Tax Break

John Fisher, international tax consultant

Archive for the tag “WTO”

Red Scotch Tape

And then came the 1970s

When Queen Victoria opened the Great Exhibition in 1851, Britain was the world’s leading industrial power, producing more than half its iron, coal and cotton cloth.

 Well, I don’t think Her Late Majesty would be very amused to hear from her great-great granddaughter how the country she bequeathed to her descendants in perpetuity is currently faring in that field (mind you, her grandson Kaiser Bill did a far bigger hatchet job on Germany).

Nothing highlights the shifting sands more starkly than the announcement the other day that, following World Trade Organization approval, the US is to apply ‘the biggest ever’ new tariffs to imports from the EU – and specifically the UK, France, Germany and Spain.

The British air industry knew when to be competitive

The issue has been brewing for 15 years, ever since the US first complained to the WTO that the EU was subsidizing Airbus and others to assist in their competition with Boeing and others. The EU was indeed found to have overshot the General Agreement on Tariffs and Trade and given until late 2011 to comply. The EU did take measures, but in 2012 the US requested the review of a compliance panel, and in 2018 the WTO determined there had been further violations. The WTO finally ruled last week in the US’s favor and the US Trade Representative was quick to issue a list of products to have their wings clipped through new import tariffs.

The list of products to be punished, represented by their Harmonized Tariff Schedule Codes, is long. The first item is, unsurprisingly, aircraft – the prices of which are to be hiked by 10% from later this month.

It is the next item – designed to hit Britain – that is gobsmackingly strange. You would have thought that it would be heavy turbines, trains or ships. No. It is single malt (and only single malt) scotch whisky – together with single malt Irish whiskey distilled in Northern Ireland, if there is such a thing. And no friendly 10% for them. 25% slapped drunkenly on the price.

It turns out that the most effective way to get at what was once ‘the workshop of the world’ is through premium brand whisky. But, it is all so unfair. Check on Wikipedia for ‘Aircraft Manufacturers of Scotland’, and you will be greeted by ‘Defunct Aircraft Manufacturers of Scotland’. In fact, tragically, Scotland’s biggest claim ever to aviation fame was probably the 1988 Lockerbie Disaster, for which they suffered more than enough.

So, sadly, the good people of Scotland (in the interests of full disclosure, I should point out that I am half Scot) are being made to pay for the shenanigans of their southern partners (who themselves are probably far less guilty than the Germans and French , both of whose record on air wars is abysmal).

Who are the Americans trying to kid?

I don’t know what hurts more – Britain’s descent from the industrial world to the spirit world, or the gross unfairness of trade wars. Not much can be done about the former, but the latter should be exorcised before the new mercantilism takes an unbreakable hold.

We are not amused.

Don’t Mention The War

It is comforting to know that the western world is in safe hands....

It is comforting to know that the western world is in safe hands….

1/1/14. Typing the date, I am paralysed with fear as I imagine myself, pencil in fingerless-gloved hand, writing home from a rat-infested trench in the fields of Northern France (rats are one thing – but France?). Even the quality press has added to my waking nightmare. Both the New York Times and The Economist got in early last month, running articles explaining the clear similarities between 2014 and 1914 and cautioning against complacency that might lead to history repeating itself. This is potty nonsense –  First World War Redux would never be as frightening as the original because, apart from anything else, it would be in colour.

...really

…really

But even those Yuletide broadsheet offerings were positively sane when compared to the leader The Economist ran for – what I think was – the 90th anniversary of the Great War in – what must have been – July 2004. Heading for our summer haunts,  we readers were requested to look around the crowded beaches and spare a thought for all those never born due to the 1914-18 carnage who, otherwise, would presumably have been sunning themselves on the sand next to us. There are lots of reasons that people are not born, or should not have been born,  but I wonder if those poor Anzac soldiers landing on the beach at Gallipoli in 1915 realized they were sacrificing themselves so that future generations of sun-worshippers could slop on sun-screen and frolic around on that self-same beach in their Speedos and Bikinis.

I prefer to try to look ahead to 2014 a little more hopefully. Today there are massive threats, very different to those of a hundred years ago, but since the end of the Blockbuster sequel to World War I ( imaginatively named World War II ) there have been major strides forward in international cooperation leading to peace and brotherhood among men.  There was a small, but not insignificant, step forward in the dying weeks of 2013 in the Doha Round of Trade talks held in Bali, Indonesia.

End of the Kennedy Round

End of the Kennedy Round

The General Agreement on Tariffs and Trade (GATT) was established in 1947 to deal with issues of trade and, specifically, break down the barriers caused by tariffs, quotas and import bans. Each “Round” of talks, often with exotic names like The Kennedy Round and The Uruguay Round, has specific goals which, when achieved, mark the end of the Round. In the early days, when a relatively small number of  countries could dictate to the world, Rounds lasted a matter of months.

Well, the Doha Round has been going since November 2001 and involves 159 countries (the GATT morphed into the WTO during the previous Uruguay Round). Charged with a long list of goals including tariff reductions, non-tariff measures, agriculture, labor standards, environment, competition, investment, transparency and patents, as at the beginning of December 2013 it had achieved…. precisely nothing. Then came the breakthrough. Under the expert guidance of the new Brazilian WTO Director-General, the 159 countries compromised their way to an agreement on trade facilitation which essentially meant cutting red tape and, hence, trade costs – a move that some estimate could raise global output by $400 billion annually. It remains to be seen what effect this will have on the number of Customs Officials in the Green Lane at airports around the Globe, so don’t hold your breath.

Moving forward, the Doha Round  is expected to concentrate on the less controversial issues (I am not quite sure what it has been doing for the last 12 years) and support Plurilateral treaties (involving blocks of countries ) such as the proposed Free Trade Agreement between the US and EU.

Of the 9 Rounds so far, the most efficient, measured by length of time over number of participating countries, was the Torquay Round in 1951, lasting 8 months and involving 38 countries. I have a sneaking feeling I know why.

In case you are not aware, Torquay is an English seaside resort. I last visited Torquay in 1965 and until thinking about this Post had no interest in ever going back. When John Cleese and the Monty Python  team filmed on location in  Torquay in 1971 they stayed at the Gleneagles Hotel, which had been established by Donald and Beatrice Sinclair in 1964. It is quite possible that some of the delegations to the 1951 opening conference stayed at the Sinclair’s other hotel, Greenacres, opened immediately after the War. In TV  interviews John Cleese and Eric Idle later told of Sinclair’s eccentricities: not liking a comment by one of the team, Sinclair threw his suitcase out of an upstairs window; in reply to a guest who asked when the next bus was due, he chucked a bus map at him. Cleese said he was the rudest person he had ever met. But, thanks to that chance encounter, arguably the greatest sitcom in the history of television was born – Torquay’s own Fawlty Towers, with Basil Fawlty playing Donald Sinclair (Cleese told interviewer Sir Michael Parkinson that the only adjustment he needed to make to Sinclair for the part was his height).

Was it something he said?

Was it something he said?

Sitting here now, I can picture a bunch of post-war Continental Europeans partaking of their meal  in the dining room of Greenacres while Donald Sinclair  goose-steps around declaring: “Don’t mention the War”. It would be enough to get everybody to agree about everything just as long as they could check-out and get back behind the Maginot Line as soon as possible. A Happy and Peaceful New Year to us all.

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