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Thursday, January 24, 2019

If You Think Brexit Is A Good Idea Then Read This

Comment under The Guardian article ‘The Guardian view on WTO rules: not a Brexit safety net’

The perceived wisdom in the Brexit camp is that when we leave the EU we will be able to start trading using an already defined set of tariffs and quotas using WTO rules.

This article (read Guardian article here) illustrates how utterly ignorant that idea is. What we are seeing is the opening spat in a process we will have to go through to negotiate our own WTO tariffs and quotas. At the moment despite being a founder member of the WTO we don’t have any, they are all held in a EU wide pool by the EU which is the 29th member of the WTO.

The WTO is a consensus organisation with 160+ members many of which have no particular liking for the UK and many of who have things they want from us, ranging from market access for products we don’t really want such as hormone fed beef to The Falklands in the case of Argentina. 

Any one of them can slow our negotiations and we have cast ourself adrift in a world where at the moment we are leaving the largest trading block globally many are joining regional blocks to amplify their power. The EU, MERCOSUR, ASEAN, East and West Africa all created to amplify the trade power of their members, most now more powerful as a collective than the UK. Many include members we want to do trade deals with such as Brazil, most will insist in the fullness of time that we deal with their trading group not themselves as in the case of Brazil.

There might be some mitigation if a major industrialised country had gone down this route before us but we are trying something not tried before,

To makes matters worse the WTO makes the EU look agile, decisive and harmonious. In the last decade little of substance has been achieved by the WTO as attempts at improving market access in contentious areas such as regulated services or reductions in Non Tariff Barriers have floundered on the reefs of national interest. These failed negotiations conducted over a decade have left the WTO with little interest in further attempts to improve services access and very needed NTB reduction.

This is hugely damaging for the UK because the refocusing of our economy on Services in particular regulated services started by Thatcher has left us with an economy that is almost uniquely unsuited to trading using WTO rules. Mainly because there are none in the areas where we generate some of our most lucrative exports.

These lucrative exports are made possible not by the WTO but by our membership of the EU a club we are now leaving and in the process leaving these markets as well.

To further compound our problems even Trade deals will be hugely problematical because gaining market access to a partners market for our banking, insurance etc services is unlikely, for the reason that the WTO’s attempts to do the same failed, countries prefer not to allow 3rd parties to trade without costly pre-conditions such as local ownership in their regualted markets.

None of this is a problem for us in the EU and ironically the only trade deals outside the EU itself that make any attempt to improve regualted services access and reduce NTB’s are the EU Korea and EU Canada deals.

Of course many Brexiteers might say, hang on we are going to become a Free Trader leading the global Free trade revolution, they are deluded, free trade doesn’t exist, countries want to regulate everything from a banking license to the frequency a wireless device uses and they aren’t prepared to give that up for the sake of a small country on the edge of Europe with ideas well above its status. And again the WTO can’t help. WTO rules don’t cover regulatory compliance thats well beyond the WTO’s competence and this is hugely damaging because despite Brexiteers childlike fixation on Tariffs its NTB’s that cost more and can in many circumstances stop trade entirely.

2 Responses “If You Think Brexit Is A Good Idea Then Read This”

  1. Keith CLIFF
    6th October 2017 at 4:42 pm

    Brexit never was about any trade dea with Kuxembourgls, it was only about the 1% continuing to avoid paying their due taxes. That’s why it started just after the EU announced it was going to clamp down on tax avoiders and tax havens. They have already started with Luxembourg.

    If viewed from a tax dodger then the governments Brexit approach becomes much clearer.

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