Britain’s CPTPP deal is all upside in a world dividing into US and China power blocs

This is Iain Martin’s weekly newsletter, exclusively for Reaction subscribers.

Britain did something interesting and rather encouraging this week.

It secured approval to join the Asia-Pacific trade bloc – the CPTPP – that includes Japan, Canada and Australia following nearly two years of negotiations. The eleven countries already in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership have a combined population of 500 million. Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are members. The free trade partnership lowers trade barriers and creates opportunities for business growth, particularly in the services sector.

Following the announcement there was considerable criticism and grumbling in Britain, much of it wearily predictable, much of it related to the European-fixated Brexit wars, on social media and elsewhere.

The deal will produce only a tiny uptick in trade and growth it was said, by a string of Twitter trade experts. How could anyone know this given that other growing countries want to join the CPTPP? Economic reforms and geopolitical shifts are by their very nature dynamic with unpredictable effects. There were no models for the outcome of the revolutionary abolition of exchange or capital controls in 1979 by the Thatcher government. Those reforms ended restrictions on money that could flow in and out of the country. It was transformational and largely positive. There were no models for Big Bang either, the City reforms of the 1980s. Or for the invention in the early 1960s of the eurobond in London, a wonderful innovation that transformed European investment and debt-markets. Future history cannot be mapped with any accuracy by a Twitter trade expert armed with a spreadsheet and a grievance about Brexit.

Britain’s leader of the opposition Sir Keir Starmer also said that the Asia-Pacific deal would make little difference and that the priority should be improved trade arrangements with the European Union instead.

This almost completely misses the point. Of course British negotiators should aim for an improved trade deal with the EU as well when the post-Brexit trade deal, the TCA, the Trade and Cooperation Agreement, comes up for its five year review in the middle of this decade. But there is no easy win available with Brussels, even with relations improved of late following the resolution of the Northern Ireland Protocol.

Britain will have to be very hardheaded in those EU negotiations to come. If the Labour leadership thinks simply being nice will produce major concessions on trade terms from the EU it hasn’t been paying attention during the Brexit wars. The EU is a trade bloc that defends its interests, its single market, in blunt terms. All of us should have learnt that by now. When the next negotiation with Brussels comes, the government of the day, Tory or Labour, will have to work out what the UK can offer in return that Brussels wants. The negotiation may involve a swap on security (where Britain is a leader) for some reduction of trade barriers on the EU side. Or there may be no improvement available from Brussels at all.

These being the stark realities, UK negotiators were quite right to get on with pursuing other partnerships. It doesn’t preclude, over time, better trade with the EU, but there are other fish to fry too.

As a Whitehall source puts it about the Brexit angst: “What are we supposed to do? Go around in sack cloth and ashes? Lament it (leaving the EU) for ever? No, get over it, get on with it. Get on with making a living in the world.”

Japan was particularly keen for Britain to join CPTPP and pushed the process. There’s commercial opportunity on both sides, particularly on services and defence, and the hope is that with Britain now inside the bloc can keep on growing.

As that Whitehall source says: “The US has withdrawn from trade liberalisation. The EU is stuck. Both the EU and the US are hosing out industrial subsidies. China is decoupling from the global economy. Now, along comes a member of the G7 saying we want to join something that is open, rules-based, property-rights based.”

That is where this deal really matters – on geopolitics and the strengthening of alliances. The logic of American policy right now is driving towards polarisation, asking allies to pick a side, the US or China, in the power bloc struggle already underway.

This week there were more developments confirming that China is creating its own alternative economic architecture, rivaling the post-War institutions dominated by the West. The WSJ reported that some countries in the Belt and Road initiative – that’s countries in hock to China via large loans for infrastructure – are getting ever more in the way of emergency loans from China as they struggle under heavy debts.

The WSJ reported: “The scale of China’s often opaque assistance to borrowers in distress means Beijing has effectively established a new system for international rescue lending that exists alongside the International Monetary Fund and other Western institutions, according to new research published by the World Bank.”

China has been helping Pakistan with its debt troubles. Pakistan was trying to roll over a $2bn debt that was up this week.

In that context, the CPTPP presents a direct challenge to the Chinese Communist Party’s abusive Belt and Road model. The Asia-Pacific partnership Britain has joined can accommodate diverse economies and is cooperative rather than coercive.

The US is in an odd position. It will be interesting to see what if any response the latest developments produce from Washington, which left the CPTPP under President Trump. In time might there even be some discussion in America about rejoining when some of its best allies are organising in this way? Let’s hope so. It would make sense considering the emphasis the US, rightly, puts on building an alliance to resist China.

AI we’re all going to die

Cheery news from the Artificial Intelligence community this week.

Scientists and engineers (boffins in British tabloid speak of the 1980s) penned a troubling open letter saying that Artificial Intelligence is developing so fast that a six month moratorium is needed on any further research work. Chat GPT-4, the “chatbot” that can answer questions, write text and create instructions, is just the most public and celebrated example of the surge in technological capabilities.

One of the leading experts on AI is Eliezer Yudkowsky, who heads up research at the Machine Intelligence Research Institute. He didn’t sign the letter because he thinks a six-month moratorium doesn’t go far enough. It is time to stop developing AI, immediately and completely, otherwise humanity has had it, he claims.

Imagine an AI system at some point this century that escapes its human tech expert controllers, shuts down food, water and power systems, invents unbeatable weapons and viruses and proceeds to wipe us all out.

British subscribers of an older vintage will be familiar with the Hamlet cigar adverts. When everything goes wrong for our hero in the advert, when it’s so over and there is nothing more to be done, he lights a Hamlet mild cigar and melancholy, restful music (Bach’s Air on the G String, played by Jacques Loussier and his trio) plays in the background.

Reading this week’s article by Yudkowsky, published in Time Magazine, I couldn’t get the Hamlet music out of my head

He writes: “Many researchers steeped in these issues, including myself, expect that the most likely result of building a superhumanly smart AI, under anything remotely like the current circumstances, is that literally everyone on Earth will die. Not as in “maybe possibly some remote chance,” but as in “that is the obvious thing that would happen.” It’s not that you can’t, in principle, survive creating something much smarter than you; it’s that it would require precision and preparation and new scientific insights, and probably not having AI systems composed of giant inscrutable arrays of fractional numbers.”

Blimey.

He goes on: “The most likely outcome is AI that does not do what we want, and does not care for us nor for sentient life in general. That kind of caring is something that could in principle be imbued into an AI but we are not ready and do not currently know how. Absent that caring, we get “the AI does not love you, nor does it hate you, and you are made of atoms it can use for something else.”

Oops.

“The likely result of humanity facing down an opposed superhuman intelligence is a total loss. Valid metaphors include “a 10-year-old trying to play chess against Stockfish 15”, “the 11th century trying to fight the 21st century,” and “Australopithecus trying to fight Homo sapiens“.”

Stockfish 15 is a chess machine.

Views less apocalyptic than those of Yudkowsky are available, though it seems fewer and fewer tech-optimists say the world being created for us by AI and super-powerful quantum computing is anything other than fraught with risks we do not yet fully comprehend. The internet and smartphones were just the start, like a caveman rubbing two sticks together and finding fire, mere child’s play in terms of their impact on the economy, society and warfare, compared to AI.

Pretty soon concern about what’s coming is going to become the stuff of mainstream politics. It is already shaping great power calculations, as the US and its allies race to outcompete China and its tyrannical friends. For the autocracies, AI is a boon because of the endless scope for squashing freedom. If it is unlikely digital development can be halted, it is surely essential that the democracies have the best of it and stay in front.

This week the UK government decided not to introduce an AI regulator. This is, counterintuitively perhaps, a sensible decision. Such a regulator would take years to establish and staff, and probably end up being run by someone like Matt Hancock. By the time said quango got itself established on Whitehall the landscape would be unrecognisable.

Instead, it should fall to leaders, Prime Ministers and Presidents, to engage directly with the moral and practical dilemmas this technological revolution presents. Talk honestly to their fellow humans, us voters, about the trade offs and how the democracies might respond.

Eight letters, starting with “g”

In my column in The Times this week (for which I have a new post-weight loss serious picture byline) I assessed Humza Yousaf, the new leader of the SNP and First Minister of Scotland, my homeland.

It is extraordinary that the Nationalists have inflicted on Scotland this person with such a dire track record of ministerial screw-ups.

Sensibly, my wise colleagues on The Times removed one paragraph from the column on the grounds one sideswipe didn’t work and any joke you have to explain is pointless. It seemed obvious to me, but then I wrote it. What do you think?

“There is a word for Yousaf’s student politics performance style that shouldn’t be deployed in polite company. It originates in Liverpool, contains eight letters and is sometimes used in connection with firebrand Owen Jones. The first letter is “g” and the final letter is ‘e’.”

Oh, okay, the first three letters are “g”, “o”, “b”. The fourth letter is “s” and the eighth is “e”.

What I’m reading

Peter Frankopan’s epic new book The Earth Transformed spans 4.5bn years, which is nearly as long as this newsletter. The chapter on the Roman Warm Period is particularly ace. The Romans were lucky with the humid weather and exploited it to their agricultural advantage.

Nikita Khrushchev was less successful when he tried to transform Soviet agriculture, having become gripped by the idea that corn was the wondrous food of the future. Corn had helped Ukraine avoid famine in 1949. Planting of corn rose ten-fold between 1953 and 1962. Unfortunately, it dried up the Aral Sea, creating dust plumes, “ecocide” and continuing medical disasters.

Meanwhile, during mad Mao’s Four Pests campaign some two billion sparrows were killed. This led to an increase in insects and reduced crop yields and famine.

The Earth Transformed is packed with great factoids. Lemons were 60 times more profitable than any other crop in Sicily in the 1800s, which helps explain why the mafia emerged. Lemons were an easy way to make a lot of money. I would add that the southern Italian drinks industry then spotted an opportunity. There were a lot of lemons and they could be turned into liqueur. Think on that next time someone says at the end of a raucous dinner party: “We brought back a bottle of Limoncello from Italy. Nightcap everyone?”

The Spanish conquest of South America actually led to reforestation because of the large drops of native populations.

And it is estimated that the Justinian plague (541–549 AD) killed 50% of the Mediterranean population. Let’s try to keep this information from the AI machines, in case they find out and get ideas on how to replicate it.