Brexit discussion thread XII (Please read OP before posting)

Strazdas · 02-02-2020 11:56PM

ancapailldorcha wrote: »

They couldn't wait a single day.

https://twitter.com/Telegraph/status/1223727509851836418

I'm genuinely curious where the limits of the shtick of blaming the EU for everything are. The UK has left so if there's one positive to be seen from this, it'll be seeing this narrative collapse.

Reading the responses on Twitter though and people are incredulous that Johnson and his right wing press buddies are even going for this angle. There is a lot of pushback against such obvious falsehoods.

Nody · 02-02-2020 11:59PM

First Up wrote: »

But remember, WTO terms do not circumvent the need to comply with technical requirements. If goods don't meet EU standards, they don't get in.

Import tariffs is the easy bit. Its the "non tariff barriers" that will bite.

It's not only that they need to meet the standards which is fairly straight forward; it's proving that the goods meet the standard in every single shipment which is the real killer. Any business who thought there would be less paperwork is going to be in for a very rude surprise on their first export attempt or heck simply trying to take a sample to a customer in EU.

briany · 03-02-2020 12:23AM

What are the real chances of a hard border in Jan 2021?

Johnson has set his stall out looking for a Canada deal. That looks to be impossible to negotiate in 11 months. Therefore WTO and hard border?

On the other hand, if the deal is somehow negotiated, how negatively impactful on the NI economy would sea checks need to be before the Alliance party and UUP decide that they want to opt out of the frontstop and have a hard border?

Kermit.de.frog · 03-02-2020 12:26AM

briany wrote: »

What are the real chances of a hard border in Jan 2021?

Zero. The Withdrawal Agreement has been concluded.

This takes precedence trade deal or not.

Bit cynical · 03-02-2020 12:54AM

Nody wrote: »

It's not only that they need to meet the standards which is fairly straight forward; it's proving that the goods meet the standard in every single shipment which is the real killer. Any business who thought there would be less paperwork is going to be in for a very rude surprise on their first export attempt or heck simply trying to take a sample to a customer in EU.

I doubt if there's any exporting business that expects less paperwork when exporting to the EU.

Leroy42 · 03-02-2020 01:01AM

Bit cynical wrote: »

I doubt if there's any exporting business that expects less paperwork when exporting to the EU.

Maybe now, but that certainly wasn't the position at the time.

So who pays for all this extra paperwork? Does it come from the £350 Pw or somewhere else?

storker · 03-02-2020 01:54AM

ancapailldorcha wrote: »

I'm genuinely curious where the limits of the shtick of blaming the EU for everything are.

What makes you think there's a limit?

The UK has left so if there's one positive to be seen from this, it'll be seeing this narrative collapse.

I'm not so sure. Brexit isn't a science; it's a religion. Economic and political facts will have no more effect on the Brexit faithful than scientific facts have on Young Earth Creationists.

Xertz · 03-02-2020 02:11AM

Professor Moriarty wrote: »

A perfect foil for stoking English nationalism.

From an EU perspective, what happens domestically in the UK is no longer relevant. Brexit's passed the point of no return and all the ranting and raving that may go on aimed at a domestic audience is just that.

The Tories have a comfortable majority. If they carry on stoking far right nationalism, I think the only conclusion that could be drawn is they're no longer a centre right party, but actually one that's moved to the far right. However, from a EU-UK negotiation point of view, what difference does it make?

If we're dealing with a far right party in the UK, that's what we're dealing with. It's not going to change because they whip up hysteria in the tabloids and the tabloids have no relevance at all beyond UK borders.

Any move they take e.g. against EU citizens' rights in the UK or to block flows of goods/services will just have automatic reciprocal consequence.

Strazdas · 03-02-2020 02:25AM

Xertz wrote: »

From an EU perspective, what happens domestically in the UK is no longer relevant. Brexit's passed the point of no return and all the ranting and raving that may go on aimed at a domestic audience is just that.

The Tories have a comfortable majority. If they carry on stoking far right nationalism, I think the only conclusion that could be drawn is they're no longer a centre right party, but actually one that's moved to the far right. However, from a EU-UK negotiation point of view, what difference does it make?

If we're dealing with a far right party in the UK, that's what we're dealing with. It's not going to change because they whip up hysteria in the tabloids and the tabloids have no relevance at all beyond UK borders.

Any move they take e.g. against EU citizens' rights in the UK or to block flows of goods/services will just have automatic reciprocal consequence.

It has already happened. There's no way the current version of the party could be considered centre right (quite a few centre right MPs left the party recently in protest).

briany · 03-02-2020 02:29AM

Kermit.de.frog wrote: »

Zero. The Withdrawal Agreement has been concluded.

This takes precedence trade deal or not.

But this was something that the UK agreed to as part of negotiations toward a revised WA, wasn't it, or was it a separate agreement entirely? If (as could well happen) FTA talks collapse, what's to stop the UK reneging on the special arrangements? Yes, the EU might refuse to do business with the UK if they didn't uphold a border solution, but the acrimony might lead to the UK not caring.

moon2 · 03-02-2020 02:56AM

briany wrote: »

what's to stop the UK reneging on the special arrangements?

The world is a lot bigger than the EU and UK. The ramifications of showing that agreements with the UK are not worth the paper they're printed on would be felt for years or decades.

54and56 · 03-02-2020 03:11AM

briany wrote: »

But this was something that the UK agreed to as part of negotiations toward a revised WA, wasn't it, or was it a separate agreement entirely? If (as could well happen) FTA talks collapse, what's to stop the UK reneging on the special arrangements? Yes, the EU might refuse to do business with the UK if they didn't uphold a border solution, but the acrimony might lead to the UK not caring.

The Withdrawal Agreement is a separate international treaty that stands regardless of whether a trade agreement is concluded or not. The political declaration which sets out the broad strokes of what both the EU & UK want to achieve in the trade negotiations is not binding.

The whole objective of ensuring the NI question was dealt with in the Withdrawal Agreement was to ensure it couldn't be used as leverage by the UK in the trade negotiations and that objective was successfully achieved.

Peregrinus · 03-02-2020 03:13AM

briany wrote: »

But this was something that the UK agreed to as part of negotiations toward a revised WA, wasn't it, or was it a separate agreement entirely? If (as could well happen) FTA talks collapse, what's to stop the UK reneging on the special arrangements? Yes, the EU might refuse to do business with the UK if they didn't uphold a border solution, but the acrimony might lead to the UK not caring.

The WA is a treaty, binding in international law. But, obviously, the EU doesn't have an army that will invade and occupy the UK if it repudiates its obligations under the treaty that it has made. So "what would the sanctions for breach be?" is a reasonable question.

I think there are a few.

The first is domestic blowback. Under the Withdrawal Agreement, the UK pays many billions to the EU; the bulk of these payments have already been made, or will be made in 2020. If the UK tears up the Withdrawal Agreement at the end of 2020, obviously it will refuse to make any more payments, but questions will be asked about the tens of billions that it has already paid, and for what? If the UK government was happy to leave the EU with no trade deal, then it could have done that on Brexit day, instead of paying tens of billions to put it off for 11 months and then do it. So what was all that money for? Why did the Johnson government agree to pay it, and then feed through a shredder the treaty that they got by paying it?

A related point is that by repudiating the withdrawal agreement the UK gives up the protections that the WA confers on UK citizens who are settled in EU countries.

A third point is that it obviously puts the kibosh on any other deals with the EU. While in the short term there may be a burst of patriotic approval for this from the loonier elements of Brexitania, in the medium and long terms the UK will be hugely, hugely adversely affected by being on poor terms with its immediate and vastly larger neighbour. The UK may exit transition without a trade deal, but if so it will still want to put a trade deal in place. Tearing up the withdrawal agreement would be a huge obstacle to that.

Plus, of course, it holes below the waterline the UK's strategy of making exciting new trade deals with other countries, because who will have any interest in making a deal with a country that does not regard itself as bound by the deals it makes?

So simply repudiating the WA might gratify the Mark Francoises of this world, but it's a strategy that leaves the UK with basically nowhere to go.

And all of those considerations kick in before we consider the sanctions available to the EU under international law. I've already pointed out that the EU cannot enforce the treaty by force of arms, but that doesn't mean that they can do nothing. They are very well positioned to apply very substantial economic sanctions to the UK, for instance, if so minded, and they would certainly be entitled to do that.

03-02-2020 04:34AM

That Telegraph headline is absurd when matched with what Johnson and Raab etc. have been coming out with.

I knew 2020 would be a shltshow but I didn't expect it to start immediately.

Peregrinus · 03-02-2020 04:41AM

Deleted User wrote: »

That Telegraph headline is absurd when matched with what Johnson and Raab etc. have been coming out with.

I knew 2020 would be a shltshow but I didn't expect it to start immediately.

I did.

03-02-2020 05:10AM

Peregrinus wrote: »

I did.

I was expecting an incubation period of 5-14 days. Not 24 hours. Speaking of, if the coronavirus became a big thing in Europe, it would likely affect negotiations? UK populace even more averse to movement of people, a heavy focus on healthcare systems, an effect on economies, political time spent dealing with the crisis etc.

Regardless, I doubt negotiations will barely even get going. And if they do, it will probably be a very basic non-mixed agreement in December that doesn't have to be ratified around Europe.

fash · 03-02-2020 06:12AM

Nody wrote: »

It's not only that they need to meet the standards which is fairly straight forward; it's proving that the goods meet the standard in every single shipment which is the real killer. Any business who thought there would be less paperwork is going to be in for a very rude surprise on their first export attempt or heck simply trying to take a sample to a customer in EU.

It is also the regulatory environment that the business is working in that is the possibily the biggest issue: if the EU has no guarantees that the business is not getting unreasonable government assistance to undercut European companies - etc., (the LPF provisions) then why should the EU give tariff and quota free access?

CruelCoin · 03-02-2020 08:59AM

fash wrote: »

It is also the regulatory environment that the business is working in that is the possibily the biggest issue: if the EU has no guarantees that the business is not getting unreasonable government assistance to undercut European companies - etc., (the LPF provisions) then why should the EU give tariff and quota free access?

Because the UK are net importers from the EU.

The EU restricting that trade over grant aid would be like punching yourself in the stomach to avoid getting pinched.

newport2 · 03-02-2020 09:14AM

CruelCoin wrote: »

Because the UK are net importers from the EU.

The EU restricting that trade over grant aid would be like punching yourself in the stomach to avoid getting pinched.

Ireland are net importers from the US.

If we restricted that trade, who would it hurt more? The smaller trading bloc., ie Ireland.

The trade lost in exports from the EU to the UK is spread across 27 countries. The trade the UK loses to the EU hits only themselves. Punch, not pinch.

Call me Al · 03-02-2020 09:19AM

newport2 wrote: »

Ireland are net importers from the US.

If we restricted that trade, who would it hurt more? The smaller trading bloc., ie Ireland.

The trade lost in exports from the EU to the UK is spread across 27 countries. The trade the UK loses to the EU hits only themselves. Punch, not pinch.

Ireland isn't a net importer from the US

https://www.ustradenumbers.com/country/ireland/

newport2 · 03-02-2020 09:22AM

Call me Al wrote: »

Ireland isn't a net importer from the US

https://www.ustradenumbers.com/country/ireland/

Yes, you're right of course, brain fart this early in the morning.

My point still stands though. Even if the UK exports less to the EU than it imports, the impact on losing those exports will be a harder hit to the UK than the EU losing what the UK imports from them.

moon2 · 03-02-2020 09:31AM

newport2 wrote: »

Yes, you're right of course, brain fart this early in the morning.

My point still stands though. Even if the UK exports less to the EU than it imports, the impact on losing those exports will be a harder hit to the UK than the EU losing what the UK imports from them.

The EU created and authorised a disaster fund to offset the worst of any potential impact on European companies as they adjust to the new trade regime.

It's like the posturing and threats eminating from Boris were factored in years ago...

03-02-2020 09:38AM

Interesting development. Nissan considering focusing on the UK market and closing its EU factories.

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

They reckon they could increase market share from 4% to 20% if other manufacturers face tariffs.

Strazdas · 03-02-2020 09:45AM

Deleted User wrote: »

Interesting development. Nissan considering focusing on the UK market and closing its EU factories.

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

They reckon they could increase market share from 4% to 20% if other manufacturers face tariffs.

That seems to be a lot of ifs and buts and highly speculative. Trying to grow their sales five or sixfold would be a big gamble and could easily fail.

brickster69 · 03-02-2020 09:48AM

newport2 wrote: »

The trade lost in exports from the EU to the UK is spread across 27 countries. The trade the UK loses to the EU hits only themselves. Punch, not pinch.

But 90% of that is from 6 countries. It's like saying the EU has 450 million population but only 100 million buy anything.

Igotadose · 03-02-2020 09:51AM

Strazdas wrote: »

That seems to be a lot of ifs and buts and highly speculative. Trying to grow their sales five or sixfold would be a big gamble and could easily fail.

Especially if no one's buying cars post-Brexit

03-02-2020 09:54AM

Strazdas wrote: »

That seems to be a lot of ifs and buts and highly speculative. Trying to grow their sales five or sixfold would be a big gamble and could easily fail.

It's the manufacturing version of taking a short position on an industry. It would be remarkable to see it play out and succeed.

Leroy42 · 03-02-2020 10:23AM

Deleted User wrote: »

It's the manufacturing version of taking a short position on an industry. It would be remarkable to see it play out and succeed.

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

My reading of it is that they close the EU factories, and produce directly from Japan to service the EU market and move all UK required vehicle production to the UK.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

johnnyskeleton · 03-02-2020 10:26AM

Deleted User wrote: »

Interesting development. Nissan considering focusing on the UK market and closing its EU factories.

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

They reckon they could increase market share from 4% to 20% if other manufacturers face tariffs.

But it also says in that article that:

A spokesman for Nissan Europe said: "We deny such a contingency plan exists.

"We've modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs.

"We continue to urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade."

I suppose the Breixteers with their suspicious minds will assume that the fact that Nissan are denying it, it must be true. But I'm not sure that the article really makes sense. There are so many unknown issues such as how the UK and Japan could conclude a free trade deal if the UK doesn't have one with the EU, or whether in such a deal, if there was tarrif and quota free trade, why Nissan wouldn't simply close the Sunderland plant or reduce it to a finshing plant while keeping most manufacturing in Japan. Then we have the UK dying for a US deal, where there is government subsidies of the struggling automotive industry and the upshot of all this is that post Brexit Britain may well be targetted as an ideal export location for foreign manufactured cars.

03-02-2020 10:32AM

Leroy42 wrote: »

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

My reading of it is that they close the EU factories, and produce directly from Japan to service the EU market and move all UK required vehicle production to the UK.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

Peregrinus has a good write-up in the CA thread. Since he posts here too, I don't think he'd mind me copying it here.

Peregrinus wrote: »

Brexit poses a challenge to challenge for everyone in the auto industry, but a slightly different challenge for all of them, depending on how they are situated. One of the factors particular to Nissan is that, of non-indigenous manufacturers in the UK market, they are far and away the biggest - much bigger than Toyota and Honda combined, who are number 2 and 3 respectively. That level of investment represents a huge sunk cost in the UK. They wouldn't like having to write it off.

The other preliminary point to bear in mind is that, although Brexit poses a big challenge to the motor industry, they don't yet know what that challenge is. Until the UK negotiates a trading arrnagement with the EU, or abandons the aspiration to do so, they have no idea what trading environment they are going to face, and the contradictory and rapidly-changing pronouncements of the last Tory government and the present one don't help. This makes planning for the challenge very difficult. The bigger players (including Nissan) respond to this by planning for a variety of different scenarios, from the close trading arrnagement with frictionless trade targetted (initially) by May to the no-trade-deal WTO-terms-only scenario that some still threaten and a few still desire.

Right. So this particular story is based on Nissan's planning for the no-deal WTO scenario. And Brexiters crowing about it are missing one of the main points: Nissan themselves are quoted in the article as saying "We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs". That's not good news, people, for Nissan or for the UK.

It seems that Nissan's damage limitation strategy will be to retain its investment in the UK. They calculate that other manufacturers with smaller investments in the UK and larger investments in the EU will take the opposite course, running down or closing outright their UK operations, and their offerings in the UK market will become more expensive, as they will be imported and will be subject to tariffs.

Nissan's cars, although manufactured in the UK, will also become more expensive because of tariffs on imported components, extra costs due to loss of just-in-time techniques, etc. Nissan can try to limit this by closing its own facilities in the EU and centralising production in the UK, so as to reduce the number of imported components/elements but, still, there'll be an impact.

None of this is good news for Nissan but, within the UK market, it presents them with a competitive opportunity; their cars, although more expensive, will be relatively cheaper than imported cars, so they should be able to increase market share in the UK, which may help to offset the loss of export sales to the EU. (Currently 70% of Nissan UK production is exported to the EU.)

They'll have to increase it a lot, since the total UK car market is likely to shrink (because cars will be more expensive overall). So, in a shrinking market, they have to fight for a larger share to offset increased costs and declining exports. Thereport says that this "would potentially allow them to increase their UK market share from 4% at the moment to 20%". But, actually, I suspect someone is putting a favourable spin on a rather more stark finding in the report; for this strategy to succeed, and Nissan UK to remain viable, they will need to increase their share of the UK market from the current 4% to 20%. That's a hell of an ask, but only if they think they can do that does the strategy of doubling down in Sunderland make sense.

If I were a Brexiter, I would not be calling attention to Nissan's dilemma.

Brexit discussion thread XII (Please read OP before posting)

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