Free trade agreement.

[Corcory]

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?

[topsy777]

STIDW

I quite agree that protectionist is generally a bad idea as it makes businesses complacent. The ideal solution is of course a FTA but protectionist measures are available to us if 'everyone is being silly'.

Also may I point out though - EU is a protoctist cartel. Japan also protects many areas of its home market etc.

[topsy777]

'protoctist' should be protectionist.

[Bearbehind]

No. The very reason there are here is to make money, not to be part of EU or part of anything

Well obviously they are doing it to make money but if their potential profits are restricted by being outside of the EU and, critically, if that is a long term prospect, then the short term pain associated with moving production to other EU countries becomes a better long term option.

It's naive and arrogant to think we can leave the EU and carry on as we were without the bits we didn't like but that seems to be the illusion many are operating under.

[Nightofthetentacle]

Sorry Topsy, can we just lurch back to your post from yesterday evening?

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.

We do, now, have "trade-related agreements" with both the US and China, which we will lose if we leave the EU, and will need to renegotiate as a much smaller negotiating power. Again, the Nick Clegg report is important to read - these include "Mutual Recognition Agreements (MRAs)" which are:

" with third countries [&] allow goods to be inspected and declared in conformity with Single Market rules by approved bodies before they are exported to the EU. This saves time and expense as shipments do not need to be impounded and checked at the EU border "

[If we leave the EU Customs Union and sign an FTA with the EU]... "We will also lose MRAs with 3rd countries (including major trading partners like the US) which allow products to be imported having been certified as being in conformity with EU rules and regulations. Assuming we leave the Single Market and continue to maintain similar regulatory frameworks, these agreements will need to be renegotiated in order to avoid the creation of non-tariff barriers for importers."

Non tariff barriers are often much, much more important (and onerous) than tariffs.

[topsy777]

"It's naive and arrogant to think we can leave the EU and carry on as we were"

Of course not 'carry on as we were' but tools are available to overcome barriers that the arrangement creates If we can help them to make the operation here more profitable than say in Poland/Cz (they are not going to France in any case), then they will stay and even expand - won't they?

[Bearbehind]

How can we help make staying here a better option?

Throwing cash at the problem?

Cash that's earmarked for the NHS

[PattyPenguin]

topsy here is a link to the official document from the Japanese government
www.mofa.go.jp/files/000185466.pdf

I draw your attention to a paragraph near the beginning, listing Japanese businesses' requirements.

"A considerable number of Japanese businesses operating in Europe are concentrated in the UK. We have been informed of a variety of requests that these businesses have in relation to BREXIT including: maintenance of trade in goods with no burdens of customs duties and procedures; unfettered investment; maintenance of an environment in which services and financial transactions across Europe can be provided and carried out smoothly; access to workforces with the necessary skills; and harmonised regulations and standards between the UK and the EU."

How many of those things do you really believe they will have in the UK post-Brexit?

Of course, they would have them if they moved their plants to the EU, no problem at all.

[JustAnotherPoster00]

Cash that's earmarked for the NHS

Exactly Bear isn't there meant to now be a spare £350,000,000 pot of cash floating in the ether somewhere?

I'm still waiting for my unicorn, because we've had enough of experts so wheres my fuckin unicorn brexiters?

[topsy777]

Bearbehind

Well, if there is a full FTA then no problem.

Else we tax the imported goods to give a helping hand to the exporters?

[Nightofthetentacle]

Topsy, you seem to be arguing for the sort of state aid that will give tax breaks to big companies. I don't know how many people would agree that the UK becoming a low tax environment for business is something they wanted from this whole exercise.

Anyway, tariffs and taxes are not just the problem here, non tariff and customs barriers can be hellish obstacles to trade.

If you are Nissan, and you can manufacture in the UK, but face tariffs to export to the EU, and have to comply with customs checks on rules of origin (estimated to add 4%-15% in compliance costs), and face tariffs on import of components to the UK, how big a break do you need to continue with that?

And as Patty points out, where you have to rely primarily on the skills of the UK workforce and face restrictions on hiring from the EU?

[Figmentofmyimagination]

Topsy

"Tools are available to overcome barriers that the arrangement creates [to] ...make the arrangement more profitable than Poland or Cz".

What are these tools?

My worry is that they include eg lower wages, lower taxes, and even greater laxity in terms of employment regulation (bearing in mind that it's already easier to sack workers or cut their wages in the UK than in other European countries).

What tools do you have in mind?

[Bearbehind]

Do you honestly think it's that simple topsy?

[topsy777]

PattyPenguin

I note that it is a request to UK and the EU. It is very long, but can be summarised in a sentence - make sure Japanese business don't lose out.

They could be anywhere in the EU but choose to be here and most Japs (other than Nomura/Jap banks where I agree passporting is a little more complicated) are in manufactured goods/products business which faces a maximum of 10% tariff. Are the business environment in the EU warrants a move?

When we were in the EU, it didn't stop some factories moving to Poland/EE either. There are a lot of considerations - the question is are we at least 10% more competitive than the EE.

Also, they just bought ARM and committed to stay here (ok.. at least for a while) though.

[topsy777]

Nightofthetentacle

We were talking about tariff barriers yesterday.

Of course there are a lot of work to do.

Remember though we have the capability to meet those technical specifications already. So it is a matter of recognising those capabilities and setting up an appropriate agency and amend the MRAs. It is a paper work exercise and assuming common sense prevails, there would be transitional arrangements to adopt existing procedures until new one come in place.

When the British colonies left the empire, all procedures were nearly the same as the day before. Things than diverge over time.

[topsy777]

Bearbehind

I don't think it is simple, but given the amount of businesses (both ways) involved, what needs to be done will be done. I think a FTA will be signed.

There was no bailout according to the EU treaty but when they needed a bailout, ways were found to make sure what needs to be done are done.

[Nightofthetentacle]

LEAVING THE EU DOES NOT JUST INTRODUCE TARIFF BARRIERS TO TRADE.

Anyway, in case there is anyone reading this who ain't singing from Arron Banks' "let's become Singapore" hymnsheet, another bit of interesting blurb from that Nick Clegg and Peter Sutherland paper on trade agreements. (Peter Sutherland, the founding Director-General of the World Trade Organisation, apparently, although he probably knows fuck all about it).


On the timing of an EU FTA:

"Another time-consuming aspect of an FTA is the negotiations that will have to take place with domestic UK stakeholders, who will have diverse and often conflicting views and needs."

"Finally, it is important to note that an EU FTA has to be ratified by the Westminster parliament, and more significantly by the parliaments of all 27 EU member states and by the European Parliament. This introduces further significant scope for delay."

"For all of these reasons it is probable that an EU FTA will take several years to put in place post-Brexit, stretching the time horizon for a new deal well into the 2020s, and introducing a protracted period of uncertainty for business."

"In the meantime, unless there is some interim arrangement for tariff-free access, the UK will need to impose tariffs on imports from the EU, for the reasons set out above. To do otherwise would squander any chance of negotiating meaningful FTAs with other countries, and would hamstring our own talks with the EU. This will raise the cost of imports from the EU, which will be borne by British consumers. According to some studies, the impact on UK food prices alone could be as much as 8%."

"It may be tempting to imagine that there is a way around these problems by putting in place a simple, ‘quick and dirty’ FTA covering essential sectors and leaving others for future negotiations. But this is not possible: the WTO rules require any FTA to be ‘comprehensive’, covering “substantially all” the trade between the transacting parties. It the deal failed to meet this threshold it would be ruled illegal and both EU and UK would revert to their MFN tariffs."

... "it seems inevitable that there will be a hiatus between the point at which we formally leave the EU and the point at which an EU FTA comes into force."

and the complete fucker bit that everyone should read:

"Leaving the EU Customs Union [pretty much a pre-requisite of leaving the EU, even with a Norway option] will require the introduction of new customs controls (a “hard border”) between Northern Ireland and the Republic, in order to prevent goods from crossing the border in contravention of customs checks. "

[whatwouldrondo]

Topsy Please do not refer to the Japanse people as Japs. I can assure you it is offensive.

So you mention two of our sources of competitive advantage.

Losing the EU passport will not somewhat affect the financial services industry. It will lose the competitive advantage that makes London a world financial centre. The banks will move much of their head office and operations elsewhere to where they can operate within the EU, Frankfurt, Paris and Dublin are all vying to flex that competitive advantage if the passport is not negotiated, whilst New York and Hong Kong are weighing up the opportunities. Many businesses and countries are already weighing up their banking options if the financial passport is lost and will operate through other centres. The status as an offshore trading centre for the yuan for instance will be lost. It will mean a lot of people lose their jobs, not just in London, back office operations are carried out in Essex, Manchester, Leeds, Newcastle, Edinburgh etc. It will also mean high earners are lost to the economy. I know many people in the financial services industry who assume they will move overseas in that eventuality. People losing their jobs and high earners leaving the country means less buying power in the UK economy. Services account for 78% of GDP and financial services are a big bite of that.

Education. Universities are already reporting a decline in overseas students starting in UK universities this September. We have sent out a big message of deterrence, not just the Brexit vote but the ever more bureaucratic process of coming here. I have no idea why students are part of the immigration statistics when they are blatently holding up our higher education sector but they are and they are therefore a target for reduction. Outstanding Eu academics are leaving as well, UK academia is excellent and world class but starved of funding and under threat, in contrast US universities have golden handshakes on offer and a chance to be valued. The Brexit vote was the final push. Universities are planning for consolidation and contraction, not just the less prestigious (though if not well regarded by Mumsnetters they are often a powerhouse for developing vocational skills for the economy) but big names like the London universities which have larger proportions of overseas students.

Science and technology. The Science sector has already contracted. Pre Brexit there were plenty of opportunities for young scientists to start their careers, a combination of EU scientist not coming here and exclusion from EU funded projects (over 500 instances now logged) means that now there are few jobs being advertised and where projects are advertising opportunities they are able to recruit someone with a PhD for a simple entry level research assistant job. These young people will go overseas. A similar situation exists in relation to tech companies. I know several tech companies who have already moved to Berlin because the funding here was under threat. University cities voted remain because they understand the importance of the universities to their local economy.

So both Education and Science are already suffering and we have not even started negotiations.

You say there is more to life than trade but a Britain where just these three sectors are badly hit is going to be very different, not just less money but the impact on the culture and the life in our cities will be very profound

[whatwouldrondo]

Oh and your at Mao's China? I think the world's second largest economy may be having the last

[TheElementsSong]

Agree with ron!

[TheForeignOffice]

Quit with the offensive racist terminology please topsy777. Calling Japanese "Japs" is identical to calling people from Pakistan "Pakis". Neither term is acceptable. Thanks.

[topsy777]

wwr

I don't think the short for Japanese is any more offensive that Brits but happy to use the full term.

Finance - HK, NY, Tokyo, SG all operate without a passport you know. The City was throwing a tantrum post brexit saying the City would be destroyed, now they are talking about maybe a 10% 'damage'.

Yes, services is 78% of the GDP and Financial services around 10%. However, only about 6% of that 10% is exported (3% EU, 3% rest of W, primarily NorthA). The hedge fund etc already based in 'no where' (actually anywhere that don't tax them), so really really EU dependent stuffs might be 1% of the GDP or so.

I accept that there will be some effect especially euro related tradings, but massive job losses - no.

Oh yes - Uni and Independent schools - RoW wants to buy them but I agree that we make it difficult. It is silly to add short term students numbers to the immigration quota. The competitive advantage is there, so our 'not lazy' International Trade Secretary better market it well and make it works.

"Outstanding Eu academics are leaving as well"
Some do and they do move all the time. But guess what, usually they are not moving (back) into the EU, they are going to the USA which has no plan whatsoever to join the EU .

And of course China has gone very far since Mao's years and her great transformation should inspire us and remind us that hard work and enterprise are what will ensure our prosperity - not a member of a club.

[Mistigri]

I despair reading some of these threads. The level of knowledge about the realities of trade is simply depressing.

Take my employer. We manufacture, among other things, widget A which is a high-value component used in product B. Most of our clients for widget A are in the EU; if we want to sell widget A to Chinese or US manufacturers of product B, we make them in our Chinese or US factories.

What happens if we lose our EU customers due to tariffs or NTBs? (It's not all about the money: if you can't deliver because your consignment of widgets is stuck in customs, you have a problem). We won't be able to sell more to China or Russia or the U.S. because we already sell as many locally-manufactured widgets into these markets as we possibly can. And we can't sell our UK production elsewhere, because widget A is customer and region-specific due to the different national and regional laws that regulate product B. In any case, the cost and timescale of shipping make it uneconomic to ship around the world.

In practice, what would happen if we were no longer in the single market is that companies like mine would scale down or close UK production, and expand in Eastern Europe.

[nearlyhellokitty]

topsy777 Check out the Politico Morning Exchange brief from this morning - two major elements on the banks/ City - one key takeaway: "Banks are moving out. The silence you hear from the City of London is a political smokescreen not to upset the British government, not a sign that banks want to stay.":

www.politico.eu/newsletter/morning-exchange/politico-morning-exchange-brexit-prep-futile-bank-split-juncker-and-shakespeare/

BEHIND THE SCENES — THE BREXIT PREPARATIONS OF A BIG BANK: I wanted to go behind the wait-and-see facade of many big banks and find out what they were actually doing to prepare for Brexit. Here’s what I found out by talking to sources at a large London-based financial institution.

Lots of preparatory work to gauge where to move businesses and people: Politicians in London and Brussels may be sitting idly, but bankers are all over the post-Brexit scenarios. This particular bank has dozens of work streams affecting virtually all of its departments to understand whether and where it makes sense to move following the referendum. From legal to human resources to the property experts, all the internal experts are involved.

It will be jobs, not people, that move: There’s a lot of inaccurate talk in the press about “Bank X moving x,000 people to Frankfurt/Paris/Dublin.” The reality is that positions will move, but few actual people will follow. In this bank’s case, a large majority of employees are from the U.K. It’s unlikely many will want to go abroad if their unit moved, say, to Milan or Madrid. So, if banks do move, London’s economy will be a net loser. In addition, one important factor in determining where to move is the availability of skilled workers for that particular function. Critics will say this is a classic example of the EU’s “inflexible” job market (as opposed to the U.S. one, at least).

There’s no easy solution: A reason why London is Europe’s financial powerhouse? No other city comes close to replicating its mixture of infrastructure, culture, and legal framework. So when banks look to move, they are looking at trade-offs. The bank I analyzed is trying to judge precisely what trade-offs are required for each potential city. My sources say that would be the toughest job of all.

M.E. sideline: Banks are moving out. The silence you hear from the City of London is a political smokescreen not to upset the British government, not a sign that banks want to stay. The size, timing, and destinations of the moves will depend on the specific institutions, but there’s little doubt that the City will become smaller after Brexit.

PRO-BREXIT POLITICIANS SAY LONDON COULD BECOME ‘SUPER-SINGAPORE:’ That’s the view of Howard Flight, a Conservative member of the House of Lords. Financial News’ Lucy Burton has more: bit.ly/2caxYMp

M.E. counterpoint: Flight and other leading pro-Brexit lights, like former Tory minister John Redwood, argue that the financial sector doesn’t need passporting because equivalence would do just fine. That’s true, but only to a point. If all goes well, Britain will be able to obtain “equivalent” status under the Markets in Financial Instruments Directive (MiFID II). But that only covers markets-based operations and some wholesale activities. No retail, investment banking, etc. And, as we have discussed in M.E., equivalence is very likely immediately after Brexit, but it will become increasingly complicated as time goes by — especially if the U.K. stops adopting EU rules in their entirety.

[TheForeignOffice]

I don't think the short for Japanese is any more offensive that Brits but happy to use the full term

In that case your woeful lack of judgement regarding racist language matches your total lack of understanding of trade agreements.

Congratulations.

[topsy777]

If this is our 'foreign office' priority despite my agreement to use the full term, then I am seriously worried.

Back to the topic please and it is not an obligation to post if you have nothing to add.