Despite the wild card of the coronavirus pandemic, Trade Secrets’ predictions for 2020 turned out to be not bad at all © AP

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Hello from Brussels and welcome to the last scheduled Trade Secrets of the year. Today’s main piece assesses how our predictions for 2020 turned out — not bad at all, it transpires, despite the wild card of the pandemic, though a couple are still hanging in the balance with 10 days before the new year. Today’s special festive Tit for Tat is a Q&A with Santa Claus, chief executive of a renowned global logistics operation. 

Oh yes, and one prediction we could have nailed on in January: the daily Trade Secrets, still only just over a year old, has survived and thrived. A big welcome to Claire Jones, who joins us as editor in the new year. We might do a Brexit special before year end if a deal happens, or if everything implodes, in the next two weeks. Failing that, our familiar brand of wonky snark will be back in January. In the meantime: wear a mask, get the jab, don’t take risks, stay at home. We need our readers healthy. See you soon.

Don’t forget to click here if you’d like to receive Trade Secrets every Monday to Thursday. And we want to hear from you. Send any thoughts to trade.secrets@ft.com or email me at 

2020: the year of trading dangerously

The almost-final scorecard of our predictions from January

US-China: our prediction

“The first phase of the US-China mini-deal will be signed . . . but there won’t be another substantive one this year. Even the first one will lead to continual grumbling about exactly how many tonnes of soyabeans China is buying. Goods tariffs between the two countries won’t end the year higher than they are now, but those implemented since Trump became president in 2017 won’t be eliminated either. Despite the huge importance of November’s US presidential election, trade itself won’t play a big role in the campaign.”

How did we do?

Right on every count, pretty much: the deal, the grumbling, the tariffs. Joe Biden did take pops at Donald Trump for being soft on Beijing over trade, but most of the election conversation on China was Trump going after Biden’s son Hunter and his business activities there.

US-EU: our prediction

“US relations with the EU will take a turn for the worse, but not disastrously. Trump will not impose car tariffs on imports from Europe. After the World Trade Organization issues its ruling against Airbus over the summer, Washington and Brussels will start talks on resolving the issue, but these won’t get done quickly and the EU will introduce tariffs in the meantime. The US will take some kind of action over the digital services tax, and the EU will start a WTO case.”

How did we do?

Right on all except the digital services taxes, where it looks like we were premature by just six days on the US action. Give us a break: we’re only human.

EU-China: our prediction

“The EU’s relationship with China will be much less combative than US-China and EU-US relations, but not particularly fruitful. Brussels and Beijing will continue to talk quietly about reform of the WTO, but those discussions will produce little of substance. The bilateral investment treaty being negotiated between the two countries will miss its 2020 deadline, at least in any meaningful state. The main sticking point will be designing a mechanism to hold China to its promises. The big EU-China Leipzig conference in September will be a stalemate on the trade front . . . The European Commission’s attempts to impose collective EU policies on 5G procurement, foreign investment and procurement with China in mind will make little progress.”

How did we do?

There’s still time for us to be wrong on the investment treaty, since the two sides are still talking. Otherwise pretty accurate, though the investment treaty sticking points are not just on enforcement. The Leipzig conference went virtual, thanks to Covid-19, but still did not really get anything done. More member states have moved to exclude Huawei from their 5G systems, true, but the commission played a supporting rather than an executive role.

Trade Secrets predicted that the EU’s relationship with China will be much less combative that its relations with the EU but not fruitful © Virginia Mayo/AP

EU and others: our prediction

“With environmental and specifically Amazonian deforestation considerations unresolved, ratification of the EU-Mercosur trade deal will be stalled indefinitely. The bilateral deal with New Zealand will progress quickly and will be nearly or totally agreed by the end of the year. The EU-Australia agreement will be slower: it will become tangled up in arguments over beef quotas and a similar (though less dramatic) overlay of climate change concerns. Tensions between different commission directorates over practicalities and legality mean that hopes for introducing a multi-sector carbon border tax by 2021 will start to look shaky.”

How did we do?

Sort of right on Mercosur: it is stalled but may come up for ratification next year. Wrong on New Zealand, where we overestimated the EU’s desire to get a deal to pre-empt one with the UK. Carbon border tax: it will indeed be a stretch to get one in place for next year, despite the commission’s finest beavering away on the detail.

UK: our prediction

“On Brexit, UK prime minister Boris Johnson will find a way of de facto extending the transition period rather than having the UK drop into a bare-bones bilateral trade deal by year end . . . There will be talks and possibly completion of a UK-US bilateral deal covering essentially minor technical measures . . . In both cases, the newsrooms of Britain will be rent by arguments between political journalists repeating the Downing Street spin that this is a huge success and economics/trade reporters correctly pointing out they are mediocre outcomes for the UK.”

How did we do?

Even if the EU-UK trade deal happens, we were wrong on Brexit. Incredibly, given the amount of information available to us, we underestimated the Conservative government’s appetite to crash its own economy — and this despite the pandemic. Even a bridging agreement to extend current arrangements until a new deal came in would only meet the letter rather than the spirit of our prediction. We are potentially nearly partly right (which sounds a bit feeble) on a “minor technical” deal between the US and UK: as we went to pixel, USTR was talking about lifting Airbus-related tariffs (on, among other things, Scotch whisky and cashmere) in return for the UK doing similar regarding tariffs related to the steel and aluminium issue. Regarding the deep chasms between political and economics/trade reporters: naturally this never happens at the FT, but it is widespread elsewhere.

World Trade Organization: our prediction

The WTO appellate body crisis will not be resolved, as the US will continue to block judge appointments. By the end of the year, at least a dozen countries will have signed up to the EU-inspired alternative version . . . The most that the June WTO ministerial in Kazakhstan will produce is an outline agreement on reform of fisheries subsidies. A strong European candidate to be the new director-general of the WTO will emerge ahead of the incumbent Roberto Azevêdo retiring in 2021, but US opposition will mean an African nominee will be the favourite by December 31.

How did we do?

The unforeseeable (Covid-19 and Azevêdo’s resignation a year early) changed timings somewhat, but we were right on the underlying substance. The appellate body is still frozen, but the workaround version went operational in August with 23 members. The ministerial in Kazakhstan was postponed, hopefully only to 2021, but the underlying issues, including fisheries, are miles from being finished. The ill-fated EU trade commissioner “Big Phil” Hogan, if you remember him, declared himself interested in the director-general job, but USTR undercut him and that was that. Thanks to the earlier-than-expected timetable for selection, the Nigerian candidate Ngozi Okonjo-Iweala is in rather more than pole position to become DG. In fact, she is basically waiting for the US to lift its threatened veto before taking over.

Overall verdict

There are still 10 days for us to be proved wrong (or half-right) on a couple of issues but, otherwise, we are pleased with how we have done. We are inclined to go out on a high and make no more forecasts ever but, in fact, we will be back with more in the new year.

Charted waters

UK public sector borrowing rose to a record high in the first eight months of the financial year as the pandemic continued to blight the government’s finances, resulting in falling revenue and soaring spending. The government borrowed £284.7bn to cover the gap between its spending and revenue from April to November, according to the Office for National Statistics. In his spending review on November 20, Rishi Sunak, UK chancellor, said the coronavirus pandemic would see government borrowing this year rise to a peacetime record of £394bn.

Column chart of Public sector net debt excluding public sector banks as percentage of economic output showing UK public debt-to-GDP has soared to levels last seen in the 1960s

Tit for tat

Santa Claus, chief exec of the legendary Lapland-based express delivery service, joins us to answer three quick questions about running a just-in-time-for-Christmas supply chain.

Santa Claus on the secret to his Christmas global supply chain © Mohd Rasfan/AFP/Getty

Q: It seems like forever you’ve been a global leader in international gift distribution. What do you do to stay on top of the world?

People forget our client base has multiplied enormously over the decades and we get lots of shrill complaints if we don’t deliver. But throughout we’ve kept the same smallish group of employees, or more accurately a group of smallish employees. The only change to our capital stock is adding a nasally mounted guidance capability to one of our ungulate transportation fleet. We did get McKinsey in to leverage our value-added, but they first suggested streamlining distribution by sending all the products to one customer and then wanted to reduce inventory costs by staggering deliveries throughout the year. So we terminated the contract, put a lump of coal in their stocking as it were, and went back to our core productivity-enhancing technology: magic. Old dog, new tricks and all that.

Q: Will Brexit make any difference to your business?

Britain’s going to be a big priority for us this year — all the spare presents we have and as much jollity as we can, the poor things. In the longer term we’re not too bothered. We’re too fast for the customs inspectors to see, so we’re not going to be subject to chocolate orange antidumping duties, Lego import licences, product-specific rules of origin for Frozen 2 lunch boxes or mutual recognition of chimney ingress qualifications. Actually, Brexit could be good news for us. We’ve got lots of consultancy requests from British delivery companies which will now deliver only one day a year and leave the other 364 for paperwork, so that’s a new income stream for the business. As for Brexit being a good idea: ho, ho, ho.

Q: Have you ever considered using blockchain to manage your distribution?

Blockchain, you say? OK. Blockchain. Well, I think you’re old enough to know this now. Blockchain is a story we tell to children. It doesn’t actually exist.

Don’t miss

  • Britain and France were on Tuesday racing to agree a swift reopening of trade routes across the Channel, as lorries remained stuck on either side of the border after European countries prevented travel from the UK due to fears over its new strain of coronavirus. EU member state ambassadors in Brussels were due to hold talks on Tuesday about a common approach to border restrictions in response to the new Covid-19 strain. Read more

  • Britain and the EU edged towards a compromise on fisheries on Monday in an attempt to unblock a Brexit trade deal, as Prime Minister Boris Johnson eyed December 30 for a last-gasp parliamentary vote on an agreement. Britain’s chief negotiator David Frost and his EU counterpart Michel Barnier are haggling over cuts to fishing quotas for EU boats operating in UK waters after Brexit and over the length of any transition period for the industry. Read more

  • Shopping sites delivering from China are rushing to build their own global freight networks, as the pandemic and new US shipping rules threaten the supply of packages to the west in the run-up to Christmas. Stung by rising costs after a new postage deal was struck last year between the US and the UN’s postal body, bargain sites such as Wish and AliExpress have invested heavily to handle their own flow of goods. Read more

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