One of the thi9ngs that gets a certain type of lefty up in arms is the arbitration clauses in the various proposed trade pacts on offer at present. It’s portrayed as a violation of democracy that if politicians are allegedly in breach of the contracts under which people invest in the country then everyone can go off to a neutral (ie, not controlled by the politicians) legal system to sort matters out. We here regard it more as the upholding of the rule of law but there we go, be a dull world if we all thought the same way.
However, we’ve got an interesting little example of what we mean in this latest silly idea:
There are bad ideas that might appear at first blush to have some merit, and then there are just bad ideas. A consultation announced this week by the Government into whether to enforce national “roaming” so as to improve mobile phone coverage very much falls into the latter category.
Were the normally sound Sajid Javid, the responsible minister, to go this route – and the fact that the consultation has been limited to just three weeks powerfully suggests he has already made up his mind – it would potentially amount to a breach of the terms under which mobile phone operators bought their licences.
Quite, it is very much a change in the terms of those licences. Licences which the phone companies paid tens of billions of pounds for. And none of us really think that the changes are going to increase the profits of the mobile phone companies, do we? So, they paid up in the belief that the rules would be one way and now they’ve paid up the rules are (perhaps) to be changed. This is exactly the sort of thing that that arbitration clause in trade deals is all about. Holding government, the politicians, to the terms that they agreed at the point of investment. And if those rules are changed to work out whether it’s a reasonable change and if it isn’t then who should pay whom to sort of the economic effects of the changes.
Our best guess here is that national roaming isn’t going to go anywhere, whether it’s a good idea or not. For we can’t imagine that George Osborne fancies the idea of having to pay back chunks of those licence fees that he’s already banked and spent.