The Trade Implications of Brexit....

HAMISH_MCTAVISH

michaels wrote: »

UK car production has been moved to Turkey.

Other than a relatively small plant for Transit Vans, I can't think of much else?

That hardly fits with Hamish's contention that cars need to be built in the EU to serve that market.

Turkey is in the EU Customs Union.

mrginge

if the logic is that foreign investment came to the UK because we are in the SM, then I do wonder why they picked us in the first place and didn't just go straight for Germany or France or Spain or ....

There must have been some other strategic reasons.
Are those reasons going to disappear altogether, or is it just that you believe the balance will be tipped back to the EU?

If we had stayed in the EU, would be be able to stop these foreign companies from moving to say Ireland if they felt that the tax rules were more beneficial to them over there?

HAMISH_MCTAVISH

mrginge wrote: »

if the logic is that foreign investment came to the UK because we are in the SM, then I do wonder why they picked us in the first place and didn't just go straight for Germany or France or Spain or ....

There must have been some other strategic reasons.

The UK government has spent decades running around the World promoting the UK as a gateway into the single market and courting Billions of pounds in investment from overseas firms that were looking for a location within the single market for their EU facilities or HQ's.

Britain had a lot of advantages - English being the common business language - a skilled workforce - a good tax regime - the City of London for financial services, etc.

So for those firms that needed a location within the Single Market - the UK within the single market was a good choice.

Are those reasons going to disappear altogether, or is it just that you believe the balance will be tipped back to the EU?

Well first of all it's not just about my belief - I've quoted the unprecedented intervention by the Japanese Government on behalf of their companies - but clearly if you have a need to be within the single market and the place you locate to on that basis removes itself from the single market then your main reason for being here has disappeared.

If we had stayed in the EU, would be be able to stop these foreign companies from moving to say Ireland if they felt that the tax rules were more beneficial to them over there?

We've managed to more than hold our own in terms of attracting businesses that want to be within the single market to the UK over the last few decades.

Around 50% of Japan's entire EU investment has been to the UK.

I see no reason that would not likely have remained the case if we had stayed in the EU.

Whether it does remain the case in future depends largely on whether we remain in the single market or not.

HAMISH_MCTAVISH

If you want to understand these issues in a bit more detail, there's a good explanation here....

As a simple rule of thumb, when you hear 'leave the single market' think about the hollowing out of the UK s financial services industry and our services balance of payments surplus. When you hear 'leave the customs union' think Northern Irish customs checks. When you hear 'no negotiations' think of business panic. And when you hear 'unilateral free trade' think of the total collapse of what is left of the steel industry and a 10 per cent tariff on car exports.

Fella

HAMISH_MCTAVISH wrote: »

Maybe...

But the problem with that argument is the self interest of many of these companies also happens to be aligned with the self interest of the British people.

We want them to invest, to create jobs, and to increase economic activity. And then we accuse them of 'self interest' or 'bias' when they point out the things we've voted for make that less likely.

I don't disagree that's true in some cases.

I would say the reality is there will be winners & losers. The problem is, the current winners know who they are & what they have to lose & a lot of them are very vocal. But the future winners are as yet unknown therefore by definition don't really have a voice.

E.g. lets say that Brexit means some current start-up in India ends up doing billions of pounds of trade with the UK & creating a tens of thousands of jobs here. They're currently silent because they don't exist. Whereas Nissan do.

I think the situation is that nobody knows how it'll work out, we're all just backing our hunch. Remainers think we'd be better off in, Brexiteers think we'd be better off out. It's foolish of either side to categorically state they're correct, it's all supposition. My problem with the Remain argument throughout is that they've constantly spoken as if it's fact. But we all know in reality that economic predictions of more or less any kind are as worthless as Russell Grant's tea-leaves. Even in the short time since Brexit we've had most economists change their mind on the state of the UK. And they'll no doubt change it many times more.

Rinoa

The UK should Leave the Overrated Single Market:

This initiative was provoked by a claim made in 2011 by Ed Davey, then minister of state at the Department for Business, Innovation and Skills (BIS) that “EU countries trade twice as much with each other as they would do in the absence of the Single Market programme.

It emerged that the government had no data to show the “benefits” of the Single Market and the BIS had relied on a European Commission report and other questionable sources. Burrage revealed that the aggregate GDP in 2015 of the 55 countries with an EU agreement was $7.7 trillion. That contrasted with aggregate GDP of all the countries with which Switzerland had agreements of $39.8 trillion, Chile $58.3 trillion, Korea $40.8 trillion, and Singapore $38.7 trillion. Some 90 per cent of the agreements these four countries had negotiated included services, whereas only 68 per cent of EU agreements did so.


The EU has opened an insignificant $4.8 trillion of services markets to UK exporters, while the four non-EU nations cited above have opened markets of $35 trillion, $55.4 trillion, $40 trillion and $37.2 trillion respectively. In two-thirds of cases, post EU agreements, the growth of UK exports has fallen. Yet the CBI and other business organisations, on the basis of no specific in-depth data, assert that the UK benefits from the Single Market. The truth, as revealed by OECD and UN Comtrade data, is that Britain has sacrificed years of freer trade for exporters in both goods and services by abdicating the right to negotiate its own trade negotiations.


Other facts discrediting Ed Davey’s rash claims include the revelation that exports of goods of the 12 founder nations of the Single Market are 14.6 per cent lower than they would have been had they continued to grow at the same rate as in pre-Single Market days and UK exports to the other founder members have been 22.3 per cent lower. As Burrage puts it, “the image of the Single Market as the ‘crown jewel’ of the EU which has delivered ‘substantial economic benefits’ to the UK is a myth”.


Exposure of this Single Market myth is now a growing industry, so that the attempt by Remainers to exploit it during two years of Brexit negotiations are likely to meet with the same sceptical rejection that derailed Project Fear during the referendum. Almost daily the damning facts are piling up. UK exports of goods to the EU amount to less than 8.7 per cent of Britain’s GDP. Britain’s non-EU markets are expanding while the EU is in long-term structural decline. The UK has a trading surplus with the rest of the world, but has a trade deficit with the EU.

http://reaction.life/remainers-maginot-line-single-market-myth-1/

BobQ

The problem is that ignorance is rampant on the trade issues that matter which is evidenced by the result of the referendum. We are where we are and if the Government holds together on Brexit negotiations (which I very much doubt) they will have to find a way of reconciling these issues.

The PM has a difficult choice. If she really is a covert Leaver then she will probably not care what damage is inflected by being out of the Single Market. If she really did support Remain she will eventually need to take the view that the majority of the country are likely to support and move UK to the EEA and retain access to as much of the single market as possible.

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HAMISH_MCTAVISH

Fella wrote: »

I don't disagree that's true in some cases.

I would say the reality is there will be winners & losers. The problem is, the current winners know who they are & what they have to lose & a lot of them are very vocal. But the future winners are as yet unknown therefore by definition don't really have a voice.

That simply boils down to the old "bird in the hand or two in the bush" argument - and I'm not sure it's valid.

What Remainers are arguing is that we can have the best of both Worlds - that EU membership hasn't stopped Germany from becoming a world class exporter - nor Britain from becoming a dynamic economy and financial services hub with low unemployment and a large growth in non-EU exports.

Continued membership of the single market and customs union protects the advantages we have through our trade with the Single Market - while also allowing us to continue growing trade elsewhere.

My problem with the Remain argument throughout is that they've constantly spoken as if it's fact. .

And my problem with the leave argument is they've refused to acknowledge the reality of the compromises which will need to be made, and what we'll definitely lose in order to possibly gain elsewhere.

Andrew Tyrie wasn't wrong when he said the Leavers and Government need to be much more "frank" about the "trade-offs" involved with Brexit, and that....

"many of the promises made by the Leave side are manifestly unfulfillable"

I'm yet to hear any of them sit down and admit the trade-offs exist, let alone explain why these costs are worthwhile.

All we get on here is the same biased partisan drivel like that from the pro-leave authors of the quote in Rinoa's post above....

Rinoa

The benefits and disadvantages of the Single Market
If the Remain campaign’s claim is that we are going to be damaged by losing all the benefits of EU membership, let us start by assessing how sizeable those benefits are.
We should not be ungracious. The European Community has been useful to us.
When we joined it was undoubtedly to our advantage. We were a tottering industrial economy, and the European Community was a modern, go ahead, trade bloc.
To coin an old phrase, they were the future once.
Before we joined, our share of the European market was pathetic, at about 4%. After we joined, over about a decade and a half, it doubled, to 8%. That was the Common Market period.
But since then, during the Single Market period, it has halved again to less than the 4% we started with.
After 40 years in Europe we are no better off than when we started.



Source: Professor Stephen Bush, Britain’s Referendum Decision and Its Effects, Technomica 2016.

The reasons are clear enough.
During the ‘90s tariff barriers around the world came down, after the Uruguay Round, including around the EU, so we lost the protection of those tariffs against global competition.
The burdens of the Single Market regulations handicapped us as well, and general competition from developing countries eroded market share.
The consequence is also clear.
The benefit of being within the the EU Single Market, whilst not zero, is much much, much less than it was under the Common Market period.
It’s a bad deal – a huge trade deficit with the EU and a net £10 billion subscription on top.
That is why we are losing our advantage over countries from outside the EU in markets within the EU; that is why the share of our exports going to the EU has dropped from over 60% to about 42%.
And this share is predicted to fall even further in the future.

Who wrote the above? - David Davis just before the referendum.

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

CLAPTON

the one thing we do know for certain is that trade make both parties to the exchange richer
this is true whether one trades with white christian european countries or with the rest of the world

the one thing we don't know yet and we urgently need to know is exactly how much poorer is the EU willing to make the people of the EU purely for political reasons.
We probably can guess its quite a lot as they already rejoice in damaging the southern european states and rejoice at the population falls in the eastern states.