Independence would hit Scottish trade harder than Brexit - LSE report

LONDON (Reuters) - Scotland’s economy will suffer a blow to trade two or three times more severe than the impact of Brexit if it breaks away from the United Kingdom, according to an academic study published on Wednesday.

Scotland’s devolved government dismissed the report by the London School of Economics (LSE), saying it had not taken into account factors that would enable an independent Scotland to “do things better.”

The report said Scotland sends 61% of its exports to the rest of the United Kingdom, which it said would remain its biggest trade partner for decades after any independence vote, limiting the benefits for Scotland if it rejoins the European Union.

“At least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom,” said Hanwei Huang, assistant professor at the City University of Hong Kong, one of the authors of the report.

The pro-independence Scottish National Party, which heads the Scottish government, wants to hold a second referendum on breaking away from the United Kingdom.

Voters in Scotland, which has a population of around 5.5 million, rejected independence in 2014. But the SNP says Britain’s departure from the EU, which was opposed by a majority of Scots, means the question must be put to a new vote.

Responding to the LSE report, the Scottish government said an independent Scotland would benefit from rejoining the EU’s single market and pointed to the success of small EU member states Ireland and Denmark.

The Scottish government also said the study did not look at changes in migration policy, inward investment “or any economic levers the Scottish government would have control of in an independent Scotland to do things better and boost the economy”.

Opinion polls have shown a majority of Scots now favour independence, but British Prime Minister Boris Johnson has said he will not approve a new referendum.

The LSE report said Scottish income per capita stands to fall by 2% because of Brexit.

If Scotland became independent, rejoined the EU and had low border costs for trade with the United Kingdom, that figure would become a 6.3% fall - or a 7.6% drop if border costs with the UK such as customs checks were high, it said.

The report estimated trade flows between Scotland and the rest of the UK were six times higher than would be expected if they were separate countries.

U.S. warns Myanmar’s military it’ll be punished for coup

The crisis is a challenge to Biden's vision.

Myanmar's leader Aung San Suu Kyi speaks during a press conference on Dec. 17, 2019. | Aung Shine Oo, File/AP Photo

The Biden administration warned Myanmar’s military officials Sunday that it will “take action” if they proceed with an apparent coup against the country’s civilian leaders.

The crisis in Myanmar, also known as Burma, is unfolding just days after President Joe Biden took office, and in some ways it challenges the very heart of Biden’s foreign policy vision.

The new president has promised to stand up for democracy and human rights around the world, including against communist-led China. A Myanmar military coup would derail significant progress the Asian country has made toward democracy in recent years. The country’s armed forces have also been accused of genocide and other atrocities against minority groups. At the same time, one reason the United States has encouraged democracy in Myanmar is to draw it out of the orbit of China, its neighbour to the northeast. According to reports from the region, the Myanmar military has taken into custody several top civilian leaders, including Aung San Suu Kyi, the Nobel Peace Prize laureate and democracy activist whose political party has won recent elections. In a televised statement, the military said that it had taken control of the country and declared a state of emergency for one year. The military has been unhappy with the outcome of elections in November in which Suu Kyi’s party did well, while the military-backed party fared relatively poorly. The military is alleging voter fraud. Myanmar’s new parliament was due to convene Monday for its first session. In a statement late Sunday, White House press secretary Jen Psaki said the United States is “alarmed” by the reports. “The United States opposes any attempt to alter the outcome of recent elections or impede Myanmar’s democratic transition,” Psaki said, adding that the U.S. “will take action against those responsible if these steps are not reversed.” Biden has been briefed on the situation by his national security adviser, Jake Sullivan, Psaki said. Psaki did not specify what types of action the United States may take if Myanmar’s military does not heed its warnings. Odds are, however, that the administration would turn to economic sanctions as it has in the past.

Secretary of State Antony Blinken also weighed in, with a somewhat softer statement that did not promise punishment.

“The United States stands with the people of Burma in their aspirations for democracy, freedom, peace and development,” Blinken said. “The military must reverse these actions immediately.”

Myanmar was ruled for decades by a military junta, which imprisoned thousands of democracy activists, scholars and journalists. In the 2000s, the country began taking steps toward opening up its system and paving the way for limited civilian rule. It has held relatively free general elections in the past decade and taken many other steps to allow for more free speech and commerce.

Myanmar’s progress toward democracy was hailed and heavily encouraged by the Obama administration, during which Biden served as vice president. Then-President Barack Obama lifted numerous economic sanctions on Myanmar to further encourage democratization.

But the military has nonetheless retained key levers of power, including effectively controlling some ministries, and has never fallen under civilian control. Suu Kyi, who spent many years under house arrest before the democratic reforms, has been the de facto civilian leader in recent years, but she’s always had to balance that with the military’s continued power.

The military, which like most of the population is dominated by Buddhists, has a brutal track record in Myanmar, engaging in long-running battles with the country’s ethnic minorities. In 2017, it waged a vicious crackdown on the long-persecuted Rohingya Muslims, killing thousands and pushing some 700,000 into neighbouring Bangladesh.

Suu Kyi has refused to speak out in a meaningful way against that mass atrocity, which some officials and experts have labelled a genocide; her largely non-committal approach to the massacres and forced expulsions of the Rohingya has badly tarnished her international image.

Former President Donald Trump’s administration has called what happened to the Rohingya an ethnic cleansing. But Trump’s second secretary of State, Mike Pompeo, would not go so far as to call it genocide.

State Department officials have in the past indicated that was partly because he did not want to push Myanmar more into the arms of China, which has long been a key patron of the country.

During his recent confirmation hearing, Blinken, the new secretary of State, said he would review the situation of the Rohingya to determine if a genocide was committed. Blinken, and Biden, meanwhile, have said they believe that China has committed genocide against Uighur Muslims on its territory.

UK applying to join Asia-Pacific free trade pact CPTPP

The UK will apply to join a free trade area with 11 Asia and Pacific nations on Monday, a year after it officially left the EU.

Joining the group of "fast-growing nations" will boost UK exports, the government says.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership - or CPTPP - covers a market of around 500 million people.

But they are harder to reach than neighbouring markets in Europe.

Members include Australia, Canada, Japan and New Zealand.

Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam are also founder members of the bloc, which was established in 2018.

"In future it's going to be Asia-Pacific countries in particular where the big markets are, where growing middle-class markets are, for British products," International Trade Secretary Liz Truss told the BBC's Andrew Marr.

"Of course British businesses will have to reach out and take these opportunities, but what I'm doing is I'm creating the opportunities, the low tariffs, removing those barriers so they can go out and do that."

Joining the bloc would reduce tariffs on UK exports such as whisky and cars, as well as service industries, she said.

However the immediate impact is likely to be modest as the UK already has free trade deals in place with several CPTPP members, some of which were rolled over from its EU membership. The UK is negotiating deals with Australia and New Zealand.

In total, CPTPP nations accounted for 8.4% of UK exports in 2019, roughly the same proportion as Germany alone.

The US was originally in talks to be part of the CPTPP, but former President Donald Trump pulled out when he took office.

If the new administration in Washington were to reconsider the CPTPP, that would make membership much more attractive to the UK. It could allow a much closer UK-US trading relationship, without waiting for a bilateral trade deal to be negotiated.

Exactly a year after it said goodbye to the EU, the UK is eying a new trading club.

It sounds a win-win: those Pacific Rim nations represent 13% of global income and 500 million people - and the UK would retain the freedom to strike deals elsewhere. There'd be agreement on how standards and regulations are set (with minimums to be adhered to) - but they wouldn't need to be identical.

In practice, however, the short-terms gains for households and business would be limited. The UK already has trade deals with seven of the 11 nations - and is pursuing two more. In total, CPTPP nations account for less than 10% of UK exports, a fraction of what goes to the EU.

This deal would however deepen some of those ties - and allow UK manufacturers who source components from multiple nations in the bloc some benefits under "rules of origins" allowances.

But the real boost could come in the future, if others join - in particular the US, as President Biden has hinted. That would give the UK that hoped-for trade deal with America - within a trading bloc wielding considerable power on the global stage.

The UK is the first non-founding country to apply to join the CPTPP and, if successful, would be its second biggest economy after Japan.

The free trade block aims to reduce trade tariffs - a form of border tax - between member countries.

It includes a promise to eliminate or reduce 95% of import charges- although some of these charges are kept to protect some home-made products, for example Japan's rice and Canada's dairy industry.

In return, countries must cooperate on regulations, such as food standards. However, these standards and regulations do not have to be identical, and member countries can strike their own trade deals.

The government was putting place strategies that would "deliver for Britain in 2030 and 2050", Ms Truss said. She said services, robotics, data and digital industries were particularly set to gain, which could lead to more UK jobs.

Membership will also offer the potential for faster and cheaper visas for business people, the government said.

The formal request to join will be made on Monday, with negotiations expected in the spring.