Is Britain about to leave the EU?

[Gigaz]

Show me someone who claims free trade cannot happen without political union and I will show you either a fool or a liar. Free trade just means free trade and nothing else.

It's not that it cannot happen, but it will not happen. The EU cannot give Britain a free trade deal, or more general it cannot incentivise countries to leave the Union.

 

[Arakhor]

Which is all the UK ever wanted anyway.

The UK? Isn't it amazing how nation states speak with one voice and never change that opinion, even if it was ever true, when it suits someone's narrative?

It's not that it cannot happen, but it will not happen. The EU cannot give Britain a free trade deal, or more general it cannot incentivise countries to leave the Union.

At least not without some measure of compromise, no. Cue the tabloids screaming about the EU being the next enemy of the people, though.

 

[Samson]

Nope, they do want free trade but you can shove the rest. Which is all the UK ever wanted anyway.

Show me someone who claims free trade cannot happen without political union and I will show you either a fool or a liar. Free trade just means free trade and nothing else.

This all depends on what the person has to trade. Car manufacturers want to be able to trade manufactured goods, farmers want to be able to trade agricultural goods, bankers want to trade financial instruments. What most people have to trade is their labour, and there are real issues with free trade in that without some level of political union.

 

[EnglishEdward]

I think that Americans sometimes forget that the British premiership is not at all like the American premiership, and that the prime minister can be desposed at any time and for any reason by a simple majority of either their party or of the Commons, so their theoretically more sweeping authority is in practice much more constrained than those of America's elective monarchs.

And Parliament is not a court, it's a legislative body, and one which only has full legislative authority over England, varying legislative powers in Scotland, Northern Ireland and Wales being devolved to local legislatures. So the point stands, there's no such thing as "British law" or "British courts" expect in the broad sense of "laws and courts which have authority in Britain", which for the time being includes European laws and European courts.

Perhaps all this "make Britain British" stuff would apply if we were under some hyper-centralised regime like France, but the political and legal reality in the UK is a weird, accidental quasi-federalism, and when we're talking about sovereignty and legislative authority, that sort of thing matters.

Not quite full at the moment because the EU has legislative
authority as long as the UK remains a member of the EU.

 

[Mise]

Let's say the UK and EU have a Free Trade Agreement. In practice, this means that there will be an agreement that products sold to the UK by EU companies have to adhere to various UK standards for sale. For example, we have safety standards on foods, pharmaceuticals, cars, fridges, computers, etc etc. These UK standards are, of course, set by UK courts and UK laws. If a company based in the EU exports goods to the UK, but breaches these standards, they can be taken to court in the UK for breaking UK law. This, of course, works the other way around, too. UK companies exporting to the EU will be held to EU standards; all products made for sale in the EU must adhere to those standards; and companies failing to meet those standards will be taken to courts in the EU.

Furthermore, disputes arising from trade between EU and UK companies may end up being settled in the ECJ anyway. If an EU company breaches a contract with a UK company, the UK company may have to seek redress in an EU court, not a UK one. Similarly, a UK company breaching a contract with an EU company may still find itself in front of an EU court. It is likely that, during the FTA negotiations, the EU will insist that the ECJ is the court of last resort for disputes arising from EU-UK trade.

The UK will still, with respect to its trade with the EU, be subject to the ECJ's rulings and to EU law, but without any say or vote in the ECJ or EU law. This is, of course, the same situation as the many countries that currently trade with EU nations, but that are not members of the EU. In other words, this is a benefit to EU membership that will be lost when we leave.

 

[Oerdin]

It's not that it cannot happen, but it will not happen. The EU cannot give Britain a free trade deal, or more general it cannot incentivise countries to leave the Union.

It is what will eventually happen anyway. The UK can walk and settle back on WTO rules while signing free trade deals. So far USA, Canada, Australia, New Zealand, South Africa, India, Turkey, China, South Korea, and Japan are all saying free trade with the UK is either their top priority or one of their top priorities.

Further more the current balance of trade between the UK and the rest of the EU says the continent will lose far more. Once the job loses set in eventually the politicians who want to punish the UK for daring to say no will change their tunes. The UK simply needs to be patient enough to wait it out and it will get the free trade it wants without the other stuff it does not want. In the mean time there is a whole world of trade opportunities out there if certain EU officials (such as Junckers) want to cut off their noses to spite Britain.

 

[Arakhor]

I don't get what your obsession with free trade is, Oerdin. It was reported today that inflation has risen by 0.4% since the autumn due to the steep increase of shopping goods and the fall in the pound, so if the UK is to casually play chicken over the economy with the EU, whilst eating WTO tariffs and the like, it won't be wealthy businessmen that suffer, it won't be Tory fat-cats and it certainly won't be Americans in sunny California.

But hey, we have the Tories in power - knifing the working classes in the chest has been their explicit MO since the general election and it's certainly not going to stop now.

 

[Gigaz]

It is what will eventually happen anyway. The UK can walk and settle back on WTO rules while signing free trade deals. So far USA, Canada, Australia, New Zealand, South Africa, India, Turkey, China, South Korea, and Japan are all saying free trade with the UK is either their top priority or one of their top priorities.

Here is explained what happens when Britain settles back on WTO rules, and why it's a terrible idea:
http://leavehq.com/blogview.aspx?blogno=128

The thing with the recent free trade agreements was that they are hard to negotiate, and that large countries rarely compromise. So Britain will always be in the Take it or leave it situation.

 

[Oerdin]

I don't get what your obsession with free trade is, Oerdin. It was reported today that inflation has risen by 0.4% since the autumn due to the steep increase of shopping goods and the fall in the pound, so if the UK is to casually play chicken over the economy with the EU, whilst eating WTO tariffs and the like, it won't be wealthy businessmen that suffer, it won't be Tory fat-cats and it certainly won't be Americans in sunny California.

But hey, we have the Tories in power - knifing the working classes in the chest has been their explicit MO since the general election and it's certainly not going to stop now.

I am actually a duel US/UK national, thank you. Also, the pound is rebounding nicely since the PM's speech as the markets got the clarity they wanted. A slightly lower pound is actually a good thing for British competitiveness and a new balance will quickly be found. All in all the UK just needs ad much free trade it can get and it will prosper but it does not need free trade at any price so it can afford to wait out the intransigent Eurocrats until the countries which pay for the Eurocrats lavish lifestyles demand they stop hampering the economy. It will happen if we just have the courage to wait them out especially after the corrupt vindictive piece of garbage Junckers gets sent packing.

 

[EvaDK]

The British Pound is partly holding up due to the actions taken by the Bank Of England. At some time, these options will dry up and it will be up to the British Treasury (aka the tax payers money) to keep things stable.

To add, did you consider that it was May's guarantee, that the Parliament will have to sign off on whatever deal is negotiated, that kept the markets afloat today? And not so much her speech in itself, which had little substance to it in the first place?

PS: trade agreements are very complex. They take roughly 8 years to negotiate in average, give or take.

 

[AdrienIer]

When will the leave people start making sense ? Half of the UK exports go to the EU. How much of the EU exports go to the UK ? I can't find the number anywhere but it's certainly not 50%. So the exporting companies of the UK have to (on average) find new exporting countries for half of their production, while the EU ones will only have to find new partners for a quarter/decile/whatever the percentage is of their production. The relative loss will be much worse for the UK so no, the EU companies won't be begging for the EU to make a deal with the UK : the UK companies will be begging for the UK to make a deal (much worse than the current one) with the EU.

As pretty much everyone on the EU side has said, the EU economy will take a hit but the UK economy will take a MUCH bigger hit.

 

[Kyriakos]

Of relevant:

 

[Lillefix]

So the exporting companies of the UK have to (on average) find new exporting countries for half of their production, while the EU ones will only have to find new partners for a quarter/decile/whatever the percentage is of their production. The relative loss will be much worse for the UK so no, the EU companies won't be begging for the EU to make a deal with the UK : the UK companies will be begging for the UK to make a deal (much worse than the current one) with the EU.

I'll tell you how they think. They know they import slightly more from the EU than they export to the EU. So if they cut all ties there will be a net gain.
Doesn't make much sense, but I suspect that's the train(wreck) of thought.

Edit:
I like that Kyriakos. Very funny

 

[EnglishEdward]

Here is explained what happens when Britain settles back on WTO rules, and why it's a terrible idea:
http://leavehq.com/blogview.aspx?blogno=128

It is interesting reading, but consider the case of UK Company A regularly exporting product X to continental company B.

The paper assumes that the day after the UK leaves the EU:

But the moment we leave the EU, this stops. Your component manufacturer may still comply with exactly the same standards, but the testing houses and the regulatory agencies are no longer recognised. The consignment has no valid paperwork. And, without it, it must be subject to border checks, visual inspection and physical testing.

What that means in practice is that the customs inspector detains your shipment and takes samples to send to an approved testing house (one for the inspector, one for the office pool, one for the stevedores and one for the lab is often the case). Your container inspection is typically about £700 and detention costs about £80 a day for the ten days or so it will take to get your results back. Add the testing fee and you’re paying an extra £2,000 to deliver a container into the EU.

Apart from the costs, the delays are highly damaging. Many European industries have highly integrated supply chains, relying on components shipped from multiple countries right across Europe, working to a “just in time” regime. If even a small number of consignments are delayed, the whole system starts to snarl up.

i.e. everything stops.

But it does not have to. This must is only in the mind of unthinking bureaucrats that have, for protectionist
or revenge reasons, decided to be maliciously literalist in interpreting pre-existing instructions.

I.e. That would only happen in the first instance if the remnant EU states decided to actively apply non
tariff barriers to obstruct UK export trade to the continent and thereby initiate a trade war.

And the UK government would not mess about, it would very quickly block all
French/German/Italian cars/wine etc from entering the UK.

Is the combined EU stance really going to be that if the UK peaceably and democratcally
exercises its rights under Article 50 to leave the EU, that it will declare a trade war?

 

[JohannaK]

where are you gonna get your wine if not from Europe? California? Is it really worth it?

 

[EnglishEdward]

I'll tell you how they think. They know they import slightly more from the EU than they export to the EU. So if they cut all ties there will be a net gain.
Doesn't make much sense, but I suspect that's the train(wreck) of thought.

The UK traded a lot with the six countries of the EEC before it joined the EEC and we would expect to trade with the remnant provinces of the EU after we leave.
Leaving the EU is not the same as cutting off all ties. However if all ties were cut by the EU, the question would be what would we in the UK need from elsewhere.

Food
Fuel
Clothes
A few specialist medicines

We would need to pay the rest of the world for that.

But as UK trade with the rest of the EU runs at a current account deficit (e.g. loss), the loss of that loss would be no loss to us.

 

[Gigaz]

It is interesting reading, but consider the case of UK Company A regularly exporting product X to continental company B.

The paper assumes that the day after the UK leaves the EU:



i.e. everything stops.

But it does not have to. This must is only in the mind of unthinking bureaucrats that have, for protectionist
or revenge reasons, decided to be maliciously literalist in interpreting pre-existing instructions.

I.e. That would only happen in the first instance if the remnant EU states decided to actively apply non
tariff barriers to obstruct UK export trade to the continent and thereby initiate a trade war.

And the UK government would not mess about, it would very quickly block all
French/German/Italian cars/wine etc from entering the UK.

Is the combined EU stance really going to be that if the UK peaceably and democratcally
exercises its rights under Article 50 to leave the EU, that it will declare a trade war?

I think you know how the EU works, and its not run by some unthinking bureaucrats. It's run by consensus of the individual member states. If for example Bulgaria or Wallonia or Greece don't like the agreement because why would they care about trade with the UK, then there is no deal. The Germans have very little incentive to make them get their act together because Merkel is not all that much driven by economic considerations. Germany has the money to make a point it she likes to. I'm just saying refugees.
Anyways, there is growing discontent about the Brexit in Poland and other eastern European states because it is perceived as essentially xenophobia targeting Slavs. Also, they could use the money which the guest workers send back, and they have little to loose in a trade war. And if the combined EU stance is that there is no combined EU stance then, well, sucks for Britain. Stop blaming the EU when the Brexit turns sour, because it was the choice which Britain made.

 

[EnglishEdward]

where are you gonna get your wine if not from Europe? California? Is it really worth it?

Thank you for your concern.

There are vinyards in England, and in California, Chile, Australia, South Africa.

Besides which wine is simply not essential and it is largely the liberal elite (the pro Remain) who enjoy wine.

The rest of us can manage on beer and whisky.

In all seriousness, we would be impacted more if India stopped exporting tea.

 

[Kyriakos]

I think it is way too early to say who will be harmed more. Obviously the most crucial development in the near future will come from Italy and France, and maybe by then it won't matter (other than historically) that UK left prior to the domino effect.

 

[EnglishEdward]

I think you know how the EU works, and its not run by some unthinking bureaucrats. It's run by consensus of the individual member states. If for example Bulgaria or Wallonia or Greece don't like the agreement because why would they care about trade with the UK, then there is no deal. The Germans have very little incentive to make them get their act together because Merkel is not all that much driven by economic considerations. Germany has the money to make a point it she likes to. I'm just saying refugees.
Anyways, there is growing discontent about the Brexit in Poland and other eastern European states because it is perceived as essentially xenophobia targeting Slavs. Also, they could use the money which the guest workers send back, and they have little to loose in a trade war. And if the combined EU stance is that there is no combined EU stance then, well, sucks for Britain. Stop blaming the EU when the Brexit turns sour, because it was the choice which Britain made.

I know how customs officials work.

With respect to Poland and other Slavic countries. If there is a trade war, they lose the money the
guest workers in the UK are sending back. They therefore have an incentive not to initiate a trade war.

There may well be no deal because no deal can be brokered that is acceptable to all.

But having no deal, does not mean the EU must misinterpret customs procedures to start a trade war.