Brexit: Now What? Part III

[Tolls]

Re: This idea that we will simply fall back to WTO terms. That's not how it works.
Our current terms are based on us being part of the EU.
Any new WTO terms will have to be negotiated...with everyone.
There is no fallback.

I have mentioned this before...

 

[Craig B]

Re: This idea that we will simply fall back to WTO terms. That's not how it works.
Our current terms are based on us being part of the EU.
Any new WTO terms will have to be negotiated...with everyone.
There is no fallback.

I have mentioned this before...

The impression I have been left with is that WTO terms are a default, accepted as applying in the absence of any specific terms deviating from them. Is that not the case?

 

[Tolls]

It is, but in our case it's a bit more complex as our commitment is (by and large) the EUs commitment.

I don't think I worded the above terribly well (serves me right for rushing).

Our terms will be those of the EU (I believe) which will be even worse than they would be if, for example, Australia went into WTO terms with the EU, since Australia already has those terms marked out for them. Unlike Oz, the UK does not have their own standalone set of WTO terms.

Does that make sense? It's not my field (as might be patently obvious), but that's the reading I've seen from pretty much all sides on this.

 

[abaddon]

It is, but in our case it's a bit more complex as our commitment is (by and large) the EUs commitment.

I don't think I worded the above terribly well (serves me right for rushing).

Our terms will be those of the EU (I believe) which will be even worse than they would be if, for example, Australia went into WTO terms with the EU, since Australia already has those terms marked out for them. Unlike Oz, the UK does not have their own standalone set of WTO terms.

Does that make sense? It's not my field (as might be patently obvious), but that's the reading I've seen from pretty much all sides on this.

As I understand it, the UK had it's own WTO terms but allowed them to lapse once it came under the EU umbrella. By leaving the EU, they are folding that umbrella and leaving it in the hatstand. Once out, they are free to start again from scratch with WTO, but it will be from scratch.

 

[Craig B]

This doesn't look too good; as if the UK was conniving at revenue fraud in order to secure more imports from China. If it's a sample of how things may be managed outside the EU, it's a rather ominous sign.

 

[Tolls]

As I understand it, the UK had it's own WTO terms but allowed them to lapse once it came under the EU umbrella. By leaving the EU, they are folding that umbrella and leaving it in the hatstand. Once out, they are free to start again from scratch with WTO, but it will be from scratch.

But then that implies needing to negotiate with the WTO (ie everyone) what that means...doesn't it?

I'm pretty sure there is no default value.

Here's an FT article from last year.
The key part:

Can the UK just go ahead and trade under WTO terms as soon as it leaves the EU?

No. In practice, the UK would have to detach itself from the EU and regularise its position within the WTO before it could sign its own trade agreements, including with the EU. As Roberto Azevêdo, the WTO’s director-general, said recently, there is no precedent for a WTO member extricating itself from an economic union while inside the organisation. The process would not be easy and would likely take years before the UK’s WTO position was settled, not least because all other member states would have to agree.

 

[abaddon]

As I understand it, the UK had it's own WTO terms but allowed them to lapse once it came under the EU umbrella. By leaving the EU, they are folding that umbrella and leaving it in the hatstand. Once out, they are free to start again from scratch with WTO, but it will be from scratch.

But then that implies needing to negotiate with the WTO (ie everyone) what that means...doesn't it?

I'm pretty sure there is no default value.

Here's an FT article from last year.
The key part:

Can the UK just go ahead and trade under WTO terms as soon as it leaves the EU?

No. In practice, the UK would have to detach itself from the EU and regularise its position within the WTO before it could sign its own trade agreements, including with the EU. As Roberto Azevêdo, the WTO’s director-general, said recently, there is no precedent for a WTO member extricating itself from an economic union while inside the organisation. The process would not be easy and would likely take years before the UK’s WTO position was settled, not least because all other member states would have to agree.

That's the point, once the UK leaves the EU, it isn't in the WTO at all in it's own right. It is currently in the WTO by dint of it's EU membership.

 

[Tolls]

Ah, yes.
For some reason I interpreted "from scratch" as "default terms".
Don't ask me how...

 

[Craig B]

Ah, yes.
For some reason I interpreted "from scratch" as "default terms".
Don't ask me how...

So did I. Let me ask: before these new arrangements are brought into being, what in practice will happen as regards trade? Presumably foreign trade will still take place. On what terms? Or will the U.K. be cut off from the rest of the world like Tokugawa-era Japan?

 

[Amazer]

So did I. Let me ask: before these new arrangements are brought into being, what in practice will happen as regards trade? Presumably foreign trade will still take place. On what terms? Or will the U.K. be cut off from the rest of the world like Tokugawa-era Japan?

From what I've understood it wouldn't be quite that bad... but close enough

But without WTO you wouldn't have MFN status that all WTO members receive and you do not have the same low trade barriers that WTO members must grant each other.

 

[Planigale]

This is an interesting article on article 50 (a legal view) with links to one or two other views. To my mind it implies there are more court cases to come!
https://publiclawforeveryone.com/2017/02/17/the-three-knights-opinion-on-brexit-a-response/

 

[McHrozni]

I'm not sure Theresa May and her cabinet of clowns have any idea what they're getting into. This sort of issues would have to be a matter of public debate two years ago, and the government would have to have a plan ready a year ago if Brexit was to have a chance of success.

McHrozni

 

[The Don]

I'm not sure Theresa May and her cabinet of clowns have any idea what they're getting into.

I agree. They have set their course for and out-out-out diamond-hard Brexit and have assumed that any obstacles along the way can be easily overcome and/or made to go away with some of the "£350m a week".

This sort of issues would have to be a matter of public debate two years ago,

These sorts of issues were repeatedly brought up by experts in the Remain campaign but they were dismissed as being part of "Project Fear" and in any case experts can be safely ignored unless they are pro-Brexit

and the government would have to have a plan ready a year ago if Brexit was to have a chance of success.

McHrozni

IMO a Brexit which results in us leaving the EU (so an actual Brexit) cannot be a success, all the government can do is mitigate the damage. It wouldn't shock me to find that there was some kind of plan being considered which constituted the softest kind of Brexit in which political blushes were spared but there was little or no change in the day-to-day situation.

Theresa May put paid to that plan (if it existed) by her dogmatic insistence that we should have the hardest possible Brexit. I suspect that this has thrown everything into confusion and quite frankly, there isn't a plan which involves Hard Brexit that doesn't end up with a complete mess

 

[McHrozni]

IMO a Brexit which results in us leaving the EU (so an actual Brexit) cannot be a success, all the government can do is mitigate the damage.

This isn't entirely true. A Brexit which sees UK leave the EU can be made into a success in theory. In practice the scenario would require UK to somehow out-compete China, Pakistan and Vietnam (among others) in low-cost manufacturing, USA and Singapore in innovation, Arab world in energy production and South America in agriculture, and these successes must be greater than the damage of reduced business with EU. Not all points are needed to succeed, but I sincerely doubt UK is able to do any of those to any degree worth mentioning.

So it could be a success in the same sense as it's possible to genetically engineer a flying pig.

Mmm. Pork wings

It wouldn't shock me to find that there was some kind of plan being considered which constituted the softest kind of Brexit in which political blushes were spared but there was little or no change in the day-to-day situation.

Your scenario is possible, if you look at the actions of Theresa May and other Brexiteers in the past few months as intended for domestic audience only, and having little relation to how things will happen with negotiations. This is how she could make Bremainers happy - by promising UK will go down in flames to secure a hard Brexit first, but negotiating a soft one (e.g. Norway model) eventually.

The problem with this scenario is she already explicitly promised a hard Brexit, with no EEA membership. Now, even this could again be a tactic to obtain EEA membership without freedom of movement from the EU, but if so she's playing with Fiendfyre over Wildfire. Chances are she will get burned, bad.

McHrozni

 

[The Don]

Your scenario is possible, if you look at the actions of Theresa May and other Brexiteers in the past few months as intended for domestic audience only, and having little relation to how things will happen with negotiations. This is how she could make Bremainers happy - by promising UK will go down in flames to secure a hard Brexit first, but negotiating a soft one (e.g. Norway model) eventually.

The problem with this scenario is she already explicitly promised a hard Brexit, with no EEA membership. Now, even this could again be a tactic to obtain EEA membership without freedom of movement from the EU, but if so she's playing with Fiendfyre over Wildfire. Chances are she will get burned, bad.

McHrozni

Yeah, my suggestion was that any Soft Brexit plan concocted prior to the Brexit referendum (and remember, it's only my suggestion that any such plan existed - there's no evidence for it) is now completely dead in the water thanks to Theresa May's insistence on an out-out-out diamond-hard Brexit.

IMO there is no tactic. Theresa May is determined that there will be a diamond-Hard Brexit and damn the consequences.

 

[McHrozni]

Yeah, my suggestion was that any Soft Brexit plan concocted prior to the Brexit referendum (and remember, it's only my suggestion that any such plan existed - there's no evidence for it) is now completely dead in the water thanks to Theresa May's insistence on an out-out-out diamond-hard Brexit.

IMO there is no tactic. Theresa May is determined that there will be a diamond-Hard Brexit and damn the consequences.

Do you think there is an underlying strategy? Perhaps to make Brexit as painful as possible in order to obtain that Dunkirk spirit, as you suggested earlier?

Investing everything in a diamond-hard Brexit is a tactic that stands good chances of succeeding at this. It's a catastrophic strategy of course, but the tactic looks tailor-made for it.

I agree there is no evidence any Brexit plan ever existed, or even exists. There is a letter to Santa, dubbed "strategy", which was written on the night before it was published and after the initial Parliamentary vote on A50. The government has nothing else as far as we know.

McHrozni

 

[The Don]

Do you think there is an underlying strategy? Perhaps to make Brexit as painful as possible in order to obtain that Dunkirk spirit, as you suggested earlier?

Personally I don't think that there is a plan to make Brexit as painful as possible. I think there is a plan to have an out-out-out diamond-Hard Brexit and if pain is the result then so be it. At that point the Dunkirk spirit will be invoked - so I think the cause and effect are the other way around.

Investing everything in a diamond-hard Brexit is a tactic that stands good chances of succeeding at this. It's a catastrophic strategy of course, but the tactic looks tailor-made for it.

In the past I have been (IMO rightly) criticised for overthinking Corbyn's support for Brexit. I suggested that from his perspective it's the first step in plan to implement a workers' utopia. It's been pointed out that perhaps it's just a case of "EU is face of capitalism - EU bad - leave EU" and I now concede that this simpler view is most likely correct.

In the case of Theresa May's plans for Brexit, perhaps you're overthinking it. I don't think it's part of a plan to take the UK to the brink and then roll back to a more sensible plan. Instead I think she has dogmatically fixed on a course of action and is determined to pursue it come hell or high water.

I agree there is no evidence any Brexit plan ever existed, or even exists. There is a letter to Santa, dubbed "strategy", which was written on the night before it was published and after the initial Parliamentary vote on A50. The government has nothing else as far as we know.

McHrozni

I suspect (but have no evidence to support my suspicions) that Whitehall mandarins were working on all kinds of scenarios before and after the Brexit vote which likely involved different combinations of being in and out of various institutions (EEA, Council of Europe and so forth). Only one of these scenarios has become government policy (Hard Brexit) and maybe they couldn't construct a "winning" version of that scenario.

Then again it could just be that May, Fox, Davis and Johnson have thrown all the carefully laid plans in the bin and replaced them with the letter to Santa

 

[Aepervius]

This is an interesting article on article 50 (a legal view) with links to one or two other views. To my mind it implies there are more court cases to come!
https://publiclawforeveryone.com/2017/02/17/the-three-knights-opinion-on-brexit-a-response/

I disagree on point 2. The EU is entitled to say the UK : "well come back to properly present us an parliament approved article 50 , no negotiation until then".

And that would stop all the nice article you linked right in its track.

 

[Aepervius]

This isn't entirely true. A Brexit which sees UK leave the EU can be made into a success in theory. In practice the scenario would require UK to somehow out-compete China, Pakistan and Vietnam (among others) in low-cost manufacturing, USA and Singapore in innovation, Arab world in energy production and South America in agriculture, and these successes must be greater than the damage of reduced business with EU. Not all points are needed to succeed, but I sincerely doubt UK is able to do any of those to any degree worth mentioning.

I think they could still make it a success if they drop it a lot of regulation related to pollution, worker protection, and financial regulation , and tax incentive. It would not be very good for the locals, but I think the politician don't care that much about them.

 

[Aepervius]

Personally I don't think that there is a plan to make Brexit as painful as possible. I think there is a plan to have an out-out-out diamond-Hard Brexit and if pain is the result then so be it. At that point the Dunkirk spirit will be invoked - so I think the cause and effect are the other way around.

Every time I see this I have to think about a while then ... Oh, they are speaking of Dunkerque...

I see a way they could at least politically mitigate a hard brexit : blame the EU for all subsequent problem.