Liam Fox: Covid-19 will cause ‘nightmare’ economic crisis

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The coronavirus will lead to a global economic recession somewhere between a “bad dream and the worst nightmare”, warned former minister Liam Fox.

The Conservative member said that many leaders did not understand the economic fallout from the crisis.

Dr Fox was speaking to BBC Newsnight as he pleaded to become head of the World Trade Organization (WTO) in Geneva.

He also suggested that the UK could benefit from a second phase of Brexit transition.

Speaking at WTO headquarters, the former international trade secretary said the Geneva-based body could oversee another transitional period if the UK and the EU agree to a new trade relationship this year.

“We have here what are called differential treatments which often allow countries with a clear destination time to adjust to these changes,” Dr Fox told the BBC Newsnight.

“I think everything has to be done according to the rules and there are a number of precedents set here for transitions, there are a number of precedents set here for differential treatment. That’s a question for the officials here. ”

A transition, overseen by the WTO, would be different from the current Brexit transition. This implies the full participation of the United Kingdom in the EU without a vote.

Dr Fox said a second transition could be used to allow for the gradual introduction of new border arrangements between Britain and the EU, which was proposed by Michael Gove.

Liz Truss, the current International Trade Secretary, has warned that the Gove plan could leave the UK vulnerable to a WTO challenge on the grounds that EU imports to the UK would be treated more favorably than imports from elsewhere.

Economic implications

Prime Minister Boris Johnson appointed long-time Brexit supporter Dr Fox to head the WTO about an hour ahead of the deadline earlier this month.

He is one of eight candidates to hope to succeed Roberto Azevedo, whose tenure has been eclipsed by the effective freeze of the WTO dispute settlement mechanism and trade skirmishes between the United States and China.

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Legend

Candidates vie to succeed World Trade Organization director general Roberto Azevedo


Dr Fox believes calculations on global trade ahead of the pandemic will have to change as the world grapples with the recession.

He told BBC Newsnight: “We will not be working as usual. I’m not sure people have yet figured out what a big impact the pandemic can have on the global economy and how it will shape thinking on the other side.

“It’s one thing to present a set of views if you think the world economy is going to grow happily. It’s another thing to present the same prescriptions if you think this economy is going to contract.

“It won’t be normal times. This is not business as usual… we need to understand the potential magnitude of the problems we will be facing. “

Donald Trump

Dr Fox has strong ties to Washington, particularly with the Republican Party.

But he said he had little van with President Donald Trump who questioned the merit of multilateral organizations and effectively crippled the WTO appeals court by refusing to approve new appointments.

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AFP

In contrast, the former secretary for international trade said he strongly supports a rules-based international trading system.

He also said he had little time for Mr. Trump’s habit of raising trade tariffs as Dr. Fox frowned on protectionism.

“Protectionism has a price, especially in terms of security,” he said. “But economically, if you protect your economy, you might get a price drop in the short term, but you will likely get a price increase in the long run because there is less competition in the system. “

Brexit and trade

Downing Street believes Dr Fox’s appointment is an important sign of the freedoms Britain enjoys after Brexit.

Trade negotiations in the EU are led by the European Commission, which means that it would be practically impossible for a member state to nominate a candidate for the head of the WTO unilaterally.

Britain has high hopes that the EU will not veto Dr Fox. But there are concerns that China may oppose his appointment as punishment for Britain’s decision to phase out Huawei’s involvement in the UK’s 5G network.

Ambassadors to the WTO choose the Director General by consensus. But the US, EU, China, India and Brazil can each veto a candidate.

You can watch Newsnight on BBC Two at 10:30 p.m. on weekdays. Catch up on iPlayer, subscribe to the program on YouTube, and follow it on Twitter.

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