Brexit discussion thread II

solodeogloria wrote: »

Good I don't agree with the assumption that Britain cannot get free trade deals with other economies just because it is smaller than the EU. I agree with the fact that the EU is bigger and therefore has a good place to negotiate together. I don't think it's nimble enough though.

The EU has the most extensive network of free trade agreements in the world. it has twice as many free trade agremeents already in place as the US has, for instance, and more than three times as many currently under negotiation. Evidence that it’s “not nimble enough” is lacking. The notion that the UK can achieve a equally or more extensive network of free trade agreements is implausible. I don’t say that it’s impossible that the UK can do this, but it seems wildly unlikely, and those who expect it to happen really need to say why.

solodeogloria wrote: »

I also don't agree with your either or comparison in respect to trade. I don't see why you think that trade with the EU is going to collapse to such an extent. You need to explain to me why that is the case.

I didn’t say that trade with the EU was going to collapse. But it will certainly take a knock. The UK is withdrawing from the freest possible free trade agreement that it currently has with the EU, and you can’t simultaneously expect great things from the free trade agreements that the UK hopes to negotiate with the rest of the world, and assume that withdrawing from the free trade agreement they currently have with the EU will have no effect at all. Take this line, and small children will point at you in the street and laugh.

How big a knock UK-EU trade will take remains to be seen; it depends on what post-Brexit deal the UK and the EU negotiate. But the UK has already ruled out the maximally free options - the single market, the customs union, etc. So it’s inevitable that, by choice of the UK, the UK’s trade with the EU will, post-Brexit, be markedly less free that it is now. And the same logic that says that the UK will boost its trade by entering into free trade arrangements with third countries must also accept that it will diminish its trade by withdrawing from the current arrangements that it has with the EU.

solodeogloria wrote: »

Taking two countries on their own. China and America. Britain exports about £100bn with them both. There's an opportunity to expand opportunity to trade with both with the right free trade agreement. I'm sure this is true of many others. I don't see why the shortfall couldn't be made up.

There’s an opportunity to increase trade with the US and China through “the right free trade agreement”; the question is whether the UK is more likely to find itself a party to the right free trade agreement by staying in the EU or by leaving and negotiating on its own? If we discount unevidenced prejudices like “the EU isn’t nimble enough” I see no reason to think that the UK will be in a more advantageous position as a result of leaving, and I see some reason to think the opposite.

But even if you do think that the EU will be in a more advantageous position, that’s not enough. It has to be so much more advantageous that the UK will, on the whole, still be better off even after taking the knock that results from withdrawing from its existing very free trading terms with the EU-27, and negotiating something more restrictive.

solodeogloria wrote: »

Again, perhaps I'm missing the armageddon scenario that is behind your question.

There is no armageddon behind my question. Just the point that withdrawing from the existing free trade agreements under which about 60% of your trade is conducted, in the hope that you will negotiate something better that will more than make up for the resultant losses, looks impressively optimistic, but not all that realistic.

Obviously, the UK hasn’t been negotiating free trade agreements for the past fifty years or so, so we can’t do a straight comparison between the UK and the EU as free trade negotiators. But what we can say is that the EU has the largest network of free trade agreements the world has ever seen, and this is true whether you are looking at agreements up-and-running, or counting agreements under negotiation as well. No other country even comes close to the EU on this, not even the US, which has similar wealth, or China, which can offer an unparalleled market as an inducement, or India which has a similar GDP to the UK but much better prospects for growth in its domestic market. So why would we be so confident that the UK will?

solodeogloria wrote: »

Good morning!

According to the BBC and the Guardian the UK wants a temporary customs union with the EU for a transitional period. It is also proposing that it should be allowed to negotiate free trade deals in the interim period.

Liam Fox will be happy but I don't know how far the EU will go with this.

I think the plan here is that, during the transitional period, the UK could negotiate free trade deals, but not implement them. Then, at the end of the transitional period, the UK would (hopefully) have a whole bunch of trade/customs deals ready to roll, and they'd avoid a painful interim period when they were out of the EU, but didn't have other trade deals.

From the UK's point of view it's definitely a good idea. From the Union's, it's a bit "meh"; it makes little difference, one way or the other. I predict that the EU's position will be "Thanks, this is interesting, a valuable contribution, certainly worth considering, we'll put it on the sideboard over there for the time being, because it's a bit premature. You and we have already agreed that the three priorities to be progressed first are the divorce bill, citizens right and the Irish border. We need to make some progress on that last point in particular because, obviously, the kind of border we agree we want will shape the kind of customs/trade arrangements that we might put in place. So I'll have a read of this very interesting and productive document over the next few days - and thank you again for bringing it - but I really don't think it would be helpful to discuss it just yet. We can discuss it much more productively and usefully after we have read and responded to your proposal on the border - which I think you're bringing tomorrow?"

solodeogloria wrote: »

Yes Brexit is final. The more and more I think about it the term soft Brexit is primarily used by people who wanted to remain in the EU. There's no soft or hard Brexit in my mind, there's just leaving the EU.

I think the people understood this when they voted for it that it was to bring membership of the EU to a complete end. If the UK is to come back in there will need to be actual reasons put to the electorate rather than project fear.

As for other countries and their understanding about Brexit. I'm personally thankful that the penny has dropped. It means that discussions about a future relationship can begin in earnest and that real progress can be made towards a deal that recognises the concerns of both parties. Nobody wants these negotiations to take longer than they have to.

I think after the next round of proposals are submitted there won't be reasonable grounds for saying that sufficient progress hasn't been made.

Clearly we see the world through different lenses
I think the UK would be better off inside the EU, what I was thinking about was the way that any reversal of Brexit would be unlikely in the short to medium term. And implicitly that this will affect the way the negotiations will pan out.

Peregrinus wrote: »

The UK rejoining would face exactly the same issues as any country joining - the need to redeploy civil servants whose functions are now redundant, the need to wind up existing trade deals when they are replaced by EU trade deals, etc.

Legally, constitutionally, practically, etc I don't see that this would be any more difficult for the UK than for any other country joining the Union - or, indeed, than it was for the UK the first time they joined in 1973.

Politically, of course, it would be hugely embarrassing to admit that, yes, Brexit was a colossal mistake and we need to reverse it. And it might be unrealistic to think that a politician who backs Brexit can reverse his or her course on such a fundamental question and survive politically. So I think there'd have to be change of leadership in one or both of the major parties before this would be politically feasible.

The notion that, having spent so much to achieve Brexit (hired all these civil servant, paid this horrible exit price, invested so much time and effort in negotiating trade deals, etc, etc) we have to stick with Brexit has an instinctive appeal, but it's fallacious. It's known as the sunk cost fallacy; having spend all this money on buying or building this wonderful plant/machine/company, we're committed to it; we can't turn back now. But if in fact the wonderful plant/machine/company is not fit for purpose, the fact that it cost a great deal of money is irrelevant. If, five or ten years down the line, the situation is such that the UK's long-term prospects look rosier within the EU than outside it, the rational course for the UK is to rejoin. The costs they incurred in getting out in the first place won't be relevant to that calculation at all.

I agree on the sunk cost fallacy from an economic perspective, it's the political cost (and hit to national pride) that would be the biggest sticking point, IMO.

It would take more than a change of political leadership to sell re-entry to the people of the UK, it would require a cultural change in the UK itself. It would require a UK that looks more towards Europe and less towards the Anglosphere than is currently the case. It would require a major change of stance by some of the big newspapers, most of which I expect to keep hammering away at the EU as that's the message that seems to resonate with their readers.