World Trade Organisation Rules

wotsthat

Alan_Brown wrote: »

I assume that once the dust settles, the UK and Eu will come up with a mutually beneficial trade agreement, but it's good to know what other possibilities exist and their implications.

Project fear will look like a bedtime story if we go down the WTO route. It comes only after a complete and utter breakdown of negotiations. It's the worst case scenario and EU trade will fall off a cliff. We'll be worse off and so will our European neighbours.

That's just for manufactured goods. The UK service industry will suffer immensely.

I know some people are much more chirpy about the opportunities but I think we'll end up paying more and having less say for something which doesn't look that much different than now.

Rinoa

Before the Referendum David Davis wrote an excellent piece on trade deals including his thoughts on WTO terms:

http://www.conservativewoman.co.uk/david-davis-mp-the-eu-hasnt-created-any-jobs/

Think back to the 2010 election.
David Cameron and Nick Clegg did their best to knock 7 bells out of each other in the election campaign.
Then, within a week, they were sharing a photo call in the Rose Garden of 10 Downing Street.
Circumstances had changed, and with it their behaviour.
Similarly after Brexit, the pressures on the countries that make up the EU will be different.
Free trade with Britain is in all their interests.
This is particularly true of the most powerful leader in Europe, Angela Merkel.
Her economy is dependent on exports, particularly of manufacturers, and especially of cars. Britain is the second largest and fastest growing car market in Europe.
Audi, BMW, Mercedes, and Volkswagen alone are over 25% of the British market, with the UK buying one million cars from Germany every year.
They cannot afford the threat being levelled at Britain, so called “WTO terms”, because they would involve a 10% levy on all car imports.
A German Chancellor would have to avoid this, particularly in an election year. In Europe, what a German Chancellor wants, a German Chancellor generally gets.
Indeed the first calling point of the UK's negotiator in the time immediately after Brexit will not be Brussels, it will be Berlin, to strike the deal: absolute access for German cars and industrial goods, in exchange for a sensible deal on everything else.
Similar deals would be reached with other key EU nations.
France would want to protect the £3bn of food and wine it exports to the UK. We have seen the sort of political pressure French farmers are willing to bring to bear when their livelihoods are threatened, and France will also be holding a general election in 2017.
Italy will deal to protect its billion-pound fashion exports. And Poland its multi-billion pound manufacturing and electronics exports.
So there is almost certainly going to be a deal, one that maintains a free market between the EU and the UK.
WTO terms
However, let us assume for a second that everybody behaves irrationally, and we are forced back onto WTO terms.
Let us be clear – I do not believe for a moment that that will happen, but let us humour the Treasury fantasy.
In that eventuality people seem to forget that the British government will be in receipt of over £2 billion of levies on EU cars alone.
There is nothing to stop us supporting our indigenous car industry to make it more competitive if we so chose.
WTO rules would not allow us to explicitly offset the levies charged, but we could do a great deal to support the industry if we wanted to. Research support, investment tax breaks, lower vehicle taxes, there are a whole range of possibilities to protect the industry, and if need be, the consumer.
Such a package would naturally be designed to favour British consumers and British industry.
Which of course is another reason that the EU will not force this outcome.
Trade negotiations
The other bogus element of the Treasury forecast is the presumption that the UK will do badly in global trade negotiations.
Trade negotiations are exercises in mutual self-interest. They are not power plays, or coercions, particularly now the WTO default rules are in place.
Without the emotional politics of the EU in play, there is no reason whatsoever to expect that most countries in the world would not actively want a free trade agreement with the UK.
This makes the claim by the Remain Campaign that we would have to “renegotiate 50 trade deals after Brexit” look particularly silly, indeed almost hysterical.
The simple truth is that under state succession rules all existing trade deals with non-EU countries would stay in place until either side wanted to renegotiate them. Why on earth would any non-EU country behave differently?

Alan_Brown

Generali wrote: »

I'm simply trying to understand what Leave voters think comes next. You guys won the vote fair and square so what happens now? What's the plan? What is the future that you see for the UK.

It doesn't seem to be an unreasonable question.

What's the plan?

I think that sensible people will make sensible decisions and life will go on. Those who are getting hysterical and screaming that the world is about to fall will end up looking foolish.

Things have a way of working out, no one can see the future. The world will keep spinning on its axis and rotating around the sun. The sun will continue rotating around the black hole at the centre of the galaxy and the universe will keep expanding.

Get a couple of tissues, dry your eyes, blow your nose and stop acting like a jilted teenage girl.

wotsthat

Just another point. If I import a container of product into the UK from a third country then that same product can be sold throughout Europe under the free movement rules.

I've some experience of importing product from a third country and then trying to export part of it to another third country. I just wouldn't wish it on us as a day to day trading mechanism.

Good for Rotterdam but bad for Thamesport.

rubuhoeikanaika

The main issue is that WTO rules don't say anything about services, and a huge proportion of the UK's exports are services. That's why Britain would be shafted if we had to rely on WTO rules.

Alan_Brown

Goodness. Generaly has been PPR'd!!

Hopefully it's just a temporary thing while he gets a grip and calms down.

CLAPTON

martinsurrey wrote: »

So a car produced in Sunderland will be more expensive in Germany than a car produced in Greece.

doesn't sound good for their jobs...

I'm not sure what your point is: are you talking about wage differentials with Greece or tariff barriers

if we leave the EU and just trade then the EU can set tariffs on imported goods
and the UK can set tariffs on imported goods.

in my view this would harm both the countries of the EU and the UK as I believe in the benefits of free trad, but that would be their choice to harm their own people.

However as we are a net importer of cars, this gives us the scope to increase car production for sale in the UK if the tariff situation was unfavourable.

wotsthat

Rinoa wrote: »

Before the Referendum David Davis wrote an excellent piece on trade deals including his thoughts on WTO terms:

He's going to struggle to sell the idea to a consumer they don't need to worry about paying more for an import because the government will invest it and make them better off.

If the argument worked we'd all willingly hand more tax to the government for them to invest on our behalf.

Rinoa

Alan_Brown wrote: »

Goodness. Generaly has been PPR'd!!

Hopefully it's just a temporary thing while he gets a grip and calms down.

He seems very angry at the moment. Maybe a short break will be beneficial. Hope he's back soon, too valuable a poster to lose.

Rinoa

wotsthat wrote: »

He's going to struggle to sell the idea to a consumer they don't need to worry about paying more for an import because the government will invest it and make them better off.

If the argument worked we'd all willingly hand more tax to the government for them to invest on our behalf.

Well, the £9Bn tariffs on imports from the EU is about the same per person as we currently pay to the EU for membership. About £150 p.a.

Not sure many will notice.