Brexit: Now What? Part III

[Mid]

If they do then the costs will fall to the EU consumer rather than the UK exporter.

Just a minor quibble but although the €100 billion would fall on EU consumers, there'd also be a cost to UK exports in the substitution of EU consumers demand away from UK exports due to their higher cost.

 

[baron]

So signing international treaties is not legally binding?

What treaty is being breached? And how would it be enforced? International law is advisory at best, there is no mechanism for legal enforcement.

As a matter of fact the UK governement could decide not pay, whatever the final amount, but this would also mean the end of negotiations according to Article 50. With the total loss of free access to the EU market under the current conditions.

I don't think Article 50 states anywhere that failure to pay an arbitrary and absurd ransom is grounds for negotiations to cease.

 

[The Don]

Just a minor quibble but although the €100 billion would fall on EU consumers, there'd also be a cost to UK exports in the substitution of EU consumers demand away from UK exports due to their higher cost.

True, but Degeneve was asking whether the imposition of a tariff could be used as a means of recovering the 60 or 100 billion. In that specific regard, the costs would fall to the EU consumer.

 

[Craig B]

What treaty is being breached? And how would it be enforced? International law is advisory at best, there is no mechanism for legal enforcement.



I don't think Article 50 states anywhere that failure to pay an arbitrary and absurd ransom is grounds for negotiations to cease.

The claim is repeatedly made that this is not a "ransom" at all, let alone an arbitrary and absurd one, but a settlement of outstanding commitments incurred by the UK during its membership of the EU.

 

[baron]

The claim is repeatedly made that this is not a "ransom" at all, let alone an arbitrary and absurd one, but a settlement of outstanding commitments incurred by the UK during its membership of the EU.

Which happens to add up to a round 60 billion one day, then 100 billion the next day. It's true however, that 'ransom' is not the best word; 'punishment' is better, as it illustrates the true purpose of the ridiculous fine which is to dissuade any other country from leaving.

 

[Aepervius]

What treaty is being breached? And how would it be enforced? International law is advisory at best, there is no mechanism for legal enforcement.

If the money commitment were not bound to the EU membership, but were ad hoc commitment to certain institution or separate contract, then it would be clearly a breach of those. And if you think UK can get away without paying, I have a bad news for you : there are various extranational institution which would still put the onus on UK to pay, or the EU to get the money through other means, e.g. violating UK's intellectual property up to the sum. e.g. See for example how the USA , gambling, and WTO ruling on antigua.

I don't think Article 50 states anywhere that failure to pay an arbitrary and absurd ransom is grounds for negotiations to cease.

If it is itemized and on contract, and the UK refuse to pay, then there is no reason to try have with them a treaty that they would feel they can violate at a moment notice.

 

[Aepervius]

Which happens to add up to a round 60 billion one day, then 100 billion the next day. It's true however, that 'ransom' is not the best word; 'punishment' is better, as it illustrates the true purpose of the ridiculous fine which is to dissuade any other country from leaving.

Again, if it is itemized and on contract, tehn it is neither a ransom, nor a fine, nor a punishment. That's called being held to a contractual and/or legal obligation. That you try to color it as punishment, without having seen the itemized list, is quite a sign that you will interpret *anything* which does not go the brexit way in a negative light.

 

[baron]

Again, if it is itemized and on contract, tehn it is neither a ransom, nor a fine, nor a punishment. That's called being held to a contractual and/or legal obligation. That you try to color it as punishment, without having seen the itemized list, is quite a sign that you will interpret *anything* which does not go the brexit way in a negative light.

What kind of itemised list adds up to 60 billion on Friday and 100 billion on Tuesday? If such items existed then they would already be documented. All the evidence points to this list (and that's giving it too much credence) being fabricated on the fly.

 

[The Don]

What kind of itemised list adds up to 60 billion on Friday and 100 billion on Tuesday?

Any list which involves UK government spending

If such items existed then they would already be documented. All the evidence points to this list (and that's giving it too much credence) being fabricated on the fly.

The way it was reported on the radio this morning is that the change from 60 to 100 billion was due to countries like Poland and France saying that the UK would be required to pay for future agricultural subsidies.

Only time will tell whether this is indeed a speculative "moon shot" list, whether it's an initial high bid or whether this is an ongoing process where the number increases inexorably as different facets of the UK's commitments to future EU budgets are considered and evaluated.

Popping a tinfoil hat on, I'd suggest that the 100 billion figure allows the UK to settle at 60 billion and claim that they successfully engaged in some negotiations.

 

[wobs]

The way it was reported on the radio this morning is that the change from 60 to 100 billion was due to countries like Poland and France saying that the UK would be required to pay for future agricultural subsidies.

Only time will tell whether this is indeed a speculative "moon shot" list, whether it's an initial high bid or whether this is an ongoing process where the number increases inexorably as different facets of the UK's commitments to future EU budgets are considered and evaluated.

Popping a tinfoil hat on, I'd suggest that the 100 billion figure allows the UK to settle at 60 billion and claim that they successfully engaged in some negotiations.

This is the impression I get. Apparently, Germans don't do the "go in high and aim to get a deal somewhere in the middle" thing in negotiations, so it could be that they have adjusted from 60billion to 100billion to account for the style of UK negotiating.

But like you, this is pure speculation.

If there is a sound legal basis for these costs, then we'll have to pay them.

Its not like we weren't warned that Brexit was expensive.

 

[Degeneve]

If they do then the costs will fall to the EU consumer rather than the UK exporter.

Right! But that could still be a huge disavantage for the UK economy as this would in practice almost close it access to the EU market.

 

[The Don]

Right! But that could still be a huge disavantage for the UK economy as this would in practice almost close it access to the EU market.

Yes, but it would not allow the EU to get its 60 - 100 billion Euro back directly.

If the tariff resulted in a drop in imports from the UK and a corresponding rise in intra-EU trade then there could be some benefits but it's not clear that they may necessarily result and the fact that goods and services were being imported from the UK means that some or all:

• Are cheaper from the UK - in which case sourcing from within the UK will result in a rise in prices for EU consumers
• They are unobtainable from the EU (such as Scotch whisky or Stilton cheese) in which case EU consumers face doing without or increased costs
• Sourcing from the UK is a matter of choice or cachet (like Burberry clothing) - in which case EU consumers may still face higher prices

Introducing tariffs on UK goods may be a good idea to protect EU markets, punish the UK by reducing our exports or send a clear message to UK politicians and the public but if they're implemented as a means to recoup the 60-100 billion "owed" by the UK then it's EU consumers who will bear that particular cost.

 

[Giz]

The way it was reported on the radio this morning is that the change from 60 to 100 billion was due to countries like Poland and France saying that the UK would be required to pay for future agricultural subsidies.

And how is that justifiable?

 

[baron]

Any list which involves UK government spending



The way it was reported on the radio this morning is that the change from 60 to 100 billion was due to countries like Poland and France saying that the UK would be required to pay for future agricultural subsidies.

Only time will tell whether this is indeed a speculative "moon shot" list, whether it's an initial high bid or whether this is an ongoing process where the number increases inexorably as different facets of the UK's commitments to future EU budgets are considered and evaluated.

Popping a tinfoil hat on, I'd suggest that the 100 billion figure allows the UK to settle at 60 billion and claim that they successfully engaged in some negotiations.

I suspect what they'll do is settle on a figure of, say, £30bn, then agree a repayment plan over many years and the money will never be paid back in full. After all, such agreements are perfectly acceptable to many countries in the EU as evidenced by them failing to pay their way in NATO and expecting - and getting - no sanction as a result. Why should the UK buck the trend of not meeting commitments?

 

[The Don]

And how is that justifiable?

I have no idea whether it's justifiable at all. I'm not privy to the current set of EU figures or the reasoning that lies behind them. As I pointed out upthread, this could be merely a negotiating tactic from the EU to throw around an impossibly large number, then again it could be that the 60 billion figure failed to take into account areas in which the UK does have some kind of financial commitment and/or liability.

I haven't had dealings with the EU on a professional level but I have worked on large UK government projects and my experience there is that early estimates of costs are almost always orders of magnitude lower than later estimates. While there are doubtless issues with the accuracy of the estimates, often the initial estimates were very narrow in scope (for example only considering the capital costs of a project) whilst later estimates have much broader scope (for example, considering total lifecycle costs (including decommissioning costs), finance costs and personnel costs as well).

My gut says that the EU is compiling a long list of everything they think the UK could possibly maybe be on the hook for, that the list will get inexorably longer but that in the end it will turn out that the UK will only be liable for a small proportion of the items on the list. My gut also says that the final figure paid by the UK will be much higher than UK politicians are promising, significantly higher than they themselves currently think but that there will be an "instalment plan" which will make the sum less painful and less obvious.

Then again that's just my gut and I have no firm evidence on which to base it.

 

[The Don]

I suspect what they'll do is settle on a figure of, say, £30bn, then agree a repayment plan over many years and the money will never be paid back in full.

I think the £30bn figure is low but I have no good reason to back that up other than it's always far more than the most pessimistic estimates. I agree about the rest though.

After all, such agreements are perfectly acceptable to many countries in the EU as evidenced by them failing to pay their way in NATO and expecting - and getting - no sanction as a result.

Not quite the same.

Why should the UK buck the trend of not meeting commitments?

Why indeed ? We've tried our best to weasel out of our financial, regulatory and legal requirements to the EU for over 4 decades. Indeed the Brexit vote was IMO influenced by "Call me Dave's" inability to weasel out of a bunch more.

 

[ponderingturtle]

Any plans to rebuild Hadrian's Wall after Scotland leaves?

 

[baron]

I think the £30bn figure is low but I have no good reason to back that up other than it's always far more than the most pessimistic estimates. I agree about the rest though.



Not quite the same.

Not the same framework, sure, but many of the same governments are involved. It's hypocritical for them to demand we pay every penny of some back-of-a-postit-note demand when they routinely fail to pay their own bills.

Why indeed ? We've tried our best to weasel out of our financial, regulatory and legal requirements to the EU for over 4 decades. Indeed the Brexit vote was IMO influenced by "Call me Dave's" inability to weasel out of a bunch more.

Weaseling out is fine, I'm talking more about when commitments are agreed then flagrantly breached with barely a mention.

 

[Information Analyst]

After all, such agreements are perfectly acceptable to many countries in the EU as evidenced by them failing to pay their way in NATO and expecting - and getting - no sanction as a result.

A guidline, rather than being mandatory, so not really comparable.

 

[Aber]

If the money commitment were not bound to the EU membership, but were ad hoc commitment to certain institution or separate contract, then it would be clearly a breach of those. And if you think UK can get away without paying, I have a bad news for you : there are various extranational institution which would still put the onus on UK to pay, or the EU to get the money through other means,

House of Lords analysis:

https://www.publications.parliament.uk/pa/ld201617/ldselect/ldeucom/125/12511.htm

23.It follows that, under EU law, Article 50 TEU allows the UK to leave the EU without being liable for outstanding financial obligations under the EU budget, unless a withdrawal agreement is concluded which resolves this issue.

25.In terms of substance, a case against the UK in an international court or tribunal would be hindered by the fact that Article 50 does not conflict with the relevant rule of international law on withdrawal from treaties, namely Article 70(1)(b) of the Vienna Convention.

28.Whatever the content of the Great Repeal Bill, it will not allow the EU or its Member States to sue in the UK courts for outstanding contributions under the EU budget.

Short version: without an exit agreement, the EU cannot force the UK to pay.