Tuesday, 20 September 2016

Some unpleasant trade realities



Well, this is fun. YouGov has asked the public which countries the UK's new trade negotiators (if and when they are recruited) should prioritise in their quest for free trade deals.

Unsurprisingly, the US and the EU (considered as a whole trading bloc) came top of the list. But as ever, the devil is in the detail. These charts show the difference between the public's perception of the importance of a country versus its exports and GDP rankings:


Now, of course the exports ranking is the current situation. We would expect free trade agreements to change this ranking, since countries with which the UK has free trade agreements should move up the exports ranking, and those with which it does not should correspondingly move down. The EU is currently top of the exports ranking because the UK is part of the single market. Once the UK is no longer part of the single market - as seems increasingly likely - the ranking might change. The GDP ranking is therefore possibly more important, since it indicates export potential.

But what these charts tell us about the public's preferences is disturbing.

Firstly, there appears to be discrimination against Middle Eastern Muslim countries. Saudi Arabia and Turkey are both ranked considerably lower by the public in terms of priority than either their exports ranking or their GDP would justify. Of course, the charts don't extend far enough to include smaller Middle Eastern countries, but it seems unlikely that this negative attitude is limited to those two countries.

Secondly, there is a clear preference for countries that are English-speaking and have historic colonial ties to the UK. That includes the USA, of course. But the effect is more striking for Commonwealth countries. Australia, Canada and South Africa are all significantly over-prioritised by the public relative to both their exports and GDP ranking.

Now, some of the distortion might be due to simple ignorance. Brazil is hugely under-prioritised by the public, and India is somewhat under-prioritised too relative to its GDP. This is perhaps due to public perception that these are poor countries and it would be better to target richer ones such as China and South Korea for exports. It also might reflect fear that removing barriers to imports from those countries - particularly India - would mean losing more manufacturing jobs.

But I fear much of the distortion is not due to ignorance, but tribalism. Europe and the Middle East, both of which have recently been the target of popular anger over immigration, are rejected by many in favour of older alliances. English-speaking countries are favoured over non-English speaking ones. Countries with Christian heritage are preferred over countries where other faiths dominate. Former colonies are prioritised over countries with no historic ties to the UK.

The tribal roots of the public's trade priorities are even more apparent when the voting preferences of those sampled are taken into account. Here are the top five priorities, split by political allegiance:


The split is striking. For those who voted to leave the EU (Leave/UKIP voters), the EU does not even make it into the top 5. But even among Conservative voters, not all of whom would have voted Leave, the EU is fairly low priority. Their allegiance is to what YouGov describes as the "Anglosphere". For all three groups, English-speaking countries are the top priority.

In contrast, for Remain voters and the Liberal Democrats the priority is overwhelmingly Europe. Labour voters are fairly balanced between the USA and EU, but over-prioritise Australia. Indeed the only group that does not significantly over-prioritise Australia is Remain.

Of all the groups, Remain most accurately prioritises in relation to both current export rankings and potential GDP, though it does over-prioritise the EU relative to GDP. But there is a very good reason for this, which appears to be ignored by those who voted to Leave. That is the fact that the UK currently has a free trade agreement with the EU, which it is on the verge of abandoning.

The EU is the destination for half the UK's exports. Leaving the single market without a replacement trade deal would have potentially disastrous consequences for the UK's exporters. Yet those who voted Leave appear to be blissfully ignorant of this. It is folly not to prioritise the EU in trade negotiations.

But why are Leave voters (including UKIP) and many Conservatives so unconcerned about negotiating with the EU? I don't know, but there are a number of possibilities.

Some of them seem to assume that the Article 50 negotiations will establish a new trade agreement, so there is no need for separate negotiation. I've encountered a number of very intelligent people who believe this. Sadly they are wrong. Article 50 negotiation will sort out the terms of the divorce, such as the status of EU and UK migrants and the responsibility for EU pensions. It will not establish a new trade agreement between the UK and the EU. When the UK leaves the EU, it will revert to the same position as any other non-EU country vis-a-vis the EU. There will need to be separate negotiations to re-establish free trade with the EU. These might not take place until after Article 50 negotiations have established the terms of Britain's exit.

It's worth noting, too, that although Britain's exit from the EU only requires a qualified majority vote from the rest of the EU, a new trade agreement would need unanimity. Any one country could veto the entire deal - as the French have said they will do with TTIP. Furthermore, since the precedent recently set by the European Commission with regard to the draft Canadian agreement CETA, a trade agreement with the UK would need to be ratified by the parliaments of all 27 remaining EU member states. That could take a very long time, and the eventual agreement might not be all that favourable to the UK.

Others seem to think that reverting to the EU's standard tariffs for non-EU countries would not affect UK exports. I beg to differ. It would mean an immediate price increase for UK exports to the EU. This is bound to encourage price-sensitive EU importers to look for cheaper alternatives elsewhere. We should expect therefore that leaving the single market with no equivalent agreement in place would cause UK exports to the EU to fall, possibly drastically. It would also affect the EU's exports to the UK, of course - though German cars are pretty price inelastic. There aren't too many alternatives to them at the high end of the UK market.

Finally, some seem to think that losing exports to the EU wouldn't matter because we would have all these lovely new trade agreements with other countries. Never mind the EU, bring on the Commonwealth!

This is frankly delusional. Firstly, countries such as Australia are simply too small to replace the export potential of a trading bloc the size of the EU, depressed though it is. The EU currently accepts 50% of the UK's exports: Australia, 1.6%. Admittedly, these percentages would change if the UK left the single market and agreed a free trade agreement with Australia: but no way could rising exports to Australia compensate for falling exports to the EU. Australia has 23m people: the EU (minus UK), 680m. Australia's GDP is $1.56tn: the EU's (minus UK) about $14tn.

Secondly, despite all the rhetoric, the fact is that the UK is just not that important to countries such as Australia. For some years now, Australia has been establishing itself as one of China's key trading partners. It is one of the very few countries that has a free trade agreement with China, and it is a major partner in Asia's Regional Comprehensive Economic Partnership programme, which would establish a free trade area in the entire Asia-Pacific region. This is bound to be far higher on Australia's priority list than a bilateral trade agreement with a country on the other side of the world. India, China , Japan, South Korea and Indonesia are also partners in this programme. The UK is not going to be high on their priority lists, either.

For the USA, sorting out trade relationships with the Asia-Pacific region and with the EU is far more important than a bilateral trade deal with the UK. The TPP and TTIP are both in deep trouble, TPP because of opposition in the USA and TTIP because of opposition in Europe. Deciding what to do about these will be the top priority for the incoming President, whoever that may be.

So that leaves Canada, really. But their principal trading partner is the USA, and they also are trying to finalise a trade deal with the EU. The UK is simply going to be an annoying distraction.

Furthermore, even if the UK could persuade some of these countries to give a bilateral trade deal priority, trade negotiations take a very long time. Agreements with minor countries desperate to trade with someone could perhaps be established quite quickly. But it will be literally years before the UK can establish trade agreements with any major countries or trading blocs.

If the UK ends up leaving the single market, therefore, its future looks bleak for many years to come. It will face tariffs and barriers to trade everywhere in the world, including in Europe where it currently faces none.

The fact is that where global trade is concerned, the public does not know best. Ignorance, tribalism and prejudice are no basis for trade agreements.

The UK's decision to leave the EU is unbelievably stupid. All we have done is "taken back control" of our own decline.  And we will be the poorer because of it.

Related reading:

Modelling the long-run economic impact of leaving the EU - NIESR
Brexit, trade and GVA - NIESR


Image courtesy of the US Treasury. 

52 comments:

  1. You've also argued that the referendum result must be respected, and in particular that making it a policy to reject the result - as advocated by Tim Farron and, to some extent, Owen Smith - is an unthinkably bad idea. (I tend to agree with both propositions.) But if the alternative is to allow - or encourage - the British government to commit an act of gratuitous sabotage which will hobble the economy for decades to come...! There must be some way out of here, as the man said.

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    1. I genuinely don't think there is a way out of here. I'm with Martin Wolf on this. "The half-way houses between remaining in the EU and hard Brexit are uninhabitable." http://www.ft.com/cms/s/0/3328547a-7e3d-11e6-bc52-0c7211ef3198.html?ftcamp=published_links%2Frss%2Fcomment_columnists_martin-wolf%2Ffeed%2F%2Fproduct#axzz4KnPYFCyk

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  2. No sure about this paragraph: "The EU is the destination for half the UK's exports. Leaving the single market without a replacement trade deal would have potentially disastrous consequences for the UK's exporters. Yet those who voted Leave appear to be blissfully ignorant of this. It is folly not to prioritise the EU in trade negotiations."

    First, and re "half the UK's exports", the only figures I've seen claim that the proportion of our exports going to the EU fell from 55% ten years ago to 45% now. If that trend continues, the EU becomes increasingly irrelevant for us.

    Re the "disastrous consequences" for our exporters if we don't replace the existing EU trade deal with some equivalent elsewhere in the world, clearly that "non-replacement" hits exporters. However the important point is the effect on UK standards of living. The really important thing about trade is to be able to import stuff that would be prohibitively expensive to make here. In contrast, exporting cars to other countries when they could perfectly well make them themselves does little for living standards. Likewise, importing Mercs and Renaults instead of purchasing cars made in the UK is similarly unimportant.

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    1. Two points.

      1. Yes, exports of goods and serives to EU have fallen, to 44% in 2014 from 55% in 1999. That is a drop of 10 percentage points in 15 years. I'm sure your maths is good enough to work out how long it would take for exports to the EU to become "irrelevant", at that rate of decline. The EU remains by far our largest trading partner. A shock to trade with EU would have very serious consequences for us.

      2. I keep seeing this argument that exports don't matter. For a country with a balance of payments imbalance the size of the UK's, they do, of course. But more importantly, TRADE matters. The more trade we do - in both directions - the more prosperous we can become. The EU is also the source of over half our imports, and at the moment we pay no tariffs on those. Post-Brexit, without a free trade agreement, that will change - which means price rises. That, fundamentally, is why leaving the EU is a stupid idea. It attacks our prosperity as a nation.

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    2. In point 2 you indicate imports from the EU would be subject to tariffs by whom would these be imposed?

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    5. By the UK. Assuming that, in the absence of a new free trade agreement with the EU, the UK reverted to WTO rules, it would have to impose WTO "most favoured nation" tariffs on EU imports. Failing to do so would be a breach of the WTO rules.

      The WTO "most favoured nation" rules are explained here: https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

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    7. Thanks for clarification perhaps this imposed WTO requirement would encourage the EU to offer something better?

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  3. One of the problems with the optimists is that they pay no attention to the time & costs of shifting industrial production (and marketing!) to new sectors/targets/geographies. Economic theory blithely tells us it will all work out in the end, but the transition costs could be huge. 2 issues there:

    1) A 10 year transition time is entirely plausible and will give us yet another "lost generation."

    2) There's actually a very good chance that the whole transition will fail and that we're just permanently shrinking our economic possibilities...

    None of this is certain, but we've had bugger all serious risk assessment done.

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    1. There is also the gravity problem. It is easier and cheaper to do business in countries closer to you geographically. We can't change our geography. The fact is that we are located at the eastern side of the Atlantic, not in the South China Sea. Our closest neighbours are still in Europe.

      Making trade with the EU more difficult and costly will not cut the costs of doing business elsewhere. Most businesses that find trading with the EU no longer worth their while after Brexit will also find more distant markets too expensive. They will either shrink back to domestic markets or go out of business. The result of Brexit will be diminished trade, lost jobs and reduced prosperity.

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  4. "But what these charts tell us about the public's preferences is disturbing."

    To the contrary.

    The only rational basis for prioritising trade negotiations is by the economic value of securing a trade agreement (i.e. the increase in "to be" GDP vs. "as is" GDP) weighed against the bureaucratic cost of securing said trade agreement.

    It is therefore completely rational to prioritise countries for which trade in services and intellectual property is a larger share, and for which the negotiating counter-parties share neo-liberal economic views, a common negotiating language, and close pre-existing inter-governmental ties, over countries that trade in commodities and low-value-add manufacturing, and have problematic polities.

    On that basis, considering that the UK will have no trade agreement in place with the US when it leaves the EU, it may even be rational to prioritise US over EU negotiations, depending on the expected difficulty of the negotiations and the exact pre/post GDP figures at stake (which I don't have ready to hand, and neither do you).

    (For that matter, if news reports are to be believed, neither does Theresa May or her band of merry men.)

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    1. What I regard as "disturbing" in the public's preferences is tribalism and prejudice. There is nothing rational about prioritising small countries on the other side of the world over the world's second largest trade bloc, simply because those small countries speak English and have historic colonial ties with the UK.

      You, like many, don't seem to understand that losing a free trade agreement is far more destructive to the economy than never having one in the first place. Leaving the EU will make no difference to our trade with the US, since the EU does not have a trade agreement with the US. But leaving the EU is catastrophic for our trade with the EU, since we DO currently have a free trade agreement with the EU. That is why prioritising the EU in trade negotiations is vital.

      Of countries outside the EU, clearly the US should be our top priority. It is frankly bizarre that Leave voters apparently prioritise Australia over the US. UKIP voters prioritise Canada over the US, too. I admire their nostalgia and their loyalty to the Commonwealth, but it really is not a sensible approach.The US is far more important to us as a trading partner than Australia and Canada will ever be. (Australians I know agree with this, btw - and they say the same is also true for them).

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  5. "You, like many, don't seem to understand that losing a free trade agreement is far more destructive to the economy than never having one in the first place."

    That's your assertion. The long spreadsheet which would substantiate that assertion is not in evidence.

    I'm not saying that your assertion is or is not correct. I'm saying that this issue has had altogether too much decisionmaking based on unsubstantiated assertions, and the longer it goes on, the worse off everyone is going to be.

    What little we currently know is that "Brexit means Brexit." To the extent that means anything, it means "no more free movement of labour".

    It is a reasonable inference from there that the loss of the current EU free trade agreement, catastrophic though it may be, is a foregone conclusion, a sunk cost. The questions remaining are, "what is the best possible trade deal which the UK can feasibly negotiate?", "how much is that deal worth to the economy?", and "how much time and resources will be required to negotiate that deal?".

    Answers to all three questions are necessary to substantiate an assertion that "prioritising the EU in trade negotiations is vital". Without those answers, it's just another unsubstantiated assertion, among many.

    You may be right. I don't have any quantitative basis for knowing that, though, and neither do you. I do know that if a successful EU trade agreement would take as much time and effort to negotiate as the Doha Development Round, the UK would be unwise to make it a priority.

    "It is frankly bizarre that Leave voters apparently prioritise Australia over the US."

    Indeed. Shame on the Leave voters for emotional, non-quantitative, gut-feel decisionmaking.

    Let's aspire to better.


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    1. No long spreadsheet is necessary to demonstrate that losing free trade after decades of relying on it is far more costly to the economy than not having free trade in the first place.

      I disagree that the free trade with the EU is sunk cost. Prioritising transitional arrangements to preserve as much as possible should be the priority, followed by establishing a long-term working arrangement as quickly as possible Writing it off with no attempt to salvage anything is Leave folly.

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    2. "No long spreadsheet is necessary to demonstrate that losing free trade after decades of relying on it is far more costly to the economy than not having free trade in the first place."

      True, but that isn't the question, is it? You said upthread that you agreed with Martin Wolf that hard Brexit is in the cards.

      If so, then the question is not "how much better to have never loved than to have loved and lost". The question is how much can be salvaged from the wreckage, and at what cost, and what timescale, and how does that compare with opportunities elsewhere.

      And that, I'm afraid, does need a spreadsheet. How willing are you to throw the farmers under the bus, for example? Because that could lubricate negotiations considerably, and not just with the EU. Show your work.

      I do agree, though, that it would be madness not to prioritise getting answers to those questions vis-a-vis the EU over everything else, because all other priorities fall out of that. But I can't agree that proceding immediately based on the obvious truth of our beliefs is the wisest course of action. That's what got us here in the first place.


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    3. As a business development director of an international company with approx 15% of sales in the UK we went everywhere on every continent doing commercial deals. I'm sure politically negotiated trade deals are always welcome but I don't recall we ever, not even once, asked the question 'which country has a trade deal with the UK?' We just went where there were potential customers.

      Entrepreneurs build trade, not politicians.

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    4. You may not have been aware of it, but in striking your trade deals you would have been taking advantage of WTO frameworks outside the EU and the single market within the EU. You would have paid tariffs where appropriate in countries outside the EU - that is a cost of doing international business, as I'm sure you know. There would have been no tariffs within the EU. I'm sure you know that too.

      The whole point of trade deals is to reduce or eliminate the costs of business caused by tariff and non-tariff barriers to trade. Within the EU, tariff barriers do not exist. Non-tariff barriers still do, but they are lower than outside the EU and the EC has been working to reduce them. This is where a lot of the harmonisation regulations to which you object come from. It is all about making it easier and less costly for businesses to trade with each other across borders.

      When Britain leaves the EU, it will be subject to tariff and non-tariff barriers to trade in EU countries. The costs of doing business in the EU will increase, both because of the tariffs and because of increased regulation.

      No-one has ever said that leaving the EU would prevent UK businesses trading with businesses in the EU. But it will increase their costs.

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    5. Just adding, this is the kind of issue on the "cost" side of prioritizing EU trade negotiations:

      "V4 [Visegrad group] countries will be uncompromising," he said. "Unless we feel a guarantee that these people are equal, we will veto any agreement between the EU and Britain."

      http://www.bbc.co.uk/news/world-europe-37396805

      27 parliaments must ratify any EU trade agreement with the UK. No matter how great the potential value of negotiating such an agreement may be, there are any number of foreseeable scenarios in which the negotiating costs, relative to other opportunities, make it an irrational priority.

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    6. We did sales deals in over 150 countries and at no point did tariffs appear in our costs.

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    8. That would be because of the nature of your business and its customer base. Not all businesses are subject to tariffs. But you cannot assume that because your business did not encounter tariffs, tariffs don't exist. Some tariff barriers are not called tariffs: license fees for foreign businesses, for example, are a tariff barrier under another name.

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  6. Trade depends hugely on relationships and goodwill between the parties. It's taken 43 years to build those within the EU and between it and the UK. What Brexit does is jeopardise them without being able, possibly ever, to replace them with something as good in the same period of time.

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    1. I'd go further than that. Anybody who has been anywhere near sales knows the concept of pipelines, which go from initial contact to the final sale. Pipelines can be extremely long, and the longer they are the more they rely on building a business relationship. The idea that you can just turn them on and off is insane.

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  7. Should France and Italy join the UK in the Brexit corner does it change the equation?

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  8. A dire, but not entirely unexpected result. Part of it can be ascribed to "familiarity bias" - most people really don't know anything at all about non-English-speaking countries even if they go there on holiday. And that's before we start on the level of general ignorance about the economies of those countries or their relative scales. So, mostly, you could say that people's answers are reflecting the countries that they know something about, or appear in the media that they read/view.

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    1. I think that's a fair point. The over-prioritising of Australia probably comes from the fact that Australia was widely reported as welcoming a trade deal with the UK. However, India also said it would welcome a trade deal, but for some reason that doesn't seem to have captured people's imagination. I do think fears about immigration, loss of jobs and cultural distortion play a considerable part in this. And there is a racist bias too. We should not shy away from saying the unsayable. Britain has always had pockets of deeply entrenched racism.

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    2. Racism is defined in my Oxford Dictionary as basically the idea that some races are superior to others. I'm baffled as to why the desire to trade with or associate with people like oneself proves one thinks some races are superior to others. That makes as much sense as saying the Moon is made of cheeze because daffodils are yellow.

      Personally I'm indifferent as between trading with India and Australia, but I see nothing wrong in wanting to associate with people like oneself. Muslims do that, the Chinese in the UK tend to marry other Chinese people, etc etc. Of course there are no objections to that from the politically correct because the PC lot apply a totally different set of rules to whites as compared to non-whites. I.e. self-proclaimed anti-racists are themselves the worst racists sometimes (on a broad definition of the word racist).

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    3. What you describe is tribalism, not racism. That was the term I used in the post, and I believe that in general it is a better descriptor for what is going on. However, the fact remains that there are racist attitudes in the UK, and we have seen an increase in hate crime since the referendum. It would in my view be lily-livered to shy away from acknowledging this.

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  9. One issue that hasn't been discussed much is how to extract the UK from the EU in the WTO context. Since all tariff quotas and restrictions (eg, anti-dumping levies) are at the EU level, divorce means a distribution of these between the UK and EU27. Presumably this will be part of the Article 50 negotiations too. And what is agreed will also have to be accepted by all other WTO members as not impairing their rights. This is needed before we can even know what the WTO baseline is.

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    1. Not quite true. We know what the WTO baseline is. We don't know what portion of the EU add-ons to the WTO baseline the UK will be able to keep.

      The UK could, for example, simply stop subsidizing uncompetitive agricultural production (which would be the neo-liberal thing to do), in which case (as I understand it) the bulk of the EU add-ons would either be moot outright or straightforward to renegotiate.

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    3. I refer you to this article: http://www.ictsd.org/opinion/nothing-simple-about-uk-regaining-wto-status-post-brexit. Just carving out the UK share of agricultural subsidies with the NFU looking over the government's shoulder should be quite an interesting exercise, not to mention the views of the Irish and Danes....

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    4. Thank you, but I believe this quote from the linked article is more or less exactly what I said above:

      "The only way it could, would be if a post-Brexit UK became — as some propose — much more of a free trader, with low import duties across the board, and minimal subsidies for farmers. This would be simple to establish in the WTO, but domestic opposition would have to be overcome first."

      That's the WTO baseline. We know what that is. Anything above that will have to be negotiated.

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  10. I'm sceptical about the table and what to read into it. I suspect that the question was interpreted in many different ways by the respondents - rather like the referendum itself in fact. Ask a stupid question...

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  11. Given at least some amongst the Continentals are thinking creatively about the split
    http://bruegel.org/2016/08/europe-after-brexit-a-proposal-for-a-continental-partnership/
    Why does most of the UK comment seem to think that doing a deal that looks like a win-win rather than a lose-lose is totally impossible.
    After all we in the UK have always characterized the EU as the land of fudge and compromise.

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    1. "Why does most of the U.K. comment seem to think that doing a deal that looks like a win-win rather than a lose-lose is totally impossible"

      it's pretty obvious, really. If the UK can get a better trade deal with EU countries from outside the EU than they have within it, the EU is doomed. Therefore the UK losing out as a consequence of its decision is essential to preserving the EU. The EU's primary instinct is always self preservation (just look at the bailouts - they are all about keeping the EU together). So although there are some people genuinely trying to think up creative solutions to soften the blow, I fear they are dreaming. There is not going to be a win-win solution.

      However, that is not a reason to write off the EU, as some on the Leave side seem to want to do.

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    2. I dont believe anyone thinks the UK will get a better trade deal outside EU than in. But clearly a "hard Brexit" of the type being currently discussed in the media if the UK is not willing to accept the free movement of Labour (which it is not) will do considerable damage the BOTH the UK and the EU. When both sides have had time to look into the abyss and reflect on the matter positions may well shift.If the UK's point of departure in the upcoming negotiations is that a win -win solution is impossible then it will definitely be a lose-lose

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  12. Brexit it has already weakened the pound, and may do so further. Would this not offset the price(in euros) of our exports to the EU thereby meaning they are not necessarily any less competitive due to any applied tariffs? Of course if said exports require constituent parts from the EU then obviously the situation becomes more complex (see comments above about needing spreadsheets). I think given the poor setup of the Euro the marginal decision to leave may not be as much of a disaster as hoped/feared ( delete as appropriate!).
    Martin

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    1. To some extent, yes. However, you should remember that trade goes both ways. We also import from the EU - in fact over half our imports come from there. So what we gain on export advantage, we lose in domestic price increases. Also, the U.K. is well integrated into international supply chains because of its openness, which diminishes the exchange rate effect. In 2009, sterling devalued by 25%, but it didn't make much difference to the balance of trade. No particular reason to assume that devaluation would do so now, if it didn't then.

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  13. There's an error in your stated population of the EU – "the EU (minus UK), 680m". That's actually the population of Europe minus the UK. The population of the EU minus the UK (i.e., the EU-27) is 443 m.

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    1. I will correct. Point stands, though. EU is far more populous than Australia.

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  14. "Others seem to think that reverting to the EU's standard tariffs for non-EU countries would not affect UK exports. I beg to differ. It would mean an immediate price increase for UK exports to the EU. This is bound to encourage price-sensitive EU importers to look for cheaper alternatives elsewhere. We should expect therefore that leaving the single market with no equivalent agreement in place would cause UK exports to the EU to fall, possibly drastically. It would also affect the EU's exports to the UK, of course - though German cars are pretty price inelastic. There aren't too many alternatives to them at the high end of the UK market."


    Dr. Vladimir A. Masch points out quite clearly why you are wrong with this statement Francis.

    The Myth of comaparative advantage

    http://www.huffingtonpost.com/vladimir-a-masch/the-myth-of-comparative-a_b_581814.html

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    1. In the comment you quote I am discussing competitive advantage, not comparative advantage. Dr. Masch's piece is therefore wholly irrelevant.

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  15. In terms of a framework for quantifying the value of a UK-EU trade deal, this is a reasonably good starting point:

    http://www.ase.tufts.edu/gdae/Pubs/wp/16-03CETA.pdf

    If this sort of analytic approach gains currency, the "queue" that the UK negotiators are at the end of may get rather short rather soon.

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  16. Brazil is actually much larger than it is appears on the popular map , the Mercator projection. Brazil is bigger than Europe from Finland to Portugal including the UK.

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  17. "It has become clear that the popular understanding of trade, even among politicians who should know better, is stuck in the past, hence the ready recourse to tales of swashbuckling mercantilism and the revival of trade ties with Australia and Canada. This could be dismissed as popular prejudice, but the condition of public opinion is probably more down to ignorance about prospective growth markets for British goods and services than racism. Most Brits would guess that China is the largest country by population, because that is emphasised with monotonous regularity by the press (playing on an old fear of Asiatic hordes), but few would guess that Pakistan and Bangladesh are both in the top 10 (let alone that Indonesia is in the top 5), essentially because media coverage of those countries is largely reduced to terrorism and natural disasters, which leads us to underestimate the size of their middle class and thus their spending power."

    From Arse to Elbow: Empire Loyalists

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  18. Thank you for your interesting article. Because I found it via a site which demands factual and expert submissions, I had to check your credentials. Your "about" page simply says "writer". It was google which finally revealed to me your background in banking.

    Just a thought, but you might want to make your experience a bit more clear on your "About" page. It will help for your views to be taken more seriously.

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  19. How about some trade?

    You can have Sen. Clinton and tRump and we get Nigel Farage?

    If not maybe Boris?

    All aside, if we all vote for a third party we won't get either of them.

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