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Discussion > First steps towards a sucessful Brexit

From the BBC. See the 19.03 entry.

Austria's finance minister, Hans Schelling, warned that "Great Britain will become Little Britain".
Speaking as he arrived in Brussels for talks, Mr Schelling predicted that Scotland and Northern Ireland would not leave the EU following the referendum. Both voted against so-called Brexit.

Does he know something we don't?

Jul 11, 2016 at 8:08 PM | Unregistered CommenterEntropic man

Hans who?

Jul 11, 2016 at 8:23 PM | Unregistered CommenterMartyn

Martyn

Hans Jorg Schelling

You may need to translate.

Jul 11, 2016 at 8:41 PM | Unregistered CommenterEntropic man

People thinking up scenarios to mess up Brexit. He may well know something but it does not seem to include the political realities in Scotland, Ireland north and south and the EU. However, it does not seem a good way to worry the English and Welsh who are fed up with the scottish neverendum and may not be so devoted to the Union as some think if the other countries really want to leave, not to independence but to join a failing empire.

(I've often noticed on the blogs that Scot Nats cannot stand being agreed with by an English commenter if I say if you want to go, good luck.)

Jul 11, 2016 at 8:44 PM | Unregistered Commenterrhoda

Oh, and I wonder why Austria needs a finance minister. Is his office in Germany?

Jul 11, 2016 at 8:45 PM | Unregistered Commenterrhoda

Rhoda

Schelling, and other EU finance ministers, will have a big say on our future trade with the EU.

Worth watching how they think. Remember that we are on the weak side in any negotiations. They can impose any conditions they like, knowing that two years after we invoke article 50 we default to WTO rules and 10% tariffs. That would benefit them much more than us.

Jul 11, 2016 at 8:59 PM | Unregistered CommenterEntropic man

rhoda
Typical English insult about Austria? Not worthy of you.

Jul 11, 2016 at 9:02 PM | Unregistered CommenterSandyS

Rhoda

Perspective.

In the first three months of 2016 our trade deficit with the EU was £24billion, equivalent to £96billion per year.

Under WTO rules, 10% tariffs, that would cost us almost £10 billion per year. That is comparable with the membership fee we pay now, but with none of the benefits.

All the EU finance ministers need do to get that £10billion is to sit on their hands until we are eject ourselves.

Are you all right? I had thought you were good at this stuff.

Jul 11, 2016 at 9:40 PM | Unregistered CommenterEntropic man

Remember that we are on the weak side in any negotiations. They can impose any conditions they like, knowing that two years after we invoke article 50 we default to WTO rules and 10% tariffs. That would benefit them much more than us.
Jul 11, 2016 at 8:59 PM Entropic man

Em - would you explain that please. I had thought the UK imports more from the EU than we sell to it. Why would the UK be on the weak side in any negotiation?

Negotiating to a deadline puts you in a weak position. But only if you agree to negotiate to the deadline.

Jul 11, 2016 at 9:51 PM | Unregistered CommenterMartin A

EM, from the same BBC article

"Theresa May is enjoying victory tonight, but German Chancellor, Angela Merkel has warned today that negotiations between the UK and the rest of the EU on leaving the bloc will not be easy. She said it was important that the 27 other member states asked themselves what kind of EU they wanted."

So the UK votes to leave, and now the other countries are asked what kind of EU they want??? Pity the EU didn't listen to the UK before. What has happened to make the EU drop it's entrenched arrogance?

If the EU wants to put together a package of revisions that the UK could have a fresh Referendum on, then that might change things.

Jul 11, 2016 at 10:40 PM | Unregistered Commentergolf charlie

In the first three months of 2016 our trade deficit with the EU was £24billion, equivalent to £96billion per year.

Under WTO rules, 10% tariffs, that would cost us almost £10 billion per year. That is comparable with the membership fee we pay now, but with none of the benefits.

All the EU finance ministers need do to get that £10billion is to sit on their hands until we are eject ourselves.

Are you all right? I had thought you were good at this stuff.
Jul 11, 2016 at 9:40 PM | Unregistered CommenterEntropic man


EM - I seem to be missing something somewhere. Can you put me right?


I don't understand. (really). Aren't import duties paid by the purchaser of imported goods to their own government? So EU purchasers (not us) would be paying 10% times the total they import from us (not the 10% times the deficit) to their finance ministers.

UK purchaserswould pay whatever the UK govt chose to impose as tarifs - up to 10% - on total imports from the EU and it would go to the UK Treasury. (I presume that the UK govt would have the right to impose a lesser tarif than 10% if, for whatever reason, it chose to.)

I'm clearly missing something - can you put me right, please? How would it cost us £10B that would go into into EU finance ministers' pockets?

(BTW, I thought recently you told me that €5B UK resident income to the French economy was "peanuts". But now £10B is something to worry about?)

Jul 11, 2016 at 10:49 PM | Registered CommenterMartin A

Martin A
I thought triggering Article 50 puts a 2 year deadline in place.
The balanced may be in the EU's favour Britain only represents 16% of all EU exports* I'd guess Germany would be the biggest source of UK imports, perhaps explains Mrs Merkel's softly softly approach..
*
China 8%
Switzerland 6%
Russia 6%
Turkey 4%
USA 15%
RoW 45%
Any drop in exports to the UK could be replaced by China, Turkey and RoW in the same way as the UK is going to concentrate on these markets.

Jul 11, 2016 at 10:55 PM | Unregistered CommenterSandyS

Martin A
Don't WTO rules say something about having standard tariffs when no agreement is in place, so the minimum tariff the UK could apply would be those already in place for a country where no agreement is in place. So presumably the UK will apply tariffs during the 2 year negotiations with the EU to non-EU countries which if negotiations fail will be applied to the EU.

I don't really know the answer either.

Jul 11, 2016 at 11:05 PM | Unregistered CommenterSandyS

SandyS, in climate science maths, everything is always worse.

Obviously a deficit has winners and losers. Is it better if a deficit increase or decreases, for winners and/or losers? Will the countries and companies within the EU be better off if this deficit gets bigger or smaller? Will this matter to them?

With every dark and gloomy Guardian cloud, someone has nicked the silver lining.

Jul 11, 2016 at 11:28 PM | Unregistered Commentergolf charlie

From the Guardian, our trade deficit with the EU was £24billion for the first quarter of 2016, is we bought £24billion more in goods that we sold them, that is we are paying out £100billion per year more to the EU than we earn from them.

At present we are in a free trade relationship, so no tariffs apply.

The World Trade Organisation rules specify that, in the absence of any other trade agreement, a country receiving imports charges the importer a 10% import tariff.

If we invoke Article 50 and no trade agreement is completed before our enforced departure, then WTO tariffs will kick in automatically. We will charge 10% on imports from the EU and they will charge 10% on imports from us.

Since we import £100billion more than we export, the change would give us an extra £10 billion after we leave if there is no agreement.

Whoopee! I got it wrong. It is to the EUs advantage to negotiate, rather than do nothing.

Jul 11, 2016 at 11:44 PM | Unregistered CommenterEntropic man

SandyS, I do not mean to demean Austria, which is a perfectly nice country. I do mean to demean the role of a finance minister in a country which does not have its own currency (and which, incidentally, cannot elect a government which the EU disapproves of without being threatened.)


And EM, your sums make no sense. I'm inclined now to say stuff negotiations, the UK must have control of its own affairs. If that means WTO, so be it. That is certainly the attitude our negotiators ought to have, not the pre-surrendered position you seem to be advocating. No free movement is quite important even if the level of immigration is set quite high. Should we retain it for the Scots and Ulsterfolk?

Jul 11, 2016 at 11:46 PM | Unregistered Commenterrhoda

Entropic Man: Why would the WTO insist on countries raising tariff walls? And tariffs even on things the country doesn't produce for itself? My browsing around only turned up their wranglings to encourage countries to reduce tariffs. Reference please?

Jul 12, 2016 at 5:52 AM | Unregistered CommenterRobert Swan

The concept of import duties exist.
Politicians of all countries are under pressure to protect home based supplies.
To stop wild changes to import duties, the WTO was set up.
Many countries have bilateral trade agreements where they have agreed their own deal.
If you have no deal at all then it is convention that WTO rules apply: 10% duty on imports.

Currently the UK is a member of the EU which 'does' trade deals on behalf of all 28 members.
The EU is party to the WTO deals (about 60) and they have about 34 bilateral agreements:

http://ec.europa.eu/trade/policy/countries-and-regions/agreements/index_en.htm

The above link takes you to the EU page detailing all trade agreements with all participating countries.

(That's a good starting position, we have all of the current texts to start the negotiation with...)

It is slowly being realised here that in any tariff war with the EU, the UK will be the winner, so there will be no war.

We will get access to the EU market without any fees.

The fees we currently pay are the political membership fees to be a member of the political union.

We no longer wish to be a member of the political union with its costs and loss of sovereignty so there is no reason to pay it.

It suits all countries of the EU to have open access to the UK/EU market.

Jul 12, 2016 at 7:32 AM | Unregistered CommenterSteve Richards

Robert Swan
I think the WTO does encourage lowering of tariff barriers but it also requires equal treatment. This means as far as I can make out that for nations where no trade agreements are in place then all tariffs should be the same.

For example, if the UK has no agreement with Nauru and has 20% import duty on goods from Nauru then the same tariffs must apply to goods from the EU should there be no trade agreement with them. This is so that neither the EU nor Nauru is disadvantaged.

But I don't really know how it works, but that's how I understand it. If someone can explain in simple terms then I for one would be better off.

Jul 12, 2016 at 7:35 AM | Unregistered CommenterSandyS

Steve Richards
Thank you for that explanation.
I'm not sure I have your confidence in the EU being the loser in a trade war though. Trade wars always hurt both sides and the UK is not a expanding market in the way China and India are, the same logic applies to the EU exporting to these and other growth areas in global trade as for the UK. On the back of a UK mini-recession after Brexit would a WTO trading situation with the EU be worse for the UK or the EU.

Jul 12, 2016 at 7:43 AM | Unregistered CommenterSandyS

rhoda
Don't all EU countries have a finance minister? it's one of the problems that played a role in the referendum result, They have to get together to discuss how the Euro is affecting them, usually for a week in the most expensive hotel they can find.

As far as threatening goes all nations do it to each other in the hope of influencing elections. As with Brexit this is normally counter productive. So get ready for the wrong person to get elected in Austria.

Jul 12, 2016 at 7:50 AM | Unregistered CommenterSandyS

Will the Brexit means Brexit require a dash for growth along the lines of those of Maudling, Barber and Lawson?

Jul 12, 2016 at 8:01 AM | Unregistered CommenterSandyS

Some people seem to be saying that the default tariff under WTO rules is 10%. That is not correct. The WTO provides numerous specific tariffs for different countries and different goods. Some are zero. I believe the average is about 4% but some items are obviously higher.

Jul 12, 2016 at 8:26 AM | Unregistered Commentermike fowle

All the EU finance ministers need do to get that £10billion is to sit on their hands until we are eject ourselves.

Are you all right? I had thought you were good at this stuff.
Jul 11, 2016 at 9:40 PM | Unregistered CommenterEntropic man

EM - I seem to be missing something somewhere. Can you put me right?
Jul 11, 2016 at 10:49 PM | Registered CommenterMartin A

.... Since we import £100billion more than we export, the change would give us an extra £10 billion after we leave if there is no agreement.

Whoopee! I got it wrong. It is to the EUs advantage to negotiate, rather than do nothing.
Jul 11, 2016 at 11:44 PM | Unregistered CommenterEntropic man

That explains why I couldn't make sense of it. Mind you, I still don't understand how us paying import duty to the UK govt on stuff we import "gives" us anything.

....
It is slowly being realised here that in any tariff war with the EU, the UK will be the winner, so there will be no war.

We will get access to the EU market without any fees.

The fees we currently pay are the political membership fees to be a member of the political union.

We no longer wish to be a member of the political union with its costs and loss of sovereignty so there is no reason to pay it.

It suits all countries of the EU to have open access to the UK/EU market.
Jul 12, 2016 at 7:32 AM Steve Richards

That's what seemed to make sense to me. Since tariffs damage the wealth of both sides, the only reason I could see for the EU putting tariffs in place would be as a kamikaze strike to punish the UK for voting to leave (and to encourage the others not to be so foolish as to try it on).

Michael Farage pointed this out to the European Parliament in his "you are not laughing now" speech following the Brexit vote.

Jul 12, 2016 at 8:50 AM | Registered CommenterMartin A

Entropic man on Jul 11, 2016 at 11:44 PM
At present we are in a free trade relationship, so no tariffs apply.

At present we are in a Customs Union. This is why we have to pay import duties on some goods when we trade with countries outside the EU and why we cannot make trade deals with them.

There is nothing free about it. We obey Brussels (aka Merkel), or we are fined.

Making such simple mistakes renders your posts worse than worthless.

Jul 12, 2016 at 9:07 AM | Registered CommenterRobert Christopher