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WTO - Brexit could cost the UK 5.6 billion pounds a year in extra duties

(31 Posts)
nearlyhellokitty Tue 07-Jun-16 16:42:04

Just saw this... speech by the WTO Director-General Roberto Azevêdo explaining how complicated this procedure would be, time consuming and leave the UK in a weak position... not to mention the 5.6 billion pounds extra a year.

There are really no savings to leaving the EU - just a lot of extra costs, economic risk and enormous amounts of new negotiations. - extracts from the speech:
"I have received many, many questions on the issue of the hour — the UK’s membership of the EU. So I think it would be remiss if I didn’t share some brief comments with you. This is, of course, a sovereign decision for the British people. But it’s important that in making this decision they have the facts.

Trade issues have been a major feature of the debate so far and it seems that there is still a great deal of confusion about the implications of a British exit from the EU. I would like simply to clarify some of the facts and practical implications as they relate to trade and the WTO.

The UK currently has preferential trade relationships with the EU, and with the 58 countries with which the EU currently has free trade agreements. In the event of a British exit, all of these relationships would need to be re-established to maintain the same preferential access the UK currently enjoys via the EU. This would probably entail negotiations.

In the meantime, while trade would continue, it could be on worse terms. Most likely, it would cost more for the UK to trade with the same markets — therefore damaging the competitiveness of UK companies. Here we’re talking about preferences on 60% of the country’s goods trade (that divides as around 47% with the EU itself, and around 13% with the EU’s preferential trade partners).

The implication is that UK exporters would risk having to pay up to 5.6 billion pounds each year in duty on their exports. And there could be an impact on services trade as well. In addition, the UK would also need to re-establish its terms of trade within the WTO. The UK, as an individual country, would of course remain a WTO member, but it would not have defined terms in the WTO for its trade in goods and services. It only has these commitments as an EU member. Key aspects of the EU’s terms of trade could not simply be cut and pasted for the UK. Therefore important elements would need to be negotiated.

There is no precedent for this — even the process for conducting these negotiations is unclear at this stage. I can say that negotiations merely to adjust members’ existing terms have often taken several years to complete — in certain cases up to 10 years, or more. However, as far as the UK’s case is concerned, it is impossible to tell how long it may take.

Upon leaving the EU, rights that the EU secured for its members would arguably no longer automatically apply to the UK. This includes the right to restrict certain aspects of the free movement of people and to protect public utilities from competition. The UK might need to negotiate with other WTO members to maintain these rights.

No WTO member can unilaterally decide what its rights and obligations are. I don’t have a crystal ball to assess the outcome of these various different negotiations — and nor does anybody else. The only certainty is uncertainty. However, I have spent my life as a trade negotiator and now as WTO Director-General it is my job to broker trade deals between nations, so I can try to offer some insight.

To begin with, I would say that trade negotiations are highly complex. Conducting multiple negotiations simultaneously would bring a further level of complexity.

In addition, you need willing partners. Other countries already have their negotiating priorities and may not be ready to shift resources to a new negotiation overnight. Of course, speaking of resources, all of this presumes that your own resources and negotiating infrastructure are already in place and fully operational.

Moreover, if you need to complete a deal quickly when the other side can wait, you are negotiating from a very weak position.

So, on this basis, it could take quite some time before the UK got back to a similar position that it has today in terms of its trading relationships with other countries."

ThroughThickAndThin01 Tue 07-Jun-16 16:46:26

Could being the operative word. Brexit could mean anything. Bremain could mean anything. Nobody knows.

nearlyhellokitty Tue 07-Jun-16 16:48:14

Through did you actually look at this?

It is clear that there will be more duties. And an enormous amount of new negotiations - the question is quite how much not that there won't be.

bremain is a much clearer proposition .. it's where we stand now *ie without the extra duties eg and with our trade negotiations intact.

ThroughThickAndThin01 Tue 07-Jun-16 16:51:20

Guilty grin. Sorry op that was rude, I'll have a look tonight. But I'm sure I'll no doubt be reporting back with a similar comment.

BritBrit Tue 07-Jun-16 16:53:57

More nonsense, the UK buys billions & billions more from the EU than they do from us. That would also mean the UK imposes tariffs on EU goods making their good uncompetitive & the UK able to buy cheaper goods from non EU nations particularly if we sign trade deals with non EU nation which the EU stops us from doiung.

nearlyhellokitty Tue 07-Jun-16 16:55:56

So BritBrit you're much more qualified to guess that the UK will have more duties than the WTO? Bear in mind that this is not just about duties for trade to the EU, if I understand it right but about the fact that the UK will be leaving Trade agreements already negotiated while in the EU...

lljkk Tue 07-Jun-16 17:11:49

The WTO is part of the "elite establishment". Plus we all know that "economic forecasts exist to make astrology look good" and "They failed to forecast the crash of 2007/08 so everything else they say must be rubbish." plus "You can bet your bottom dollar the WTO would never give up its own sovereignty" and "Only meglamaniacs like Hitler think that European cooperation is feasible and beneficial".

Have I missed any of the other most favourite discrediting statements?

lljkk Tue 07-Jun-16 17:14:07

(silly me, these ones are essential)

WTO only said that because "WTO only wants what is best in the WTO's interests not what's best for UK" and "WTO never advocates anything to help the poor working class" because of course the "WTO are part of the elite establishment."

(I want applause for making the full circle)

Pangurban1 Tue 07-Jun-16 17:39:11

Yes, lljkk.

You've missed the most factually based and convincing argument to something from Leave.

"Knickers'. Bet you can't argue against something so well thought out.

Don't you know that the WTO don't know how simple it will be. What do they know?

lljkk Tue 07-Jun-16 17:44:21

Indeed. Plus, "WTO Director has no right to comment on the UK EU Referendum. He should just keep his sticky beak out of it." (Hyacinth Bucket emoticon here) Besides (whispers) "Everyone tells lies."

Pangurban1 Tue 07-Jun-16 17:44:27

Having said that, it is sobering. The most interesting line is 'you will need willing partners'.

You mean you can't just tell everyone else that this is how it will be!

lljkk Tue 07-Jun-16 17:47:09

That's like when my kids tell me they want to sell (some knackered old toy). For £20. I ask "Who is going to pay £20?!" My kids are baffled. £20 is what they want so why won't anybody pay it. Most puzzling.

lljkk Tue 07-Jun-16 17:48:15

Oh never mind WTO Director-General Roberto Azevêdo, "his term of office is up in 2017. He won't be there much longer so it doesn't matter what he thinks."

MrsBlackthorn Tue 07-Jun-16 19:20:49

Yeah, so some bloke down the pub knows more than him?

Jesus Christ.

The markets are now so worried about the uncertainty of Brexit that they're moving money out of the country at the fastest rate since the financial crisis.

And this is only the start of the uncertainty that Brexit will bring.

This is real money, real investment, real jobs. It's terrifying.

MrsBlackthorn Tue 07-Jun-16 19:22:20

(That wasn't to iljkk - I know you were joking)

Spinflight Tue 07-Jun-16 19:37:19

This confuses me, though the WTO can only comment on data given to them by us..

In March we imported £20.2 billion from the EU and £19.6 Billion from the rest of the world.

In the same month we exported £12 Billion to the EU and £12.9 Bliion to the rest of the world.

Now call me dense but if there was 10% tarifs on all of these then our companies would pay..

12 + 12.9 = 24.9 /10 = £2.49 billion in tarifs.

And the exchequer would receive..

£20.2 + £19.6 = £39.8 / 10 = £3.98 Billion.

Hence surely we would make an extra £1.49 Billion per month...

No I realize the treasury and wider civil service has not done any detailed work into Brexit, an act of negligence I consider to be extraordinary and remarkable. I also realise that the treasuries projections are very much worst case scenarios.

How though do they claim that we would lose money overall when imports are so much higher than exports, set to be £177 Bliion higher extrapolating the figures from one month.

nearlyhellokitty Tue 07-Jun-16 20:20:16

grin grin lljkk and Pangurban1

nearlyhellokitty Tue 07-Jun-16 20:22:57

Spinflight I think the treasury has done several reports, e.g.

This document assesses continued UK membership of the EU against the three existing alternative models:

membership of the European Economic Area (EEA), like Norway
a negotiated bilateral agreement, such as that between the EU and Switzerland, Turkey or Canada
World Trade Organisation (WTO) membership without any form of specific agreement with the EU, like Russia or Brazil
The Treasury’s analysis shows that the UK would be permanently poorer if it left the EU and adopted any of these models. Productivity and GDP per person would be lower in all these alternative scenarios, as the costs would substantially outweigh any potential benefit of leaving the EU. The analysis finds that the annual loss of GDP per household under the three alternatives after 15 years would be:

£2,600 in the case of EEA membership
£4,300 in the case of a negotiated bilateral agreement
£5,200 in the case of WTO membership
The negative impact on GDP would also result in substantially weaker tax receipts, significantly outweighing any potential gain from reduced financial contributions to the EU. After 15 years, even with savings from reduced contributions to the EU, receipts would be £20 billion a year lower in the central estimate of the EEA, £36 billion a year lower for the negotiated bilateral agreement and £45 billion a year lower for the WTO alternative.

"A vote to leave would cause a profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow. The central conclusion of the analysis is that the effect of this profound shock would be to push the UK into recession and lead to a sharp rise in unemployment."

nearlyhellokitty Tue 07-Jun-16 20:27:38

so which is it - they have not done any work, or they have done work on worst case scenarios? I understand that there's been some work behind the scenes, but really everyone is at a loss because the Politicians have not stated what the alternative would be. We're not choosing between one scenario (the EU) and another defined scenario, we're choosing between the EU and a step into the dark.

Anyway, civil servants can no longer comment - too close to the referendum.

lljkk Tue 07-Jun-16 20:27:47

It seems likely that we import £20.2 billion from EU & export £12 billion to them because there are no mutual tariffs. I don't think should assume there will be same trade figures with 10% tariffs on both sides.

(Awaiting a Brexiter Bunny to come explain why we will manage to export more than £20.2 bn to EU with mutual 10% tariffs in place).

MrsBlackthorn Tue 07-Jun-16 20:35:26

Indeed. On average once trade tariffs are imposed there's a fall of 40-60% in trade. So no, there will not be a net increase. A fact that is indeed covered in detail in the Treasury report. And by the public accounts committee of the Commons.

Spinflight Tue 07-Jun-16 23:59:44

Based on worst case assumptions, as directed by project fear.

Frankly there is only one logical conclusion as to the reasons Cameron forbade the civil service from making provision for Brexit and that is that the result would be positive.

The real worst case though is the TTIP trade deal which will privatise our NHS by the back door. Or the Eurozone continues to stagnate for decades. Or the rise of ugly right wing racist politics.

These are far more likely given current trends than a dodgy dossier from the treasury, which has yet to forecast anything of note.

STIDW Wed 08-Jun-16 01:08:50

More nonsense, the UK buys billions & billions more from the EU than they do from us.

True but proportionally the EU buys more (13%) from the UK than we do from the EU (3%). Individual EU countries export roughly the same % to us as the UK does to them. Germany is the exception, it sells a lot more to us than we buy from Germany.

nearlyhellokitty Wed 08-Jun-16 07:33:26

spinflight how anyone can call Remain Project Fear on the basis of economic modelling after what Nigel Farage has been saying recently is beyond me. And where the ugly politics is.

Also, as I said before, how can you make a provision for something where the Politicians in Leave have no clear position and no-one really knows what can happen? There is no scenario for Leave because no one knows what it will entail - the Leave politicians as you have seen flail from saying we'll be like Norway or like Albania or even Canada or whatever. However the civil servants have outlined what some of these options could look like.

Please engage with what the WTO DG is saying - it is correct, you can quibble over a few million here and there but his scenario is what awaits the UK. Objectively speaking we will go from one state - where we are a member of a trading block with negotiations in place - to another state, where we have left that trading block and need to renegotiate everything with those who want to.

Millyonthefloss Wed 08-Jun-16 09:33:59

STIDW : Germany is the exception, it sells a lot more to us than we buy from Germany.

Exactly. That is why there is no need to listen to any Project Fear nonsense.

Germany is in charge of the EU. They sell us loads and loads of stuff. They will not put up barriers to trade. It's perfectly simple.

All these reports from the IMF and the WTO are bollocks written by bureaucrats. They are not written by business people. If you want a balanced view of the pros and cons of Brexit read somebody sensible like Neil Woodford who actually knows what he is talking about and has a solid and sound track record of predicting economic events and investing in British businesses.

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