospect of losing their seats. It won’t be the Labour Party’s socialist agenda that gets them unelected, but the Conservative’s failure to deliver Brexit.

The key to exiting Hotel California lies increasingly in the freest trade agreement possible, not in the Chequers plan. Mrs May must give up on the Chequers plan or she will be soon gone.

[i] Eagles, their album: Hotel California, 1976.

[ii] I must confess to cribbing this fine example of comparative advantage from Daniel Hannan, Conservative MEP for South-east England.

[iii] Unveiling the cost and extent of the 12,651 EU import tariffs – and why we should repeal them by Dan Lewis of the Economic Policy Centre.

[iv] Resolution passed by EU parliament sitting in Strasbourg, 5 April 2017 516 votes to 133, with 50 abstentions.

[v] An example of covert support for Remainers is reported here: https://www.express.co.uk/news/uk/905714/Brexit-news-Nigel-Farage-Michel-Barnier-EU-UK-European-Union-LBC

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Tom Welsh
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Tom Welsh

“Besides building walls as a hobby, it will be clear to everyone that Churchill added considerably greater value to society as a politician and an author and was paid more than he ever would be as a bricklayer”. And that example neatly demonstrates why economics is such a useless pile of old rubbish. Churchill built walls because he enjoyed doing so, and it relaxed him – thereby possibly enhancing his performance in his “more important” work. But the point is that human beings are not robots programmed to maximize their wealth. We have many instincts and desires, only a few… Read more »

AM Hants
Member
AM Hants

Do you wish to stay in the EU?
EU continues dictating, with full control over your thoughts and actions.

Do you wish to leave the EU?
Self determination and full independence.

Now what is difficult to understand. We were not asked to merge BREXIT, with ‘Remoan’

Hard BREXIT, bank account closed to the EU, using WTO trade tariffs, for deals.

Normski
Member
Normski

My thoughts exactly – lets just get the hell out of the EU and then deal with the consequences!.

Flying Gabriel
Guest
Flying Gabriel

We are all just prisoners here, of our own device.

Rick Oliver
Guest
Rick Oliver

Britain is good at going to War , just get some backing from your brothers in arms and declare WAR on the EU . Simple , game over !!!

Karl
Guest
Karl

The British government have no intention of taking the UK out of the EU because they want to board the gravy train once they leave UK politics,they only care about themselves not their country!

Imre
Guest
Imre

Putting Mother Theresa in charge of the Brexit negotiations is like putting a vegetarian in charge of a steak house… It won’t work out!

Latest

CIA Director and NYT Accidentally Expose Skripal Poisoning Hoax – DUCKGATE (Video)

The Duran – News in Review – Episode 189.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the stunning, inadvertent, admission by the New York Times and CIA Director Gina Haspel that much of what we know from the Salisbury-Skripal poisoning is pure fabrication and manipulation.

‘Duckgate’, as it is now being dubbed, was used to trick US President Trump into expelling 60 Russian Diplomats over false photographic evidence presented to him by Haspel, as it was provided to her by UK authorities.

The manipulation of POTUS Trump, courtesy of CIA Director Haspel, the UK government (and accidentally documented on by the NYT), has now blown open some serious holes into the entire narrative that Sergei and Yulia Skripal were poisoned by Russian agents with the deadly Novichok nerve agent.

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Via The Blogmire…


(SEE UPDATE AT THE BOTTOM)

Well this is interesting.

I had intended to put up a new thread for people who want to continue commenting on the Salisbury and Amesbury cases, as the last piece I did on it has reached an unmanageable 1,500+ comments. But just as I was about to do so, I was alerted to an important piece over on the Moon of Alabama website, entitled, “CIA Director Used Fake Skripal Incident Photos To Manipulate Trump“.

The gist of the piece is as follows. Back in April 2018, the Washington Post published an article about the decision taken by the United States to expel 60 Russian diplomats in the wake of the Salisbury poisoning. According to the authors, the day after the decision was made, President Trump reacted in anger when he found out that the French and the Germans were expelling just four diplomats each:

“The next day, when the expulsions were announced publicly, Trump erupted, officials said. To his shock and dismay, France and Germany were each expelling only four Russian officials — far fewer than the 60 his administration had decided on. The President, who seemed to believe that other individual countries would largely equal the United States, was furious that his administration was being portrayed in the media as taking by far the toughest stance on Russia.”

Mr Trump, it seems, believed that he had been misled by officials, as the piece goes on to say:

“Growing angrier, Trump insisted that his aides had misled him about the magnitude of the expulsions. ‘There were curse words,’ the official said, ‘a lot of curse words.’”

Whether Mr Trump was misled about the magnitude of the expulsions is impossible to say without a transcript of that meeting. What does seem certain, however, is that he was misled in another, far more important way, as Moon of Alabama goes on to point out.

In an article in today’s New York Times about the head of the CIA, Gina Haspel, an extraordinary piece of information is revealed — albeit unwittingly, it would seem, by authors who probably have no idea of its significance. Pointing to that same meeting mentioned in the Washington Post article, in which Mr Trump was persuaded to expel 60 diplomats, here is the NYT’s account of what took place:

“During the discussion, Ms. Haspel, then deputy C.I.A. director, turned toward Mr. Trump. She outlined possible responses in a quiet but firm voice, then leaned forward and told the president that the “strong option” was to expel 60 diplomats.

To persuade Mr. Trump, according to people briefed on the conversation, officials including Ms. Haspel also tried to show him that Mr. Skripal and his daughter were not the only victims of Russia’s attack.

Ms. Haspel showed pictures the British government had supplied her of young children hospitalized after being sickened by the Novichok nerve agent that poisoned the Skripals. She then showed a photograph of ducks that British officials said were inadvertently killed by the sloppy work of the Russian operatives [my emphasis].”

If you’re late joining the party, and don’t understand what is so extraordinary about this, let me spell it out plainly and unambiguously:

Firstly, there were no dead ducks as a result of poisoning. None. Zilch. Nada!

Secondly, there were no children sickened by nerve agent. None. Zilch. Nada!

Yet even though there were no dead ducks, and no sick children, Mr Trump was apparently persuaded by the head of the CIA to expel 60 diplomats after being shown pictures of dead ducks and sick children.

In addition to the extraordinary nature of this revelation, there is also a huge irony here. Along with many others, I have long felt that the duck feed is one of the many achilles heels of the whole story we’ve been presented with about what happened in Salisbury on 4th March 2018. And the reason for this is precisely because if it were true, there would indeed have been dead ducks and sick children.

According to the official story, Mr Skripal and his daughter became contaminated with “Novichok” by touching the handle of his front door at some point between 13:00 and 13:30 that afternoon. A few minutes later (13:45), they were filmed on CCTV camera feeding ducks, and handing bread to three local boys, one of whom ate a piece. After this they went to Zizzis, where they apparently so contaminated the table they sat at, that it had to be incinerated.

You see the problem? According to the official story, ducks should have died. According to the official story children should have become contaminated and ended up in hospital. Yet as it happens, no ducks died, and no boys got sick (all that happened was that the boys’ parents were contacted two weeks later by police, the boys were sent for tests, and they were given the all clear).

And yet despite the fact that no ducks died and no children were made sick, the director of the CIA (a.k.a. the Canard Invention Association), allegedly using information given to her agency by the British Government, showed the President of the United States pictures of dead ducks and sick children, apparently from Salisbury, to persuade him to take extreme action (Note: You can read more about the duck feed and all the other holes in the official story here). In other words, Mr Trump was lied to, and in a big way, and with potentially huge consequences.

I have no reason to doubt the authenticity of the claims made in the New York Times piece, since the purpose of inserting the bit about the ducks and the children was to cast Gina Haspel as a strong leader, rather than to cast doubt on the Skripal story. My guess is that Mr Trump might be quite interested to know that he was misled, either by the director of the CIA and/or the British Government. It might even make him wonder this: if no less a person than the President of the United States was given a false version of events, what are the chances that the rest of the story stacks up?

As ever, someone got some ‘splaining to do.  Discuss among yourselves.


PS. An aside. The Independent, which is apparently a publisher of news, has picked up on this storyhere. In their piece, they basically repeat what was said in the New York Times about how Gina Haspel persuaded Mr Trump using the dead ducks and sick children pics. But here’s the thing. Whilst it doesn’t surprise me that writers in the likes of the Washington Post or New York Times might not know too many details regarding the Salisbury case, the Independent knows full well that there were no dead ducks and no sick children. And so since they are writing about it, they must know that either the CIA director or the British Government, or both, knowingly misled the US President. Yet they say nothing about this in their piece. Why? Simply because they are not journalists, but stenographers, and they have no intention of informing their readers of what is true and what is real. I’m not sure how they live with themselves, but somehow they manage.


UPDATE: The Guardian has published an article (18th April), in which the director of public health at Wiltshire Council, Tracy Daszkiewicz, was asked to comment on the New York Times report. Here is what she said:

“There were no other casualties other than those previously stated. No wildlife were impacted by the incident and no children were exposed to or became ill as a result of either incident [my emphasis].”

So according to Ms Daszkiewicz, not only were no children made ill (which we already knew), but nor were any exposed to the substance. How does this accord with the official narrative? In that scenario, Mr Skripal gave bread to three boys, one of whom ate a piece, less than half-an-hour after his hands had become contaminated. In which case, they would undoubtedly have been exposed to it. Then again, if he wasn’t contaminated at that time … well, that would agree with Ms Daszkiewicz’s assessment, but it would have another consequence involving cans and worms!

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Airline wars heat up, as industry undergoes massive disruption (Video)

The Duran Quick Take: Episode 145.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris examine the global commercial airline industry, which is undergoing massive changes, as competition creeps in from Russia and China.

Reuters reports that Boeing Co’s legal troubles grew as a new lawsuit accused the company of defrauding shareholders by concealing safety deficiencies in its 737 MAX planes before two fatal crashes led to their worldwide grounding.

The proposed class action filed in Chicago federal court seeks damages for alleged securities fraud violations, after Boeing’s market value tumbled by $34 billion within two weeks of the March 10 crash of an Ethiopian Airlines 737 MAX.

*****

According to the complaint, Boeing “effectively put profitability and growth ahead of airplane safety and honesty” by rushing the 737 MAX to market to compete with Airbus SE, while leaving out “extra” or “optional” features designed to prevent the Ethiopian Airlines and Lion Air crashes.

It also said Boeing’s statements about its growth prospects and the 737 MAX were undermined by its alleged conflict of interest from retaining broad authority from federal regulators to assess the plane’s safety.

*****

Boeing said on Tuesday that aircraft orders in the first quarter fell to 95 from 180 a year earlier, with no orders for the 737 MAX following the worldwide grounding.

On April 5, it said it planned to cut monthly 737 production to 42 planes from 52, and was making progress on a 737 MAX software update to prevent further accidents.

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Via Zerohedge…

Step aside (fading) trade war with China: there is a new aggressor – at least according to the US Trade Rep Robert Lighthizer – in town.

In a statement on the USTR’s website published late on Monday, the US fair trade agency announced that under Section 301 of the Trade Act, it was proposing a list of EU products to be covered by additional duties. And as justification for the incremental import taxes, the USTR said that it was in response to EU aircraft subsidies, specifically to Europea’s aerospace giant, Airbus, which “have caused adverse effects to the United States” and which the USTR estimates cause $11 billion in harm to the US each year

One can’t help but notice that the latest shot across the bow in the simmering trade war with Europe comes as i) Trump is reportedly preparing to fold in his trade war with China, punting enforcement to whoever is president in 2025, and ii) comes just as Boeing has found itself scrambling to preserve orders as the world has put its orderbook for Boeing 737 MAX airplanes on hold, which prompted Boeing to cut 737 production by 20% on Friday.

While the first may be purely a coincidence, the second – which is expected to not only slam Boeing’s financials for Q1 and Q2, but may also adversely impact US GDP – had at least some impact on the decision to proceed with these tariffs at this moment.

We now await Europe’s angry response to what is Trump’s latest salvo in what is once again a global trade war. And, paradoxically, we also expect this news to send stocks blasting higher as, taking a page from the US-China trade book, every day algos will price in imminent “US-European trade deal optimism.”

Below the full statement from the USTR (link):

USTR Proposes Products for Tariff Countermeasures in Response to Harm Caused by EU Aircraft Subsidies

The World Trade Organization (WTO) has found repeatedly that European Union (EU) subsidies to Airbus have caused adverse effects to the United States.  Today, the Office of the United States Trade Representative (USTR) begins its process under Section 301 of the Trade Act of 1974 to identify products of the EU to which additional duties may be applied until the EU removes those subsidies.

USTR is releasing for public comment a preliminary list of EU products to be covered by additional duties.  USTR estimates the harm from the EU subsidies as $11 billion in trade each year.  The amount is subject to an arbitration at the WTO, the result of which is expected to be issued this summer.

“This case has been in litigation for 14 years, and the time has come for action. The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” said U.S. Trade Representative Robert Lighthizer.  “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft.  When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”

In line with U.S. law, the preliminary list contains a number of products in the civil aviation sector, including Airbus aircraft.  Once the WTO arbitrator issues its report on the value of countermeasures, USTR will announce a final product list covering a level of trade commensurate with the adverse effects determined to exist.

Background

After many years of seeking unsuccessfully to convince the EU and four of its member States (France, Germany, Spain, and the United Kingdom) to cease their subsidization of Airbus, the United States brought a WTO challenge to EU subsidies in 2004. In 2011, the WTO found that the EU provided Airbus $18 billion in subsidized financing from 1968 to 2006.  In particular, the WTO found that European “launch aid” subsidies were instrumental in permitting Airbus to launch every model of its large civil aircraft, causing Boeing to lose sales of more than 300 aircraft and market share throughout the world.

In response, the EU removed two minor subsidies, but left most of them unchanged.  The EU also granted Airbus more than $5 billion in new subsidized “launch aid” financing for the A350 XWB.  The United States requested establishment of a compliance panel in March 2012 to address the EU’s failure to remove its old subsidies, as well as the new subsidies and their adverse effects.  That process came to a close with the issuance of an appellate report in May 2018 finding that EU subsidies to high-value, twin-aisle aircraft have caused serious prejudice to U.S. interests.  The report found that billions of dollars in launch aid to the A350 XWB and A380 cause significant lost sales to Boeing 787 and 747 aircraft, as well as lost market share for Boeing very large aircraft in the EU, Australia, China, Korea, Singapore, and UAE markets.

Based on the appellate report, the United States requested authority to impose countermeasures worth $11.2 billion per year, commensurate with the adverse effects caused by EU subsidies.  The EU challenged that estimate, and a WTO arbitrator is currently evaluating those claims

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Mueller report takes ‘Russian meddling’ for granted, offers no actual evidence

RT

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Via RT…


Special counsel Robert Mueller’s ‘Russiagate’ report has cleared Donald Trump of ‘collusion’ charges but maintains that Russia meddled in the 2016 US presidential election. Yet concrete evidence of that is nowhere to be seen.

The report by Mueller and his team, made public on Thursday by the US Department of Justice, exonerates not just Trump but all Americans of any “collusion” with Russia, “obliterating” the Russiagate conspiracy theory, as journalist Glenn Greenwald put it.

However, it asserts that Russian “interference” in the election did happen, and says it consisted of a campaign on social media as well as Russian military intelligence (repeatedly referred to by its old, Soviet-era name, GRU) “hacking” the Democratic Congressional Campaign Committee (DCCC), the DNC, and the private email account of Hillary Clinton’s campaign chair, John Podesta.

As evidence of this, the report basically offers nothing but Mueller’s indictment of “GRU agents,” delivered on the eve of the Helsinki Summit between Trump and Russian President Vladimir Putin in what was surely a cosmic coincidence.

Indictments are not evidence, however, but allegations. Any time it looks like the report might be bringing up proof, it ends up being redacted, ostensibly to protect sources and methods, and out of concern it might cause “harm to an ongoing matter.”

‘Active measures’ on social media

Mueller’s report leads with the claim that the Internet Research Agency (IRA) ran an “active measures” campaign of social media influence. Citing Facebook and Twitter estimates, the report says this consisted of 470 Facebook accounts that made 80,000 posts that may have been seen by up to 126 million people, between January 2015 and August 2017 (almost a year after the election), and 3,814 Twitter accounts that “may have been” in contact with about 1.4 million people.

Those numbers may seem substantial but, as investigative journalist Gareth Porter pointed out in November 2018, they should be regarded against the background of 33 trillion Facebook posts made during the same period.

According to Mueller, the IRA mind-controlled the American electorate by spending “approximately $100,000” on Facebook ads, hiring someone to walk around New York City “dressed up as Santa Claus with a Trump mask,” and getting Trump campaign affiliates to promote “dozens of tweets, posts, and other political content created by the IRA.” Dozens!

Meanwhile, the key evidence against IRA’s alleged boss Evgeny Prigozhin is that he “appeared together in public photographs” with Putin.

Alleged hacking & release

The report claims that the GRU hacked their way into 29 DCCC computers and another 30 DNC computers, and downloaded data using software called “X-Tunnel.” It is unclear how Mueller’s investigators claim to know this, as the report makes no mention of them or FBI actually examining DNC or DCCC computers. Presumably they took the word of CrowdStrike, the Democrats’ private contractor, for it.

However obtained, the documents were published first through DCLeaks and Guccifer 2.0 – which the report claims are “fictitious online personas” created by the GRU – and later through WikiLeaks. What is Mueller’s proof that these two entities were “GRU” cutouts? In a word, this:

That the Guccifer 2.0 persona provided reporters access to a restricted portion of the DCLeaks website tends to indicate that both personas were operated by the same or a closely-related group of people.(p. 43)

However, the report acknowledges that the “first known contact” between Guccifer 2.0 and WikiLeaks was on September 15, 2016 – months after the DNC and DCCC documents were published! Here we do get actual evidence: direct messages on Twitter obtained by investigators. Behold, these “spies” are so good, they don’t even talk – and when they do, they use unsecured channels.

Mueller notably claims “it is clear that the stolen DNC and Podesta documents were transferred from the GRU to WikiLeaks” (the rest of that sentence is redacted), but the report clearly implies the investigators do not actually know how. On page 47, the report says Mueller “cannot rule out that stolen documents were transferred to WikiLeaks through intermediaries who visited during the summer of 2016.”

Strangely, the report accuses WikiLeaks co-founder Julian Assange of making “public statements apparently designed to obscure the source” of the materials (p.48), notably the offer of a reward for finding the murderer of DNC staffer Seth Rich – even though this can be read as corroborating the intermediaries theory, and Assange never actually said Rich was his source.

The rest of Mueller’s report goes on to discuss the Trump campaign’s contacts with anyone even remotely Russian and to create torturous constructions that the president had “obstructed” justice by basically defending himself from charges of being a Russian agent – neither of which resulted in any indictments, however. But the central premise that the 22-month investigation, breathless media coverage, and the 448-page report are based on – that Russia somehow meddled in the 2016 election – remains unproven.

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