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Discussion > The World Turned Upside Down

Geoff Chambers, is there really support for Trump on the left? I find that hard to believe - perhaps you have some links?

Martin, yes maybe the CC act as well. That makes two- hardly the makings of a "de-facto world government" as suggested.

Steve Richards. "Being able to trade with the whole world on your own terms will expand our trade..." Except it wont be on our own terms, very obviously. It will be on terms dictated by our major trading partners, the EU, China, the US etc. Only with smaller countries might we get to play boss.

Jun 19, 2016 at 1:40 PM | Unregistered CommenterRaff

Steve Richards Only if you redefine the word "isolation" The names of the two sides say it all - Leave and Remain.
"Trade with the world", you leave, you sever existing trade links.

Jun 19, 2016 at 1:49 PM | Unregistered CommenterAlan kendall

"Except it wont be on our own terms, very obviously. It will be on terms dictated by our major trading partners,"

That's not how it works. Two countries don't necessarily have the same products to sell. So we might be happy to have zero tarif on one thing so long as in return we have no tarif on something else. One of the reasons a trade deal with the EU is so hard is because each has a different set of products they want to push and don't want competition. The UK already knows what products it buys and sells, so doing a deal is easier to negotiate.

Worst case we pay 4% tariff - the WTO value. But we also charge 4%. We have a deficit with the EU, so in theory we'd get more money in chages than they would.

But a Brexit might cause other countries to break free, where we could reform the EC, where we are just trading partners like we wanted all along. It would certainly put a massive stress on the EU's finances and those of its main payers like Germany. Could they survive a trade war any better than the UK or would they need to settle things as quickly as possible?

Jun 19, 2016 at 1:50 PM | Unregistered CommenterTinyCO2

Tiny, I don't really know how trade negotiations work but I imagine the advantage goes to whoever is in a position of power. Would that be the UK, do we have any trade negotiators to ask? But with sterling down 10-20% perhaps and hence exports more competitive, EU countries, the US, China or other countries might be happy to apply 4% or whatever the can get away with to our exports to regain some of that loss. The UK government however, with input prices rising correspondingly, will be loth to apply an extra 4% to imports.

Jun 19, 2016 at 3:01 PM | Unregistered CommenterRaff

But you've put your finger on it - price. There's also quality to consider. If you sell the right product at the right price, people and countries buy it. It's why there are already US and Chinese products here and British products there. Rememeber we are the 5th biggest economy - surely that should count for something? The value of the pound has dropped and will drop further in a panic but that's fantastic for exports and makes it hard for imports. The EU would find it harder to sell to us. Meanwhile we'd be able to start making EU products with all those protected names and processes (eg Palma ham). There'd be a nationalist bump on both sides of the Channel. We'd buy more Austrlaian wine than French and they'd stop buying our lamb. Yummy cheap chops and tastier wine. We could instantly start taxing Google and Starbucks because they could claim to have already paid taxes in Ireland or Luxembourg.

I certainly wouldn't let any of the Remain team be part of the negotiation if there was one.

Jun 19, 2016 at 3:41 PM | Unregistered CommenterTinyCO2

Talking of EU tax deals. Gates might not need to invest as much here if Microsoft was actually paying its taxes.

http://www.dailymail.co.uk/news/article-3649049/Microsoft-agrees-secret-deal-HMRC-allows-company-avoid-100m-UK-tax.html#comments

Jun 19, 2016 at 4:27 PM | Unregistered CommenterTinyCO2

I've been away for a day, and I see there's been a very healthy discussion while I've been away. Thank you one and all.

geoffchambers - interesting comments on the Civil Wars of the 1640s, and regarding Diggers, Levellers and Puritans. It's a period of our history that interests me greatly. I'm still looking out for a good biography of "Freeborn" John Lilburne. I think you may be on to something with your take on the Puritans. I see similarities with the most egregious of the climate change fanatics (I hasten to add I refer to nobody commenting on this website) - sanctimonious, holier than thou, convinced of their rightness, and determined to make life less pleasant for everyone else! If the analogy holds, with luck they'll p**s everybody off to the same extent as the Puritans did, and there will be a major reaction against it all.

Martin A - I'm still with you on your analysis, and your latest refinement of it.

As for the debate regarding potential trading options post-Brexit (in the unlikely event of a Brexit - despite wanting to leave the EU I strongly suspect we won't) I should be interested if anyone can tell me who receives the money from the Common External Tariff when it is applied to goods imported into the EU. Presumably it is collected at the point of entry, but is it kept by the Government of the country where they arrive, or are they handed over to the EU? As it must involve a massive amount of money, it strikes me as an important point, but nobody seems to be discussing it during the referendum campaign. Can anybody enlighten me, please?

Jun 19, 2016 at 8:06 PM | Unregistered CommenterMark Hodgson

It probably goes to the country but will be counted as part of our 'income' to be taxed by the EU. There was talk that even crime and prostitution were part of our economy and should be taxed.

Jun 19, 2016 at 8:17 PM | Unregistered CommenterTinyCO2

Therein lies the rub, Mr Richards (1:17 PM); the economy of Europe is stagnating – as someone has said, the only continent with an economy slower than Europe’s is Antarctica. All the claims of leaving would lead us to economic downfall is probably quite the reverse; let us leave the stagnant EU, and rejoin the developing world. And we do no need “trade agreements” to continue trading – we do not have “trade agreements” now, so why are we being told that we need to have them. The one being pushed so hard for, by both the EU and Mr Cameron, TTIP, is an agreement that is solely for the benefit of the U.S. companies; if the U.S. companies are not making the profit that they are expecting, they can sue the government of the country they are not making the expected profits in. Again, as we are already freely trading with the U.S. now, why do we need this gun to our head?

The other point is that leaving the EU is that we will NOT be leaving Europe; we will still be engaging with Europeans, both the people and the industry, we will just be circumventing the EU institutions.

Finally, another policy that is being withheld from us is that there are moves afoot for VAT to be applied in the country of origin, not the country of sale. With the UK being a greater consumer of European goods that Europe is of ours, then Europe will be getting even more of our tax money – about 14 BILLION Euros more!

Jun 19, 2016 at 9:01 PM | Registered CommenterRadical Rodent

Radical

I had also read something about the EU's planned changes to VAT (though not surprisingly, I have heard nothing about it on the BBC news or website). The problem is, we simply don't know if it's true. But if it is, then it will have the effect of more than doubling our net membership fee, and will punch a huge hole in our already desperate financial situation (c. £1.7trn debt, c. £70bn ongoing deficit).

It forms the backdrop to my anger at the uselessness of our politicians and the poor quality of the referendum debate on both sides. The questions of the EU common external tariff and its VAT plans are hugely important, but nobody on either side is talking about them much if at all. No wonder the British people are complaining that the debate has left them short of facts!

Jun 20, 2016 at 8:00 AM | Unregistered CommenterMark Hodgson

RR, Mark,
if the VAT story is credible, why isn't the Leave campaign using it?

Jun 20, 2016 at 8:19 AM | Unregistered CommenterAlan kendall

Alan K

"if the VAT story is credible, why isn't the Leave campaign using it?"

Good question! I have no idea why not, other than that the debate has been conducted in a puerile way in both sides with precious little intelligence debate either wayThis is such a detailed technical point – but with a sting in the tail that could cost the UK more than our net budget contributions to the EU. Under EU VAT Directive 2006/112/CE Article 402 (yes, it has that many articles), the EU will switch from charging VAT in the country of destination of goods within the EU, to charging VAT in the country of origin. So what? you might ask. Won’t it all come out in the wash? ‘Fraid not. We currently collect the VAT on all those imported goods sold here. When the switch occurs, the country of origin will benefit from the VAT. But because we in the UK have a huge trade deficit with the EU, we’ll collect very much less VAT in the UK. Of course we’ll get the VAT on UK goods exported to the EU – but that’s a much lower figure.

On the current balance of payments, the loss of VAT to the UK is estimated at around £14 billion a year. We’ll have to pay it if we remain. We can avoid it with Brexit.. I picked it up from Roger Helmer's blog where he says this:

"This is such a detailed technical point – but with a sting in the tail that could cost the UK more than our net budget contributions to the EU. Under EU VAT Directive 2006/112/CE Article 402 (yes, it has that many articles), the EU will switch from charging VAT in the country of destination of goods within the EU, to charging VAT in the country of origin. So what? you might ask. Won’t it all come out in the wash? ‘Fraid not. We currently collect the VAT on all those imported goods sold here. When the switch occurs, the country of origin will benefit from the VAT. But because we in the UK have a huge trade deficit with the EU, we’ll collect very much less VAT in the UK. Of course we’ll get the VAT on UK goods exported to the EU – but that’s a much lower figure.

On the current balance of payments, the loss of VAT to the UK is estimated at around £14 billion a year. We’ll have to pay it if we remain. We can avoid it with Brexit."

I don't know if he's right or not - I find the EU Commission website hopeless when looking for information like this. I have found a semi-official looking website which seems to go some way to confirming it, where it says this:

"The contraindications of the system based on applying the country of destination principle,
which – in order to function correctly – is conditioned by a consolidated and efficient system of
exchanges of information between Member States, give rise to fiscal frauds, which are difficult to
counteract. The Community has definitely opted for the country of origin principle, which provides a
form of compensation between Member States, by redistributing VAT. Article 402 from Directive
2006/112/EC from 28 November 2006 states that taxation on intra-Community exchanges should be
done in the country of origin."

But who knows? It is rather important that we do know, though!

Jun 20, 2016 at 8:47 AM | Unregistered CommenterMark Hodgson

Sorry, my last post got a bit mangled. I hope ultimately you can make sense of it. I'm still not very good at this interweb thingy...

Jun 20, 2016 at 8:48 AM | Unregistered CommenterMark Hodgson

Mark Hodgson. A followup question: I assume this is a proposal. If the financial implications are as dire as you suggest, the British Government will be aware and will oppose it. Does the British Government have a veto?

Jun 20, 2016 at 9:23 AM | Unregistered CommenterAlan kendall

The problem is, the EU always has plans cooking. To deny it, all the Remain supporters would say is that it's one idea amongst many that are being discussed. Like Cameron's claim Turkey won't join the EU but refuses to promise to veto it. Too often the EU throws up plans and we veto them, so it looks like we're complaining all the time. Half the EU relies on the UK throwing out stuff and only bestirs themselves when we don't. Stuff gets through when everyone is too tired of saying 'no' and something that's not too bad comes along.

Jun 20, 2016 at 10:03 AM | Unregistered CommenterTinyCO2

Continuing - That's how the EU grows in power and will achieve total statehood. It works by erosion, not big step changes. Eventually there will come a point where our veto for ever closer union will be irrelevant because for all purposes we will be one country all bar the letter heads.

Jun 20, 2016 at 10:08 AM | Unregistered CommenterTinyCO2

Here is someone with facts to offer: https://www.youtube.com/attribution_link?a=rTZwrXojJKE&u=%2Fwatch%3Fv%3DgILTIDr4Ra8%26feature%3Dplayer_embedded

Jun 20, 2016 at 12:20 PM | Registered CommenterRadical Rodent

Alan K

Sorry for the delaying in responding to your follow-up question, but I've been off doing other things. I probably won't be online again until tomorrow, so if I don't respond straight away to any other follow-ups, it's not because I'm ignoring you, or anybody else, it's just that I won't be here.

The short answer is that I don't know if Britain would have a veto against such a proposal. Part (most, in fact) of my frustration with the referendum campaign has been because there has been a lot of scare-mongering by both sides, with much concentration on emotive issues, but precious little concentration on what I regard as important. Important, both because of the amount of money at stake, but also because unlike so much of the hot air today (telling us what would happen if we stay or if we leave, when nobody can know, and at best it can only be informed - or uniformed! - speculation), things like whether we have a veto over EU tax changes is a hard fact. Somebody must know and be able to tell us. Yet nobody does. Even the BBC website, with its fact check section, isn't clear on this point (at least, not to me).

According to a Guardian report earlier this year (http://www.theguardian.com/politics/2016/jan/28/eu-plan-cut-uk-vat-exemptions-pierre-moscovici):

"EU plan could call UK VAT exemptions into question"; and

"Last year, EU judges ruled that ebooks could not benefit from lower VAT charged on paper equivalents because they were not enshrined in a law drawn up before they were invented."

Here is one of the problems. If the ECJ makes a ruling on the EU Treaties, then we're bound by it, even ifs ruling surprises us and causes us a problem. Eurosceptic websites would have us believe that an ECJ ruling earlier this year (or was it last year) against the UK Government, means that foreign companies trading in the UK can now avoid tax that the UK Government planned to collect from them - running into £billions over the lifetime of a Parliament.

I don't know whether this is untrue, entirely true, or partially true (but exaggerated and/or heavily spun). What I do know is that there is a lot of uncertainty surrounding our position if we stay in the EU, and we can remove that uncertainty and take control of our finances without any risk of outside interference if we leave. Though I do acknowledge that you're never entirely in control when international horsetrading goes on, at least if we leave, any concessions we make would be just that - concessions - and not imposed on us by the EU Commission or ECJ without our agreement, and possibly as a bolt out of the blue.

Radical Rodent - thanks for the link. Interesting viewing (but then, as a Brexiteer, I would say that, wouldn't I?).

Jun 20, 2016 at 2:41 PM | Unregistered CommenterMark Hodgson

Thank you, Mr Hodgson. The important point about that video is that it does not rely on speculation or hyperbole; it just gives facts. That the facts will not be comfortable for those who advocate remaining should make them think a little… though I doubt it.

Jun 20, 2016 at 4:24 PM | Registered CommenterRadical Rodent