WTO here we come!

[mummmy2017]

If one side Can't, and the other side Won't.
We get no deal and get WTO.
Thought this from the start and each day makes me surer this is what will happen.

and in the top 30, 20 are EU, EEA, customs union or have FTA agreements with the EU.

So we are jepordising most of our major trade partners by leaving.

"So we are jepordising most of our major trade partners by leaving."

Not if the EU is a commercial entity, rather than a political one, and if politics and a Federal Gloop of Europe is both their main function and direction of travel - we can take the majority of trade we will keep with an EU whose companies are desperate to trade with us - and find new markets e.g. with the 52 countries across all continents called the Commonwealth, with 2.3 billion citizens.

The Commonwealth HQ is in London, and if any Europhile don't think early 'break the ground' discussions aren't already going on, they are delusional - especially if the Australian Trade geezer's words are taken in.

The Commonwealth countries are not waiting for us to sign new trade deals, see India for more details.

"We can take the majority of trade we will keep with an EU whose companies are desperate to trade with us."

Our trade with EU companies will still be influenced by what ever deal we get with the EU. Companies are not going to up sticks and leave the EU for the UK, nor are they going to jepordise their access to tariff and non tariff barrier free trade to a market of 450 million people.

I assume this is a variant on the: "But the German car industry" trope, it doesn't work like that.

But the German car industry

UK suppliers to the German car industry will most likely move some or all of their production to the EU - this is already happening.

I know, but its the bleat of all the quitlings, the German car industry will save us.

If French, German, Spanish and Italian cars end up with import charges/tariffs, like everything else, UK spending habits could change - so we'll buy more Nissans, Jaguars, whatever, made in the UK, knowing it will also support our jobs.

I certainly would.

No one can tell me the French buy so many French manufactured cars, just because they LIKE them.

P.S. Now the know it all bathildabigshot can authoritatively speak on behalf of 52 countries and 2.3 billion Commonwealth citizens and our future relationships, with or without India - who if they saw a gap in our low price range cars wouldn't think of looking to fill it, whether building cars here or not.

Look we can go back and forward on this for a week of Sundays, but the POINT is the UK-EU trade is of mutual benefits to both parties, especially the EU in value terms selling to us - and as the UK government are happy to keep trade as close to how it is now - its up to their political point scorers, to screw it up.

That's because most of them know fuck all about how the car industry works.

That was to bathilda ... evidence in the post above

Misti, I do know a lot about how the car industry works, so allow me to elucidate for sore arse with reference to specifics.

"so we'll buy more Nissans."

50% of all Nissan cars manufactured in the UK are done so from parts imported from the EU. There would be tariffs on these parts as all automotive products are tariffed under WTO terms at 10%.

This dramtically increases the costs for Nissan in the UK, and will be added to with WTO terms because outside of the customs union the non- tarrif barriers also increase costs of production. This will increase the cost of a Nissan to UK consumers and EU consumers at the same time.

In the UK this means that the competitive advantage of the WTO tariff is removed, and in the EU means that Nissan will find that consumers will purchase other cars ( but I'll get to that in a moment).

75% of all Nissan products manufactured in Sunderland are for EU consumption. Nissan in 35% owned by Renault. The ease to switch production of cars for the EU to avoid these increased costs for Nissan is extreme, they have a plant in Spain that could easily increase capacity.

These issues with costs are clear for all other volume producers of cars in the UK. No customs union and tariffs, costs rise significantly to continue producing for the entire EU market here, and even if they leave production for the UK market here they don't obtain much competitive advantage for doing so because of the need for imported parts.

That goes for Vauxhall, Nissan, Toyota and Honda.

Finally the "German car industry" point is utterly facile because.... The big car firms know that demand for Mercedes, Audi, VW and BMW cars is relatively price inelastic.

The evidence is clear, these cars marques already price themselves significantly above the competition in each class of car, yet are market leaders. For example the german made BMW 3 series starts at £26, 000, yet out sells the British made Toyota Avensis which starts at £18,000.

Now you could have the Toyota with all the bells and whistles on it for less than that you could buy the basic diesel BMW. Yet the BMW still outsells the Toyota.

Why? Because price isn't the major determinent of demand for these cars, where as for Nissan, Toyota and Honda it is.

Landrover/Jaguar will be fine, but the others I'm not sure about at all.

"Now the know it all bathildabigshot can authoritatively speak on behalf of 52 countries and 2.3 billion Commonwealth citizens and our future relationships, with or without India

Many of the commonwealth countries are already in trading blocs of their own. The Indian trade deal appears to be dead in the water because the Indian Government want to increase the ability for Indian nationals to emigrate to the UK for work, this is likely from other countries too, Australia have said it as well.

Now, here's the rub sore arse, 44% of our exports go to the EU, 59% of our exports go to the EU + countries that have FTA agreements with the EU, a further 15 % goes to the US. so that's effectively 75%.

The rest of the world ( whom we can trade with) includng the BRICS only makes up 25% of our exports.

Want to know why? Because there is little demand in the developing world for the services we provide!

"Government want to increase the ability for Indian nationals to emigrate to the UK for work, this is likely from other countries too, Australia have said it as well."

I had heard that the government of India had initially asked for that, but with a 1.3 bil population, level minds will know that is not possible, never mind if desirable - so trade will be open to negotiation to a growing economy where a huge portion do not yet have electricity - so huge potential for UK companies.

Re Australia, I heard the Australian Trade Commissioner the other day say the opposite, NO increased general ability to emigrate, but similar to the EU, see the common sense it allowing business people move/travel from each others countries.

Under Brown, did he ever travel with UK business delegations to the B.R.I.C. countries - as I remember we were doing more trade with Ireland than the 2.4 billion citizens in those counties - but I guess his priority was 'growth' of the State, right?

We grew too complacent in the EU and we relied on them too much, especially when recessions happen, especially western recession usually in sync - so some inter-continental economic diversification, is long overdue. IMO

"Want to know why? Because there is little demand in the developing world for the services we provide!"

Spot the key word in your own statement?

Yes although a lot of our manufacturing and services are usually on the higher end of the 'value chain', they might still want optics, drugs and financial services like those insurance products from Lloyds Underwriters to name a few - but the UK will adapt to being out of the EU, we are not leaving Europe.

So inward investment/jobs are likely to increase as the UK with our skill sets and low tax economy forges new relationships, and we will be seen as a European 'hedge' against an overly regulated, tight arsed, Brussels - well, until the government here changes, and we become like a Venezuelan state regulated basket case.

"50% of all Nissan cars manufactured in the UK are done so from parts imported from the EU. There would be tariffs on these parts as all automotive products are tariffed under WTO terms at 10%."

The Japanese manufacturers are experts at bringing down costs, whether within Japan, or outsourcing to emerging countries within their region, so able to 'absorb' increased trade costs after ditching the higher priced EU parts.

How much cheaper could it be to manufacture car parts say putting a factory in Vietnam, or an emerging country elsewhere where salaries are where Chinese salaries were a few decades back, and why isn't the UK able to forge Free Trade agreements with who they like after leaving the EU?

So how many EU jobs would be on the line, and what will the WTO tariff be with the EU, once we leave it, did you say 10% - even on medium to high marque German parts that lie about diesel omissions?

But you are losing the big picture.

UK trade is between UK businesses and EU businesses, Brussels bureaucrats and even governments of member states, are just the political zits in the middle - so all your scenarios are based on 'only the UK will be affected', which is clearly 'Operation Fear' rollocks - so as we get closer to March 2019, lets see what EU businesses looking to plan years ahead, says to Brussels and their own governments.

Utter waffle.

No point discussing this with you.

The fact that you don't know what WTO terms on the automotive industry is demonstrates your ignorance.

Oh and the Japanese now have a trade deal with the EU with no tariff.

Japanese now have a trade deal with the EU with no tariff.

So this means the EU car industry will have to compete against imported cars, there will only be so many cars sold each year, and if the EU make Japanese cars cheaper to buy, this means unless you think expect the Japanese to buy loads of EU cars this will hugely effect their sales.
Don't tell me the Japanses will buy the cheaper EU cars, because it's not true, it is in fact so expensive to drive there, that unless you can rent space to park a car your can't buy one, and they don't like 2nd hand goods, so the resale values are almost no existent. prices to repair cars are way more than over here, and so people use the Public Transport, as they just can afford a car.
The cars were the sweetener to allowing the EU to export Diary goods, if they get a taste for cheese, then doesn't it follow they will also be willing to import more UK cheese at a higher price because it's a luxury item.

Of course the EU car industry will compete well against Japanese cars.

In essence this works in favour of the EU, more car marques to sell at more competitive prices.

The Japanese already have bases in the EU, mostly in the UK, to sell their cars tariff free.

The risk to the UK comes when it becomes uncompetitive to make cars in the UK when tariffs from the EU have been abolished for Japanese cars.

But if the EU import more cars into the group from Japan, then less EU cars will be brought, and if we also buy less due to price, does this not mean there will be over production in the EU car industry just when they need the revers?

This overwhelmingly favours EU companies, whilst Japanese companies have production bases in the EU and so are able to get round WTO tariffs, I can't think of a single EU manufacturer that has a mass production base in Japan.

This opens up the Japanese market to the EU firms without tariffs.

I think actually it works in the favour of the luxury marques of BMW, Mercedes, Audi and Jaguar more than anything else. The city car market in the EU is saturated, as is the 4X4 (Japanese ones again built EU), however Japan has very few prominent luxury marques and this gives these marques a chance to gain more market share of Infinity and Lexus.

The problem is also, that like many others you see trade as a 0 sum game. Them vs Us.

So this means the EU car industry will have to compete against imported cars

In practice mass market cars tend to be manufactured close to where they are sold these days. The days of large Japanese car exports to Europe and the US are long gone, these days most of those vehicles are manufactured in local plants.

You can export premium brands to distant markets, because people are by definition prepared to pay a premium for them (and often to wait for delivery) - this is why the German premium brands have done well in China, and why they have little to fear from a hard brexit in terms of their UK sales. But by and large, high-volume mass-market models are almost always made locally, either by foreign car companies setting up transplants in their foreign markets, by local car markers, or by joint ventures.

I don't know where you get the idea that the Japanese can't afford to buy cars - off the top of my head car sales are about 5 million a year and vehicle ownership rates are very similar to those in western Europe.

I agree. BMW , Volkswagen and Mercedes have plants in China that could be easily used for export to Japan.

As I said I think this opens up the Japanese market for further EU luxury marques. It also opens up the Japanese service industry.

All about comparaitve advantage innit.

The other reason why mass market vehicles aren't shipped around the world is legislative - standards are not the same worldwide. You can't ship a vehicle homologated for the Japanese market to Europe. It costs a lot of money (and time) to change out components to meet different standards, go through testing and approval procedures etc.

”No point discussing this with you.”

”The fact that you don't know what WTO terms on the automotive industry is demonstrates your ignorance.”

The problem with the ‘EU can only poop roses’ mentality of the staunch Remainers is that you don’t have the rational ability to see any advantages or opportunities outside of the ‘club’, with the four founding pillars (including Freedom of Movement’), the strict rules & regulations with no flexibility, protected employment, protected trade, 450 million people who will live to 100-years old with the ‘human right’ to be able to retire at 63-years old etc.

How will this all be possible?

The planned Federal States of Europe & surrounding satellite countries, ruled by Brussels, with member states losing the power of veto, that takes several years to be convinced to agree trade OUTSIDE their ‘club’ - can keep enlarging their insular, protected EU ‘bubble’, by ever inviting in new accession States with cheap workers, to keep the whole Ponzi Scheme going.

Simples, what could possibly go wrong, like this ‘cunning economic model offering its protected workers and companies Shangri La La land’, that only seems to do well on its own if every members interest rates are close to ‘AAA’ Germany - and can’t economically recover from a major recession until its central bank helicopters QE and even cheaper ‘negative interest’ money in, several years after the crash – clearly has structural problems.

But the Remainers or general Europhiles, cannot see past the current structural problems, or sheer uncertainty of how a Federal Gloop of Europe can practically work, never mind the ‘satellite’ EU member states who will clearly be ‘2nd class Europeans’ to the Brussels policy sausage machine – who already don’t care a rats tail about the problems of individual members, from the sheer size economic migrant flows into the UK, to the migrant flows of every category, into Italy.

'Mix and Match'?

Clearly the EU economic ‘model’ can be approved upon, and although the rigid structure of Brussels will not be able to do it (as member states have been pleading with them to do so for years), a far more flexible economy like the UK, if allowed to be smart and look at all options, will be able to – unless the socialist/Europhile MPs etc naysayers, still ASPIRE to the EU model and force the worst of both in/out of the EU worlds on us.

Continued

The following article on today’s BBC website example, looks a tad ‘free trade’ extreme to me, as there will need to be a balance to protect UK jobs in the pursuit of cheaper tariff free goods in certain industries, but it is clear countries outside the EU miraculously survive without being in the European ‘club’ and their suspect ‘model’.

And if handled professionally by a government that understands the private sector/business, rather than one funded by 1970’s style militant trade unions, ‘the world is our lobster’.

“Hard Brexit offers '£135bn annual boost' to economy”

”A "hard" Brexit is "economically much superior to soft" argues Prof Patrick Minford, lead author of a report from Economists for Free Trade.”

”He says eliminating tariffs, either within free trade deals or unilaterally, would deliver huge gains.”

”He argues that the UK could unilaterally - before a reciprocal deal is in place - eliminate trade barriers for both the EU and the rest of the world and reap trade gains worth £80bn a year.”

”The report foresees a further £40bn a year boost from deregulating the economy, as well as other benefits resulting from Brexit-related policies.”

”The EU would then be under pressure to offer Britain a free trade deal, otherwise its producers would be competing in a UK market "flooded with less expensive goods from elsewhere", his introduction says.”

“What is the customs union?”

”The UK is part of the EU customs union, and so imposes tariffs - taxes on imports - on some goods coming into the country.”

”Countries in the customs union don't impose tariffs on each other's goods, and every country inside the union levies the same tariffs on imports from abroad.”

”So, for example, a 10% tariff is imposed on some cars imported from outside the customs union, while 7.5% is imposed on roasted coffee.”

”Other goods have no tariffs.”