Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Divide and Conquer?

by Frank Schnittger Sun Jan 21st, 2018 at 09:02:11 PM EST


Britain's favourite tactic in gaining and running an empire was to divide and conquer: There was always some local comprador bourgeoisie willing to give their loyalty in return for immediate financial gain. So long as you had a superior military presence and at least some local elites on your side, subduing or marginalising those opposed to you could become a relatively straight forward process. Even a huge and populous country such as India could be governed as long as you had most of the Maharajas on your side. The fact that India, as a whole, was impoverished by the process did not detain the Imperial office unduly.

Britain  seems to think that employing similar tactics with the EU could pay similar dividends. Theresa May's recent visit to Poland with a full ministerial entourage at a time when the EU and Poland are at loggerheads over the latter's alleged violations of judicial independence sent a none-too-subtle message to Brussels: We can make a lot of trouble for you if you don't give us a good deal. Eastern European countries have an interest in remaining as close as possible to the UK's belligerent attitudes to Russia and nuclear deterrent capabilities. Boris Johnson and David Davis' "charm offensive" in Germany sought to highlight some German Industries' dependence on the UK market.

It will certainly be much more difficult for the EU to maintain the unanimity it displayed in Phase I of the Brexit negotiations when the differing national interests come into play in the trade negotiations. Germany, France, Holland, Luxembourg, Ireland, Eastern European and Mediterranean countries will all have different priorities. Macron has just become the first major European leader to visit 10 Downing St. in a long time. You know you are in trouble when even Trump displays no enthusiasm for a state visit with all the royal bells and whistles.


But what the British appear to fail to understand is that divide and conquer tactics may not work to their benefit on this occasion. Any Brexit deal needs a qualified majority on the Council and European Commission and Parliament endorsement. A trade deal requires unanimity. Piss off too many countries and parties, and European divisions could work to prevent any deal being ratified. Threatening European unity risks provoking a very antagonistic response from those who see their future as being part of a cohesive Europe.

Chris Johns notes that

The debate has grown strangely quiet in the UK, with many people either bored or battered into submission. The national mood is sullen. Attention, never a strong suit of the Brexiteers, has wandered elsewhere. Even Nigel Farage couldn't attract much interest with his suggestion, quickly withdrawn, that a second referendum is needed. Only European leaders seemed to notice; several, including Emmanuel Macron, say the United Kingdom is more than welcome to forget the whole thing.

Ian Dunt, a prominent Brexit commentator, points out that Brexit is now happening without the British, with all the running made in Brussels. And by running he means preparations. It's as if the Brexiteers have behaved like teenagers trashing the family home during a particularly riotous party. The kids have moved on, leaving the adults with the clean-up. But there are consequences for the children, including punishment - perhaps even retribution.

If anything Brexit-related is going on in Britain right now it is invisible. Behind the scenes the civil service is making preparations, but they are all devoted to having your cake and eating it: a bespoke free-trade deal, encompassing all goods and services, plus complete freedom to negotiate third-party trade deals; no more freedom of movement; and no more European Court of Justice. It doesn't matter how many times or ways in which European politicians say no; the British just don't seem to listen.

<---snip--->

In any battle, any negotiation, it is wise to try to understand what motivates the other side. Yes, EU countries have differing interests that the British will try to exploit. But this betrays only a very superficial understanding of what Europe is about. Europe's ideas about itself shape what it considers its interests to be. The effort needed to figure all this out, to understand their opponents, is clearly beyond the wit of the Brexiteers. It remains an uneven and brutal contest.

British enthusiasm for Brexit may diminish further as their hopes of achieving all these good outcomes are dashed. The usual Brexiteer response - more EU bashing - is only likely to consolidate European unity further. Whatever about the immediate economic interests of particular EU countries and industries, the long term interests of the EU as a whole are clear: Offer as difficult a Brexit deal as possible, if only to discourage other nationalist and separatist movements.

Meanwhile, other countries such as Ireland are busy building new alliances within the EU to protect their interests and consolidate their positions. David McWilliams is the nearest thing there is to a prominent Eurosceptic in Ireland, arguing that our cultural affinities and economic interests are much more closely aligned to Atlantic countries such as the USA and UK than they are with eastern European and Mediterranean countries. But even he has argued that Ireland should align itself with eastern European EU members if only to prevent a new Schultz/Merkel/Macron led drive for further EU integration.

Leo Varadker appears to have taken this advice by meeting Victor Orban in Hungary on a trip not announced to the Irish parliament beforehand and the subject of considerable criticism when announced. About the only things Orban and Varadker have in common is a preference for a low corporate taxation rate as a means of attracting FDI and the maintenance of CAP subsidies. There was, pointedly, no agreement on migration policies. Importantly, Orban also promised to support Ireland's position on Brexit.

However Varadker also schmoozed the European Parliament on his birthday and added an anecdote about his personal family history which put Nigel Farage firmly in his place - always a popular thing to do there - and leaving the Parliament in no doubt that Ireland remains committed to the European project. If the British Government wants to isolate Ireland within the European Union, it will have some work to do. Alliances are being built and consolidated all the time, and dividing and conquering the EU will not prove to be as easy as some Brexiteers expect.

Display:
I still don't understand why even ostensibly pro-EU commentators buy the line that the EU are being difficult and/or trying to punish the UK. It looks to me like the EU are in damage limitation mode, trying to get a deal that causes as little damage to the EU and, as a secondary concern, the UK.

This means offering the UK the best deal they can consistent with the principles of EU law and treaties - thus Barnier's brilliant stairs graphic that shows the best deals the EU can offer given apparent UK insistence on various "red lines" (otherwise known as shit May decided to say to keep some group or the other on her side for a week and then doubled down on because she confuses inflexibility with strength).

by Colman (colman at eurotrib.com) on Sun Jan 21st, 2018 at 10:23:28 PM EST
It is easy to argue that the EU has a vested interest in offering a bad deal in order to avoid encouraging other separatist parties and also in the hope that a bad deal might encourage the UK to change its mind once the "have cake and eat it" promises of the Brexiteers are thoroughly demolished.

But I think the fuller explanation - which you have averred to elsewhere - is that the EU is an incredibly rule bound institution with very specific Treaty derived competencies which define very precisely what it can and can't do or offer to the UK. Unlike the UK government, it can't make up policy on the hoof.

Specifically it can't offer a deal which:

  1. Might fall foul of an existing Treaty or require a new Treaty to be enacted by all member states
  2. Provide the UK with benefits it might then have to offer all other trading partners under WTO rules.
  3. Undermine hard won trade deals already signed with other trading partners
  4. Might fail to gain the support of the EU Commission, Parliament, and at least a weighted majority of the Council some of which might in any case be already minded to oppose a deal for somewhat separate reasons - e.g. Gibraltar, military bases on Cyprus, treatment of eastern European migrant workers, prospective corporate tax competition, regulatory arbitrage, GFA in N.Ireland...

The UK has already ruled out all the EU's preferred options: continued full membership, membership of Single Market and Customs Union, Norway, Switzerland, Canada FTA, Japan FTA etc.

Sure, the EU can discuss a "bespoke" deal, because all those arrangements are in some sense bespoke. But they all took a very long time to negotiate and ratify.  If the UK wants any deal any time soon, it can't stray too far from an established template.

I think part of the problem is that UK commentators believe their own propaganda about an all powerful Brussels bureaucracy which can ride roughshod over member states - as they claim it has done over the UK. The reality is that the EU only has those powers specifically delegated to it by member states (including the UK) by unanimous consent. That doesn't include being very generous to third parties: ask other independent states about how easy it is to do business with the EU...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Jan 21st, 2018 at 10:52:20 PM EST
[ Parent ]
EU eyes quick Brexit transition deal, trade pact to take time
The draft negotiating guidelines echo an agreement among the 27 other EU national leaders in April that Britain would remain bound by essentially all EU rules in the transition but without a say in making them. [...]
Britain cannot put new bilateral trade treaties with other countries into effect during the transition period as the EU insists Britain go on collecting EU customs duties as if it were still a member, the official said.


Diversity is the key to economic and political evolution.
by Cat on Sun Jan 21st, 2018 at 11:12:23 PM EST
[ Parent ]
I still don't understand why even ostensibly pro-EU commentators buy the line that the EU are being difficult and/or trying to punish the UK.

It's part of the Brexit narrative: EU is a racket and since the Britons want to escape to freedom, the Eurocrats want to punish them, out of sheer spite and to terrorize the other hostages members.

The myth of nasty Continentals is so powerful that even pro-EU commentators can't help buying into it, as you noted (why can't you tolerate our intolerance?).

by Bernard on Mon Jan 22nd, 2018 at 08:48:16 PM EST
[ Parent ]

Viktor Orbán, unlike Leo Varadkar, is not in the best mood
"a very direct exchange of views"
Obviously, Varadkar wasn't convinced. He announced at the press conference that
"Ireland doesn't agree with Hungary on the issue of migration and supports the concept of a common burden-sharing within the European Union," a statement which was greeted by 24.hu with enthusiasm: "An unheard-of thing happened in Budapest. Leo Varadkar announced that he doesn't share Orbán's migration policies." This is what Hungary has come to.

We learn more about the meeting and its flavor from the Irish prime minister, who gave an interview to The Irish Times after the encounter. Apparently they had "a very direct exchange of views" about Hungary's refusal to resettle refugees, about the tightening government control over civil society, and about the shuttering of Central European University, which is `a bastion of liberal values' in the region." He added that he can't tell whether this very direct exchange had much of an impact because Orbán is someone who is "very firm in his views and world views."

Varadker has a track record of ruffling feathers in Britain and N. Ireland by being very direct and forceful in the expression of his views in private, and not averse to repeating what transpired in public.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Jan 21st, 2018 at 10:26:53 PM EST
public opinion in the UK has moved on to other things largely because public sentiment remains fixed. there has been no significant movement in opinion polls since the referendum, if anything opinion is becoming more polarised.

Brexiteers on the street are losing patience with the whole process, "why can't we just leave?" is a very common sentiment. This is not helped by the right wing press, ie almost all of it, more or less agreeing that it would be better if we just upped anchor and slipped away in the night rather than dealing with sneaky Johnny Brussels.

Meanwhile, pro-EU people have slipped into sullen acceptance, rather as the condemned man awaits the noose.

There is no meeting of minds, there is no debate in the press, just people around Westminster who won't change their mind shouting at each other about one another's treachery and refusal to accept reality over one thing or another. Frankly, it's got boring cos it never changes.

You wouldn't mind so much if there was any sense of purpose in the UK position, but there isn't. Just one set after another of mindless rainbow-seeking unicorn assertions by our ministers-in-chage, each eventually dashed on the rocks of the reality of something the EU negotiators had explicitly stated months previously.

Government-by-incompetence isn't amusing, it's tiresome.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 22nd, 2018 at 12:56:00 PM EST
And the Brexiteers on the Street aren't wrong: there is nothing stopping the UK leaving straight away, except the prospect of losing a significant part of the UK economy, and a large part of government revenues. The underlying assumption appears to be that the EU can be brought to heel only by the threat of the nuclear option of a no deal Brexit and that the EU would then cave to UK demands because, well, Jonny Foreigner has no balls.

There is even, perhaps, even an atavistic nostalgia for the Battle of Britain days when Britain opposed the world and ultimately won out. Some may relish the conflict as a relief from the grey bureaucratic maze woven by Brussels.

And there is some truth in this. Britain is more important to Europe than Norway. The UK economy is bigger, London based financial services are a key part of the EU economic infrastructure, and UK military forces have been a key part of NATO and an important part of the sense of security currently enjoyed by eastern European states.

But if it does become a major political stag fight, moderate, pragmatic, short-term focused business interests will lose out to the siren voices of political nationalism and the very survival of the EU itself. Any short-term economic damage will be treated as collateral damage in a larger struggle - by both sides.

Obviously the EU as a whole could weather the storm better than the UK, and it helps that there is currently a strong economic up turn which might have to be moderated to avoid an overheating of the economy in any case. A hard no-deal Brexit could then, from a conservative EU economic perspective, be little more than an alternative to a sharp upward turn in interest rates.

Ireland and the Benelux countries together with the German car industry will scream disaster, but Governments need not panic if other sectors continue to prosper and even benefit from the transfer of UK financial services and Aerospace activities.

It could take a very long time before very real economic damage trumps national pride and brings more moderate voices to the top of the political heap again. The people who will suffer most are also those who are least important politically. Already wealthy financial services executives can always transfer overseas. They already do.

So I see a pro-longed clusterf*ck of gradually deepening economic damage in the UK and UK facing parts of the Irish economy. Northern Ireland will go into melt-down when public services and agricultural subsidies are de-funded. Many will have to leave to get a job elsewhere. Smuggling across the border will become a major industry rewarding all the worst elements in society.

This will not end well, if the Brexiteers in the street get their way, and there is still every chance that they ultimately will. And I don't think that a Corbyn led government will necessarily chart an altogether different course, if for other reasons. And for the most part, there is little that the EU can do about it. This is a very English coup.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 22nd, 2018 at 01:51:36 PM EST
[ Parent ]
London based financial services are a key part of the EU economic infrastructure

Finance in 2018 is people working in a global network of computers, talking to each other via a global telecommunication system.  Firms can become a node in this system by paying the money to plug in, the Mizuho Financial Group could totally shut down their London operation Friday night and seamlessly re-open in Frankfurt or Dublin or Paris or all three together on Monday morning.  

Physical location is almost irrelevant.

Regulatory location is absolutely relevant.

The City is 3 times larger than the UK economy needs or can support.  The extra is there because it was easier to expand already existing offices handing Eurodollar business when the UK's $2.6 trillion (US) economy joined the EU's making a total $18.7 trillion (US) economy. Further, while the EU economy will no doubt take a hit the cost of Brexit to the UK economy will be staggering meaning the UK will need even less Finance.  Since the Finance firms are looking being locked-in to an ever shrinking $2.6 trillion economy or being locked-out of a $16.1 trillion economy ... the decision becomes easy.

Now throw in the standard - Patent Pending, all Rights Reserved - May governmental incompetence

So.

Yes, London's financial services are currently a key part of the EU's economic infrastructure that won't last 3 seconds past Brexit.  In fact I expect firms to continue shifting their operations to EU sites.

Note:  Goldman Sachs pronouncements of staying are, IMO, being driven by the fact they are building a .1 million square foot office in London scheduled to open in 2019. And despite what GS said in the previous quote:

Goldman said on Monday that Brexit could "materially adversely affect" how it operates businesses in Europe and could require it to restructure some of its operations.



She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Mon Jan 22nd, 2018 at 04:52:22 PM EST
[ Parent ]
and once the City leaves, that's one Humpty Dumpty that ain't gonna be put back together once we realise our folly and scramble to get back  in.

Frankly, I view that as a benefit cos the City are a parasite on the UK, it sucks away the oxygen of any debate on all other aspects of the UK economy.

Even multi billion pound infrastructure developments such as CrossRail2, HST2 and Thameslink 2 are all about the City, while transport and economic advancement in the north of England wither for the lack of a few million.

However much it hurts the economy, that's one thing that will make the UK a better place in the long term

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 22nd, 2018 at 05:59:21 PM EST
[ Parent ]
I can only dream that Trump might do something that would have a comparable effect on Wall Street. Come the day!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jan 30th, 2018 at 05:45:17 AM EST
[ Parent ]
I have always viewed reports of tens of thousands of jobs moving instantly as over-blown and somewhat beside the point. Yes EU regulators won't except "brass plate operations" as constituting domicile for market access purposes and so significant numbers of senior decision makers will have to relocate to 5* Hotels in EU cities for 3 nights a week at least. More operations will move over time.

But the most important implications from a political point of view is that tax revenues on large scale profits and large salaries will also move deprive the UK Exchequer of a crucial revenue source. In addition the primacy of UK law in settling contact disputes will be challenged and lawyers in EU capitals will be glad to pick up the business. Dublin, with the same language and similar common law legal system to the UK, should target this business in particular. Trillions of $ in financial derivatives require expensive lawyers to broker. Hopefully the oversight will be sufficient to prevent the taxpayer being put on the hook for losses.

Downstream support services, property values, and future investment flows will gradually follow, but the actual employment migration may not be all that great, to begin with, at least. From an Irish point of view I am far more interested in smaller UK industrial and food companies looking to set up smaller EU bases which can be located in smaller rural Irish towns and don't require rarefied skill sets. Despite a return to rapid economic growth, smaller rural towns in Ireland remain depressed, and will not be helped by large financial firms moving some operations to Dublin.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 22nd, 2018 at 06:17:59 PM EST
[ Parent ]
The people who will suffer most are also those who are least important politically.

Not always "least important", argues this academic:
`We don't exist to them, do we?': Why working-class people voted for Brexit - LSE Europp

The referendum was a turning point for the women in east London. They had not voted in the 2015 General Election: they had little interest or faith in a political system seated only three miles away when their daily and immediate situation needed constant attention. When `Sally' told me she was going to use her vote for the first time to leave, I asked her if she thought things would change for the better if we were to Brexit. She said she didn't know, and didn't care. She just couldn't stand things being the same.
<---snip--->
Working-class Leavers were derided as turkeys voting for Christmas, but it is the middle-class Remainers who have been running around like headless chickens since the vote. Like Henny Penny, they think the sky is falling in, but whether the sky falls in or not, Brexit has made a difference to working-class people dubbed `the left behind'. They have become visible for the first time in generations, and to some extent feared.
by Bernard on Mon Jan 22nd, 2018 at 09:00:14 PM EST
[ Parent ]
tbh, they'd been abandoned by Labour since the early 70s. And, once thatcher had used them and spat them out, neither party ever gave them any mind.

Appeal to those who vote has been the credo. The idea that the abandoned still have opinions was moot, if they didn't vote, they couldn't be persuaded usefully.

They're also the people who will vote for Corbyn and then expect miracles he can't deliver cos their hopes are unrealistic. Same as Attlee lost in 51 cos he couldn't hope to deliver on every expectation and Churchill attacked him on what he'd not done


keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 22nd, 2018 at 10:10:18 PM EST
[ Parent ]
And come the next general election they probably won't vote again as most are not in marginal constituencies. Or has Brexit led to them being much more engaged politically?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 22nd, 2018 at 10:52:20 PM EST
[ Parent ]
Frank: If the British Government wants to isolate Ireland within the European Union, it will have some work to do.

And having your coalition ally calling Varadker "a nutcase" is not going to help either.

by Bernard on Mon Jan 22nd, 2018 at 09:12:17 PM EST
as with so many of their other fantasies, only the brexiteers think that they have useful leverage to turn Ireland into our ally against the EU

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 22nd, 2018 at 10:18:15 PM EST
[ Parent ]
In many ways Ireland is a natural ally of the UK in the Brexit negotiations but not of the DUP and the DUP led-by-the-nose May government. The Irish government knows the UK government didn't give a shit about N. Ireland and wouldn't have given it a moments thought had Ireland not been able to to gain EU agreement to it's red lines on the border

But otherwise Ireland wants as soft a Brexit as possible. Irish food exporters are still critically dependent on the UK market and these exports will be subject to v. high (50%+) tariffs if WTO terms apply. The great fear of the Irish government is that its influence will wane as the talks move on to trade, and disappear almost altogether if the UK ends up crashing out without any deal.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 22nd, 2018 at 11:01:33 PM EST
[ Parent ]
Sammy Wilson is right.  There has been a change in tone in Dublin.  It is now much more assertive - see my diary The Changing balance of power. Varadker's style is also not to pussy foot around with the usual centrist meanly mouthed platitudes.  All of this has come as something of a shock to the DUP, who thought they had scored a major coup forcing Brexit on the majority in N. Ireland and holding May hostage. They will become increasingly nervous as May's term draws to a close and a government not beholden to them threatens to take power.

However none of this is doing Varadker any harm in the polls whatsoever, and any attacks on him by Farage or the DUP can only do Varadker(and the Irish position) good in Europe.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 22nd, 2018 at 10:49:33 PM EST
[ Parent ]
This is an exaggeration as have been and are so many claims coming out of Tory gov. It's not worth repeating.

Eurotrib has had the opportunity to review EU 2017 WTO portfolio. No EU third-country duties approach 50% much eless 20% or 15%. Eurotrib has had the opportunity to review EU BREXIT impact papers estimating 4% tariff which is line with EU favored nation ask. Currently, EU tariff on UK imports is 0. It will remain 0 until March '19 or March '21.

Any tariff greater than 0 is the number driving prospects of "permanent insanity or piracy" through the UK.

And Eurotrib has had the opportunity to review the EU-UK joint notice to WTO regarding quota divestment. EU is highly unlikely to short UK import quota in re-balancing EU27 WTO commitments, if only to support IE's small-holders' beef & dairy exports to UK, their largest trade partner. In the scheme of things, this business is marginal to EU internal and EU-UK trade balances.

IE's and UK's biggest losses are going to come from transnational banking and financial services. That's the way it is. The writing was on the wall from '12, when Draghi took on decimating eurozone bond rates and yield. "Austerity" finished the City, ironically. This is one reason why Barnier is so confident. UK has no leverage.

Pun intended.

Diversity is the key to economic and political evolution.

by Cat on Tue Jan 23rd, 2018 at 12:46:29 AM EST
For a detailed study of the impact of WTO tariff rates on EU/UK trade see here (pdf). There are different tariff rates on over 5,000 different product lines ranging from 0% to over 80%. Food and clothing attract the highest tariffs with meat c. 50%. The aggregate tariff on all Irish exports to UK is by far the highest in the EU (because of our heavy emphasis on food) and comes in at c. 18%. Trade in some product lines is expected to cease entirely because of the punitive nature of the tariff rates.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 01:02:56 AM EST
[ Parent ]
Overall the study estimates a 30% reduction in UK/Ireland trade on medium price elasticity assumptions. However the study assumes the UK remains within the customs Union and therefore assumes no non-tariff barriers to trade. With the UK also intent on leaving the Customs Union the actual impact on trade could be much higher.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 01:09:18 AM EST
[ Parent ]
You keep referring to that paper without x-reference to World Tariff Profiles 2017, EU BREXIT impact papers, or change in play to date. Why is that?

Section 3 describes the WTO tariff structure and presents implied tariffs by country and sector if these were applied to the current trade structure between the UK and each of the other EU member states
[...]
Our analysis is based on bilateral trade flows between the UK and each of the 27 other member states of the EU from the United Nations ComTrade data source for 2015.
[...]
without an agreed trade deal, the UK will not be able to apply different tariffs to trade from the
EU than it is willing to apply to all other countries.  

What's wrong with these assumptions besides category errors and the fact that the EU does not apply one rate/product line to all third-countries, because, well, bi-lateral trade agreements are in place?

archived: consider the source
condition for UK "transition" period
Joint letter from the EU and the UK Permanent Representatives to the WTO
World Tariff Profiles 2017
of which "data on bound, applied and preferential tariffs and import statistics are available in up to six digits of the Harmonized System (HS) codes" (Tariff Analysis Online )
EU Impact Studies of which The Impact and Consequences of Brexit for Northern Ireland

Diversity is the key to economic and political evolution.

by Cat on Tue Jan 23rd, 2018 at 02:10:16 AM EST
[ Parent ]
You keep referring to that paper without x-reference to World Tariff Profiles 2017, EU BREXIT impact papers, or change in play to date. Why is that?

What's wrong with these assumptions besides category errors and the fact that the EU does not apply one rate/product line to all third-countries, because, well, bi-lateral trade agreements are in place?

  1. The paper examines the impact of applying WTO tariff and quota's on existing levels and types of trade between UK and individual EU27 countries

  2. World Tariff Profiles 2017 do not apply to intra-EU trade and therefore doesn't include Ireland/UK trade

  3. The Brexit impact paper you reference makes no reference to tariff rates or impact on trade (beyond broad estimates of impact on GDP).

  4. What category errors are you referring to  - beyond the assumption of the UK remaining within the Customs Union - which I have already referenced?

  5. The whole point of the paper is to examine would would happen in the absence of a bi-lateral trade agreement between UK and EU27 - i.e. a no deal Brexit

  6. Why the dismissive tone?


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 10:52:49 AM EST
[ Parent ]
WTO governance and commitments (tariff, quota) apply to EU bloc viz. third-country WTO members. UK-EU "no deal" cannot default to academic calculation, but de minimis range determined by WTO members' and based on WTO member historical trade balances. That is total UK share of total EU bloc is not tabula rasa, but comparable to EU bloc trade with and duties applied to third-country products' origins.

Completing divestment of total UK share from total EU bloc trade balance is an arithmetic exercise. It is the subject of the formal joint notice to WTO. Nominally this difference positions UK by "default" for preferential quota and tariff treatment by EU

Tariffs placed by the EU, at a Most Favoured Nation level of 3.2 per cent upon agricultural products exported from Northern Ireland, would have significant adverse effects, whilst average WTOlevel tariffs on agricultural imports into Northern Ireland would create inflationary pressures.

or WTO standards. EG. BEETS, CAPS, EU prerogatives. Let us remember for Sammy Wilson's sake, NI is the UK.

To the extent UK goods and services can be segregated from those originating in EU27 at every point in any supply chain by product code is the political exercise of Phase II settlement in which the UK has thus far, apparently refused to participate. Which is to say, Tory gov has deferred to EU authority at bi-lateral ("no deal") -> WTO-level specification. And I expect Tory gov to default to this defensive strategy with every other prospective trade partner.

In the esri paper, distribution of UK trade to each EU member --deranged from political, heterogenous human prerogatives as well as FX hurdles to investment and sales-- predicates a persistent, erroneous belief that UK is free to dictate bi-lateral trade arrangements with each member. This a silly, incongruous basis by which to project EU bloc relations to the UK.

Because EC tariff quota mediate members' third-country trade.

+50% is exaggeration, when delta 0 to 3.2% will do to dramatize the disadvantages conveyed by BREXIT. Withdrawal from a customs union.


Diversity is the key to economic and political evolution.

by Cat on Tue Jan 23rd, 2018 at 07:04:28 PM EST
[ Parent ]
I have argued on many occasions that the Brexiteers' breezy assumption that the UK can simply default to WTO tariffs and rules in the event of a no-deal Brexit is erroneous. For one thing, a no-deal Brexit implies leaving on bad terms without payment of the exit payment which the EU27 claims is due.  In that context the EU may not be disposed to offer the UK most favoured nation status.

In addition, there has been no agreement on a methodology for carving out UK share of current EU28 WTO trade quotas, and in that context, it cannot simply be assumed that proportionate (to what?) quotas will be granted to the UK. The Joint letter from the EU and the UK Permanent Representatives to the WTO is a statement of intent only, and implies a harmonious Brexit process and Treaty will be agreed.

Finally, the EU is actively engaged in negotiating bi-lateral trade deals with all its major trading partners to the point where trading by default WTO rules will apply only to a diminishing residual share of total EU external trade. The WTO is effectively a moribund organisation which has not been able to conclude a successful trade round in many years. There is nothing to prevent the EU27 withdrawing from the WTO and applying punitive tariffs to the UK if it deems the UK to have been in dereliction of payment of debts rightfully due.

Remember, a no deal Brexit implies leaving on very bad terms indeed, and the EU27 will be under no obligation to make life easy for the UK even if Ireland, in particular, is caught in the cross-fire. The one thing the EU cannot allow happen is for the UK to be seen to "have cake and eat it" outside of all the other obligations EU members have to observe. Other ways can be found to compensate Ireland and specific industries most effected.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 09:59:07 PM EST
[ Parent ]
A warning word by Colman ovr 12 years ago ...

Neocons sighted on the Thames

Close to the Henry Jackson Society with fellows like Anne Applebaum [has resigned], can you comment on this article please.

Legatum Institute's 'solution' for the Brexit border is highly problematic

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Tue Jan 23rd, 2018 at 09:47:45 PM EST
The Brexiteers are essentially English nationalists with little interest in Ireland or N. Ireland. That the Irish border issue has now created complications for the Brexit negotiations is an irritating irrelevance as far as they are concerned, to be minimised, pooh-pooed, and wished away with false analogies and magical thinking. The Legatum Institutes "solution" is of that ilk.

If they were honest they would simply accept that N. Ireland will have to remain in the Single market and Customs Union if the Irish border (and commitments made under the Good Friday Agreement) are not to become problematic. They can then have their "invisible", "frictionless", and problem free border in the middle of the Irish sea.

The problem is they require the parliamentary support of the DUP for whom any semblance of any border between N. Ireland and Britain is anathema.  So the fall-back position is to argue that it is really the Irish government which is being unreasonable, and if the Irish government had any sense they would join the UK in leaving the EU, and hey presto, the need for an Irish land border would disappear. The Republic would effectively be re-joining the UK.

In the meantime, and given the obduracy of Varadker et al, the best strategy is to seek to isolate the Irish as a means of weakening the EU's negotiating position as whole. Any old non-factual blather about how well other borders operate will do. The LSE's paper, by two Queen's University, Belfast academics, begins the process of debunking those claims.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 10:38:38 PM EST
[ Parent ]
Leo Varadker's approval rating has jumped 7% to 60% and is the highest of any Taoiseach since the heyday of Bertie Ahern in 2007. Satisfaction with the government is also up 3% to 44%. This is in response to what was seen as a robust performance in phase 1 of the Brexit negotiations and the improving economy which is now growing at. c. 5-6%.

It is also against the backdrop of a gathering storm around the forthcoming referendum to remove the constitutional prohibition on abortion and introduce legislation allowing unrestricted access to abortion in the first 12 weeks, and more restricted access in particular circumstances thereafter.

Leo Varadker has reserved his position until the final wording of any constitutional amendment and accompanying legislation has been agreed although it is expected he will then row in behind the liberalising proposals.

The improvement in his popularity is impressive in the context of ongoing controversies regarding the government's handling of scandals in the national police force, a public housing crisis and hospital services waiting lists and capacity constraints.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jan 25th, 2018 at 04:30:46 PM EST
I just had a thought. What if the Brexit schism (or blowup that we hope for) in the Tory party doesn't really happen? What if the Brexiteers swallow the phase two agreement, anything to just get the government over the March 2019 finish line and then declare victory?

During the transition period (status quo without vote) they may be tempted to say 'See, nothing changed! Everything is the same unlike what project fear said. And total sovereignty is just around the corner'. Then, in the medium-term, when Brexit really starts to bite, it's due to someone else's incompetence. 'Nothing to do with Brexit' even.

Schengen is toast!

by epochepoque on Mon Jan 29th, 2018 at 12:58:22 AM EST
This is more or less what I expect to see happening. The Brexiteers in Government have already shown an amazing willingness to accept almost anything the Commission proposes as long as they get their Brexit at the end of the day.  So we may have the UK as part of "a new" customs union, not "the" Customs Union... same with the Single Market - "access to" rather than "membership of"... Cosmetic changes, rather than changes of substance.

And yes, any damage to the UK economy will be largely incremental, cumulative, and long term, and can therefore be blamed on near term events as it manifests itself. The media aren't interested in causes which take longer than a few media cycles to manifest themselves. It will be whoever is in power at the time who will cop the blame - mostly when the leading Brexiteers have already retired "having done their job and freed GREAT Briton from foreign domination".

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jan 29th, 2018 at 02:30:55 AM EST
[ Parent ]
the thing that confuses me is that there is huge great kerfuffle in the Tory party right now over an issue that is fundamentally decided.

If we have the open customs border with Ireland, which we are more or less legally obliged to do under the terms of the Good Friday agreement, then Hard Brexit, about which so much froth is currently being expended, is simply not available.

I suspect that both Theresa May and Phillip Hammond, the UK Chancellor, both know this, but have different priorities. May, for the sake of party unity, is playing this down. Hammond for the sake of business and financial continuity, is talking this up.

So, we have the current Tory psychodrama that is currently being played out across the pages of right wing newspapers, ie nearly all of them. Either calling for Hammond's head as betraying brexit or calling for May's head cos she can't lead the party properly (which is code for not calling for instant brexit and the possible nuking of Brussels).

This is mixed in with the House of Lord's beginning to sharpen their knives over the messs that is the "leaving the EU" bill that was cobbled through the Commons. The Lords is filled with the old hands, the legal and political wonks whose primary purpose is to slice and dice all sloppily constructed legislation to make it fit for purpose.

They know this bill is rubbish and have made great sport at salivating about what they're going to do with it. The Lords is also predominantly filled with Remainers, being the current House of Realism. So the bresiteers are already talking about the Constitutional problems involved in the Lords eviscerating their wilder flights of lunacy.

It's all mad fun and keeps the hacks reporting on it in wine and caviar, but I rather suspect that there's a path through this mess that will leave more or less everything in place as it is now.

Unless there really is a Commons backbench rebellion, May is deposed, Ree-Smogg is installed as PM. At which point I think we're back to nuking Brusssels

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 29th, 2018 at 05:31:58 PM EST
[ Parent ]
I'm not sure that an unelected Rees-Mogg as PM is going to last long enough to figure out where the nuke button is.
by Colman (colman at eurotrib.com) on Mon Jan 29th, 2018 at 07:55:47 PM EST
[ Parent ]
He's an elected MP, if the Tory party makes him leader, he's PM.

You can argue about the lack of legitimacy, but there's nothing to say they can't. Unless the DUP say that their deal was with Theresa and back out, but I can't see why they would.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 29th, 2018 at 09:21:39 PM EST
[ Parent ]
There's plenty of historical precedent for unelected PM's.  Winston Churchill, anyone? (First time around). (Also Alexander Frederick Douglas-Home, Baron Home of the Hirsel, 1963, who wasn't even a member of the House of Commons at the time).

And my guess is the DUP quite like Rees-Smogg.  He's their sort of guy (even if he is a Catholic). It would show people they aren't really bigoted. Just delusional.

In any case pressing the nuke button is much easier than conducting a complex negotiation. You just have to wait until March 2019 without agreeing a substantive deal or you can even leave immediately, by concluding a cursory agreement to do so with the Council (and EU Parliament), if you want, and there is probably not much anyone in the UK can do about it, unless Parliament can vote no confidence in you beforehand...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 30th, 2018 at 12:44:54 AM EST
[ Parent ]
It turns out that a large number of Tory MPs are ignorant of pretty much everything. See that WhatsApp chatter about Nadine whats-her-name clearly not understanding anything about CU/SM despite being very clearly agin it.
by Colman (colman at eurotrib.com) on Mon Jan 29th, 2018 at 07:57:19 PM EST
[ Parent ]
I'd love to, but I have no idea about whatsapp so wouldn't have a clue how to search it

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 29th, 2018 at 09:19:54 PM EST
[ Parent ]
Although if it's Nadine Dorries, she has replaced Louise Mensch as the Westminster village idiot.

A lunatic of no fixed braincell whose eyes occupy different orbits in the vicinity of Sarah Palin and Michelle Bachmann. Nobody pays her any attention cos she's mad and stupid.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jan 29th, 2018 at 09:29:48 PM EST
[ Parent ]
Do they call her "Fog" because she's thick and wet?
by rifek on Tue Jan 30th, 2018 at 03:13:50 AM EST
[ Parent ]
I'm not sure UK conservatives would agree that that issue is decided at all at all. OK - due to some arm twisting by the Irish and in order to get the talks to move on to the substantive issue of trade, the UK government kind of, sort of, agreed there would be no hard border in Ireland, and if necessary it would maintain regulatory alignment with EU rules to avoid the need for one.

But no one really agreed to stay in the Single Market/Customs union as this would imply - it was just for the rubes - and anyway, that inter-governmental agreement isn't legally enforceable. A hard or no deal Brexit could still overturn this draft agreement, and I expect the Smoggers to rebel at some stage if we get to what they will see as BRINO - Brexit in name only. This one will run for a while yet...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 30th, 2018 at 06:08:20 PM EST
[ Parent ]


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