Free trade agreement.(178 Posts)
People keep going on about the fact that we can't be in the single market without agreeing to freedom of movement but why can't we negotiate a free trade agreement like the other countries in the world that are not in the EU?
We can, but it will take many years, and the terms will be less favourable than what we have now.
Trade agreements with non EU countries aren't as good as the one we have with EU because they are limited. They don't include financial services ( a particular strength of the UK) & there are tariffs on certain products.
They don't include financial services? Fuck!
Free trade agreement and membership of the single market are not the same thing.
We can, of course, but it will certainly be worse than the deal we currently have, and will take quite some time.
Nick Clegg (former EC trade negotiator among other things) has drafted a note which is very very worth reading on this:
The whole thing is good - particularly the part on FTAs with the EU and why we can't just do a quick and dirty solution.
David Davis (and many others) have stated a preference for the Canada CETA model, but that does not include financial services (at least not in the way we would need) and happily allows corporations to sue government. I haven't yet read the CETA text on this but under other trade agreements legal action can be taken if there is (for instance) legislation in place which reduces corporate profits, even if that legislation is in the public interest.
This is obviously an interesting "sovereignty" point. The EU seem to hate terms like this, but worth remembering (if you are reading David) when the UK starts to negotiate trade agreements with the rest of the world.
Investor-state legal action sources if you're interested www.nytimes.com/2014/12/04/opinion/when-corporations-sue-governments.html?_r=0
and bonus CETA info:
Single market is obviously the ultimate 'free trade'. However, it comes at a cost that many find unacceptable. Further, the single market is limited to the EU28 which then apply a common custom tariff against the rest of the world.
If they have stuck with EEC. There would be little resentment.
However, if we negotiate a 1 item free trade with the US, China, canada, it is still better than the deal that we have with them (i.e. no agreement whatsoever and fall back to WTO rules).
So, Free trade with EU cannot be on better terms than it is now, but any free trade with many outside the EU/EEA would be better than it is now.
EU ex UK account for about 15% of the World GDP. UK account for about 3%. The remaining 82% are up for grasp.
I think we should concentrate on getting a free trade deal with the EU and abandon any thought of remaining in the Single Market as it would seem to me that the EU are adamant that we can not be in the single market without accepting freedom of movement so lets just go for the very best free trade agreement we can get.
The EU still accounts for 45% of our exports, the US 16.6% and China 4.5%.
Sir Andrew Cahn, fomer chief executive of UK Trade and Investment, told the Times that it was 'completely unrealistic' to think that the UK could negotiate free trade agreements with other countries to make up for lost access to the single market. 'At the very best the very best of the promised network of trade agreements would not be remotely on the scale of current trade through the single market'.
He also warned that deals with the US and China would take at least a decade. And highlighted that the US has not ratified a single trade deal in the last 5 years, and that China would extract a high price for access to its markets.
Hosuk Lee-Makiyama, director of ECIPE, gave evidence to a Treasury Select Committee on similar lines:
'Unfortunately, the realities are such that in a world where the UK trades 50:50 with the EU and the rest of the world, whatever trade we lose with Europe cannot be recreated with the rest of the world'.
'It is just not in the balance. The market access we would obtain from the free trade agreements would not equal the trade loss we would have with Europe. It is just a different scale. All in all, we need to do both'.
Bear in mind neither CETA nor TTIP cover financial services.
Cory - how do you propose to remedy the devastating impact that leaving the single market would have on financial services and the car industry in particular?
Japan has already warned that doing so will force Japanese car manufacturers, pharmacuticals and technology firms to relocate within the EU. How will you compensate for the loss of the investment and jobs?
How many times and in how many ways do posters have to spell out the consequences for the UK economy of damaging its two major sources of competitive advantages in global markets , the financial passport and our capability in Science and Technology both of which arise from our close relationship with the EU, and which if we succeed in negotiating a deal that protects them will probably mean conceding free movement (why wouldn't the EU flex that source of power). You can make all the trade agreements you want with the rest of the world but if you lose the ability to compete with other economies for business then you won't get the business and make money. Trade agreements are about the arrangements for trade but they do not entitle you to trade.
Average tariffs are less than currency fluctuations. We had the same noise about joining the Euro, particularly about the finance sector and automotive.
Let's not forget that economy is not all about external trade.
It is also about domestic demand. Take car for example - UK makes about 1.5 million cars, exports about 1 million and import about 800k or so from Germany and probably a few hundred k from elsewhere.
Some people may feel incredibly hard done by if they could not get their Volkswagen or benz, but Nissan/Toyota/JLR will take you where you want to go equally well.
But internationally we are already living beyond our means, we import more than we export. The main things we export to pay for our standard of living, from our iPads and iPhones to our Kenyan beans out of season, are already only paid for in part by the financial services and gas turbine industries (the only sectors in surplus). If we shoot those industries by stepping out of the single market how do you propose UK Plc earns its money. The view we can maintain our standard of living without the single market is like a spoilt adolescent who thinks its iPhone is a right, not a privilege that it has to earn.
But the Japanese government have pretty much stated Nissan and Toyota would leave the UK if Brexit terms mean they can no longer trade freely in the EU and JLR are prestige brands most can't afford so that plan falls pretty flat topsy
Although interestingly none of Nissan, Toyota or JLR are British owned so let's hope the Japanese were bluffing.
Nissan / Toyota - the Japanese don't lose face and beg that we understand they need the single market without good reason.
Plus when the voters lose their iPhones and have to make do with a crap Nokia - alike you will lose their hearts and minds
If eveyone is being silly than we put a tax to make sure imported cars are a lot less attractive. Simple. That will also cut ouf trade deficit.
So they find they have a million unit market domestically and will be happy.
Ford are considering closing its UK plants, they've struggled in Europe since the financial crisis. GM's (Vauxhall) European division is struggling too. Brexit has hit them both badly due to the fall in Sterling.
If we leave the single market and they shut up shop, plus Japanese car firms relocate to within the EU, we won't have much of a domestic car market left.
"If eveyone is being silly than we put a tax to make sure imported cars are a lot less attractive."
History shows protectionism doesn't work. Countries retaliate & put tax on products & services they export to each other so trade becomes stuck in an ever increasingly negative downwards spiral.
Topsy please answer at least one question I have raised. We are a dependent economy, our chance to be independent sailed in the 17th century (and we did rather well out of that but had a competitive advantage that came from the barrel of a gun ) our success as the sixth (pre Brexit, fifth) economy rests on the way Maggie built up our post empire competitive advantage.how do you propose to deliver that if we lose that EU dependent come tube advantage?
Grr at autocorrect "competitive" advantage
carol the jist of both of those articles is that both Nissan and Toyota said they'd leave the UK if the UK, by not joining the Euro, lost its attractiveness to stay.
Even though we didn't join the Euro, they can still trade freely in the EU so their concerns didn't come to pass.
If we leave the single market the very reason those companies are here disappears so the incentive to leave is much greater and is much more likely to happen.
No. The very reason there are here is to make money, not to be part of EU or part of anything.
There are of course barriers if there is no tariff free free trade for motors and its components, but the barrier is not insurmountable.
Toyota/Nissan etc set up plants all around the world based on what they can get out of the country in term of taxes, human capital, energy cost, transport infrastructure etc.
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