The Customs Union and the World Trade Organisation

Those who continue to argue that we need to be in the Customs Union of the EU, or need to copy it from outside the Union as we leave, need to answer two very simple questions.

Why do we have a large and persistent trade deficit with the Customs Union, and a trade surplus with the rest of the world trading with them under WTO rules?

Why has our trade been growing faster in recent years with the rest of the world than with the EU Customs Union?

The figures are quite stark. Our trade in goods  deficit with the EU widened to £96bn, and our travel deficit to £15bn. Our sales of services were quite unable to offset these large deficits in the way they do for our trade with the rest of the world.  Between 2014 and 2016 our exports to  the rest of the world  grew by 6.7%, whilst our exports to the EU grew by a little over 3%.

The good news is with or without a deal with the EU we will be trading with them under WTO rules, as both the EU and the UK are members of the WTO and accept its rules and its arbitration system for any disputes. The recently enforced Trade Facilitation Agreement that came into effect last spring from the WTO binds us and them to keeping border arrangements friendly to business with smooth procedures for the passage of legal goods.

Germany in 2016 exported ÂŁ66bn worth of goods to the UK and imported just ÂŁ33bn back from us. The Netherlands exported ÂŁ36bn to us, and took just ÂŁ18.6bn in imports. I will be looking in future postings at what we buy from these large exporters, and what opportunities there are to buy from elsewhere should the EU wish to impose new barriers on their trade with us.

If they want us to go to WTO terms we will be able to find cheaper imports from non EU sources and produce more at home.

164 Comments

  1. Andy
    January 14, 2018

    You have it wrong. You won the referendum. It is not those who voted Remain who have to explain anything. I am quite happy with both the Customs Union and Single Market as they are, thank you very much. You are the one who voted against these things – without having a clear plan as to what you were actually voting for. The answers are for you to come up with, not us.

    So perhaps you can explain some of the following:
    1) Where will you build all the lorry parks you need?
    2) How much will your extra red tape and border delays cost business?
    3) How many extra border guards will you recruit?
    4) Which EU regulations will you scrap?
    5) How will you protect our borders to stop illegal EU products getting in?

    Those five will do for starts. I expect numerous fact free answers full of angry hot air – the default Brexiteer position – and none which actually address the reality of your vote.

    At sometime soon you all actually have to engage with the real world. In the meantime I agree with Nicola Sturgeon. Hard Brexiteers have had their chance and have really rather spectacularly failed. It would not be fair to describe your efforts as a national humiliation because, frankly, it has been worse than that.

    1. Dave Andrews
      January 14, 2018

      Some very sensible questions I would say.
      However, the argument needs to be balanced. I might ask you, rather than where the lorry parks will be built:
      1) Where will you build a city the size of York every year to accommodate the net EU migration?
      2) How much will such a city cost to build?
      3) Who will pay for it?
      4) Can we bill the EU for the cost?

      If the decision to leave revolved solely around fair trade, the UK would have voted unanimously to remain. The goal to aim for is reciprocal low barrier trade, both with the EU and the rest of the world.

      I have no idea how much York would cost to build, perhaps Andy or someone else on here might have already made a calculation. I would genuinely like to know.

      1. jerry
        January 14, 2018

        @Dave Andrews; “However, the argument needs to be balanced. I might ask [europhiles],

        1) Where will you build a city the size of York every year to accommodate the net EU migration?”

        Ignoring the rather hyperbole way you ask the questions (as if 200,000 EU migrants would be coming to the UK each year….), EU migration is not concentrated in one place like a refugee camp, they are dispersed across the UK, also any such total will be off-set by UK citizens migrating to or working long term in another EU member country.

        “2) How much will such a city cost to build?”

        Taking into account that a New Town will not be needed, the cost will be the same as building any new homes

        “3) Who will pay for it?”

        Everyone, well those who pay their tax at least, just as always, and that includes the migrants you complain about.

        “4) Can we bill the EU for the cost?”

        Probably, if the UK really is in such a basket-case that it qualifies for such support….

        “If the decision to leave revolved solely around fair trade, the UK would have voted unanimously to remain”

        No it would not, there are quite a few, both left and right, who complain about the way the EU is restricting trade – in fact if it had been solely about trade the Leave vote might well have been larger!

        1. NickC
          January 14, 2018

          Jerry, Last year (2017) the gross number of EU migrants was 230,000. As if? – Jerry? Like many Remains you get confused by the terms net and gross. Net EU immigration into the UK means the number who arrive after some have left. It has run at an annual average of 107,000 since 2004. That’s a total of 1.4 million extra people in 13 years. Likely the total is more judging by the NINos.

          It is largely irrelevant to the costing, both monetary and socially, whether these migrants disperse evenly, clump together (as they tend to do) or all stay in a brand new city. Housing, services and infrastructure will still have to be provided, will take time to do so, will cause disruption, will eat up agricultural land, and will require capital cost before fiscal income appears.

          1. Hope
            January 15, 2018

            The number is far higher. Rudd lost 56,000 before Christmas. To included in your figures. May lost hundreds of thousands. NI numbers are three times higher than the estimates given by govt. Estimates are used to hide the truth. There is no reason for counting people in and out, if not for our safety!

      2. John Payne
        January 14, 2018

        Dave Andrews avoids commenting on how he proposes to balance our economy to pay for the stated €96.000,000,000 trade deficit we have with EU? Maybe he should! Maybe he should also calculate how many extra people we could employ to control our borders and State.
        Maybe he can explain whether we should pay an additional fee to be in a single market and forced to accept EU Laws.
        The current debate wrongly concentrates solely on Trade and Jobs and avoids discussion on regaining our Sovereignty, and EU plans to eventually become one State. If we are in the single market we will be forced to accept trade laws designed for that EU State without having any say in the matter.

      3. Andy
        January 14, 2018

        Thank you for confirming that there is no economic rationale for Brexit.

        As for immigration, it has been a hugely beneficial thing for our country.

        There are several things to note, however.

        1) The majority of migrants to the UK come from outside of the EU.

        2) Freedom of movement of people does not exist. It is freedom of movement of workers. Non-workers have no automatic right to stay.

        3) Migration ebbs and flows. Yes it has been high in recent years but there are multiple factors for this, many of which are not down to the EU.

        4) Migrants overall contribute more to the system than they take out – therefore they not only pay for their own places in schools and hospitals but they contribute to your share too.

        5) The failure of UK governments of all colours to properly prepare for the rising population is a Westminster failure. Ask Mr Redwood why he and his colleagues do not invest enough in schools, hospital and transport. Perhaps if rich Conservative donors paid their fair share of taxes rather than stashing wealth offshore there would be more to spend.

        I notice you failed to answer my questions.

        1. Hope
          January 15, 2018

          Utter rubbish. Non factual garbage.

        2. Anonymous
          January 15, 2018

          Tosh. All of it.

    2. Kenneth
      January 14, 2018

      Regarding lorry parks: we have offered the eu a near-frictionless trade agreement.

      You are suggesting they would not co-operate, preferring to purchase extra lorries to replace those tied up in Dover car parks.

      Do you think the Spanish are planning to have their fruit and veg rot in a lorry car park, never to be put on sale?

      1. Andy
        January 14, 2018

        We currently have a near-frictionless trade deal. And you all voted against it. You voted for friction. You need to deal with the consequences of that.

        I don’t mind whether you build a lorry park or not. I am not sure which is the worst PR disaster for you – picture of swathes of Kent concreted over pre-Brexit or massive lorry traffic-jams on the M20 post-Brexit. You might want to think about that.

        I particularly like those of you who hark back to the 1970s – a time when the country was grotty, failing and half of the celebrities were perverts. It’s 2018 – the world has moved on. You should too.

        1. Dennis Zoff
          January 15, 2018

          Andy

          Excellent point, and we share your view that the world has moved on. Unfortunately the EU has not?

          The people of this great country have voted to move on from 40+ years of stagnant EU self serving machinery which, for many years, has clearly not been fit for purpose.

          Time for a change and a move to a modern, enthusiastic and positive world!

          But the best part of all, we will have choices, without being encumbered by an outdated model; though I note this model is clearly to your liking…and you therefore have a choice?

        2. Anonymous
          January 15, 2018

          Frictionless Border = Dissolved Country

    3. John Finn
      January 14, 2018

      You have it wrong. You won the referendum.

      Quite – and in doing so we voted to leave the EU and all it entails including membership of the CU and the SM. The current default position, therefore, is NON membership of the CU and SM.

      If you feel there is good reason to reject the default position then it’s up to you the make the case. You might, for example, want to argue that joining the EEC in 1973 and the single market in 1993 gave the UK economy a demonstrable boost – except, of course, that neither event did any such thing.

      1. Lifelogic
        January 14, 2018

        Exactly.

    4. jerry
      January 14, 2018

      @Andy; So perhaps you can explain some of the following:

      1) Where will you build all the lorry parks you need?

      At factories and warehouses were the load begins/ends, Never heard of Sealed containers, “TIR” and its role in Customs control Andy?

      2) How much will your extra red tape and border delays cost business?

      Non, or very little, see above…

      “3) How many extra border guards will you recruit?”

      As many as needed, but we need them anyway unless you welcome illegal immigration!

      “4) Which EU regulations will you scrap?”

      Who knows, perhaps all of it, after all outside of the EU we can actually improve upon, not weaken regulation – Corbyn certainly thinks so.

      “5) How will you protect our borders to stop illegal EU products getting in?”

      The same way as we stop any illegal products from getting in now!

      Tell me @Andy, how do you think the UK managed import/export before we joined the EEC, before the Single Market, and I can tell you that we did – without problem.

      1. Edward2
        January 14, 2018

        Great post Jerry.

      2. NickC
        January 14, 2018

        Jerry, I am amazed. Good one!

      3. Andy
        January 14, 2018

        Illegal immigrants are illegal. They have no right to be here now. After Brexit that does not change – and neither does the competence of the government to stop them.

        1. Anonymous
          January 15, 2018

          The tolerance of illegal immigration by government makes all non-selective immigration intolerable to the people.

          It’s about numbers and need, Andy. Not race.

      4. Paul Davison
        January 15, 2018

        For every complex problem there is an answer that is clear, simple, and wrong.
        And this answer is so wrong – life in Brexit world must be so pleasant, simple and harmonius – shame it’s a pure fantasy.

    5. Anonymous
      January 14, 2018

      There are huge costs for remaining in the EU too.

      Never mind building lorry parks – housing estates are having to be built throughout Britain and it’s still not enough to keep up with population growth.

    6. Anonymous
      January 14, 2018

      “Hard Brexiteers have had their chance”

      Err… no.

      Influential Remainers have been as obstructive as humanly possible. (I note unsupported by any significant street demonstrations.)

      Bexiteers are outnumbered 4:1 on chat shows despite them representing the majority.

      Where is that Brexit Rebuttal Unit ?

      The Sun called for it in their editorial yesterday stating that it’s a tragedy that good news about Brexit is not getting out.

      Remain lie and lie and lie and lie – just like the EU they support.

      1. Denis Cooper
        January 14, 2018

        “Where is that Brexit Rebuttal Unit?”

        Where indeed … is it Theresa May who has decided that the constant attacks on Brexit shall just go unanswered, or David Davis? I saw on TV somebody saying that she thinks tweeting is below the dignity of her office, and maybe she has a point; but it would not be below the dignity of the staff in her office or a group of staff in David Davis’s department, and in fact the latter do send out occasional messages about what they are doing, they just don’t reply to any of the anti-Brexit propaganda flooding the media.

        1. rose
          January 14, 2018

          As I always say to you, I think it is the Chancellor and the Cabinet Secretary who have decided not to invest in this.

      2. Andy
        January 14, 2018

        With respect the ‘under-representation’ of Brexiteers on panel shows is because most leading Brexiteers are incoherent ranting loons. The reason Mr Redwood is on so much is that he is one of the few that make any sense at all. Get more credible people to back Brexit and you’ll see more Brexiteers on TV.

        1. Edward2
          January 14, 2018

          The more remainers rant on TV or on here the more leaving becomes more popular.
          Leavers just keep quiet and watch the usual characters do our work for us.

        2. Anonymous
          January 15, 2018

          Andy, that’s rubbish.

          I’m sure the BBC/Sky would love as many ranting loons as possible to be seen on the Brexit side on TV.

          It would be fairer to say that more Remain politicians have been selected by their parties than is reflected in society – so there are fewer Leave politicians to draw upon for chat shows.

          The EU orientation of MPs has, thus far, never really featured in general elections. Europhiles should be proud to exhibit the EU flag on their campaign literature and a pro/anti EU candidate should be available for each election.

          The election of MEPs, however, feature as less important than local council elections.

          Surely they should be the most important of all ? Yet 99.9% of the population have no clue as to who their MEP is.

          It cannot be right that 75% of our Parliamentarians are committed to the EU while only 30% of the population showed their full commitment to it during the referendum.

          Alas the 75% I quote clearly reflects the 1:4 ratio that I mentioned earlier. Just my perception, perhaps, and I include the often biased presenter in this too.

          Everyone with a different opinion to Andy is a loon, apparently.

        3. Dioclese
          January 15, 2018

          The main reason for Brexiteers not appearing on the TV is the rampant bias of the BBC.

    7. L Jones
      January 14, 2018

      Amid all the words and sound bites emanating originally from Project Fear, these being an example, why is it that we hear no cogent argument for remaining with the execrable EU? No-one seems to make a definitive statement that THIS is why the UK should have decided to hang in there. We hear nothing but negatives – the terrible things that will happen when we eventually leave (Project Fear) but nothing about all the wonderful benefits and golden future that would have awaited us had we voted Remain. Why not?

    8. Richard1
      January 14, 2018

      No need for any of this unless the EU decides to start a trade war. The U.K. offers continued tariff free, frictionless trade. It is up to the EU to decide whether it’s prepared to have such a relationship with another European country without insisting that that country also signs up to political union. The spectacular failure has been the apocryphal predictions of Project Fear.

    9. Original Richard
      January 14, 2018

      Andy :

      1) Where will you build all the lorry parks you need?
      We needed a vast lorry park to be built in Kent before the decision to leave the EU because of problems in Calais. It is to be hoped that lorry journeys will decrease when we leave the EU as more goods are produced in the UK which will be good not only for the UK but also for the environment.

      2) How much will your extra red tape and border delays cost business?
      None as importers/exporters need only use the systems already in place for importing from China etc..

      3) How many extra border guards will you recruit?
      We need extra border guards whether we are in the EU or out of the EU. Additional security at our borders if it comes as a result of Brexit will be welcomed.

      4) Which EU regulations will you scrap?
      These will be decided by the government/Parliament of the day and will therefore be decided as whether they benefit the UK rather than whether they benefit other EU countries. Such as stopping the Dutch pulse fishing in our waters.

      5) How will you protect our borders to stop illegal EU products getting in?
      At the moment we are totally unable to stop illegal EU products getting into the country as shown by the massive German diesel emissions scandal where German car makers cheated to get testing approval which then was valid throughout the EU without further testing.

      1. Paul Davison
        January 15, 2018

        Original Richard,
        Your reponse is too simplistic to be realistic. You need to preface your reponse by saying which of the three pos-Brexit scenarios you are ocnsidering: Canada, Norway or no deal/WTO, as the arrangemets at borders and teh amount of red tape is highly sensitive to which state we end up with.
        However under any scenario the customs checks and border delays will be much longer than at present, the regulations, standards, tariffs and other non-tariff barriers will be much more numerous and complicated. The new VAT arrangements will be require more paperwork and Customs staff effort too. Under some scenarios we will need to accommodate a hard border between RoI and Northern Island too.
        You are being very optimistic to say that only “government/Parliament” will decide which EU regulations to scrap. This is not allowed under the Norway option, and restricted under the Canada option.
        UNder WTON rules our borders might not be able to prevent countries dumping food, steel etc of dubious quality t rock-bottom prices (chlorinated chicken anyone?), which will do wonders for our farmers and incdutries currenlty cushioned by EU membership!

    10. Lifelogic
      January 14, 2018

      Alas the remainers are still in charge of the Tories and this Government. They probably have a majority in parliament and the Lords is perhaps 75% for remain. Not to mention academia, most of the state sector, most of the (largely parasitic) legal profession and the dire BBC.

      You can hardly blame the leavers for the mess they are making of it. Many are probably making a mess of it on purpose for political reasons.

    11. Dennis Zoff
      January 15, 2018

      Andy

      Don’t you worry yourself, everything is in hand.

      Remember, inane bleating is for those that only see negatives and problems; the rest of us just make it happen with erudite solutions!

  2. Brit
    January 14, 2018

    The greatest boost in our economy is when we are finally out of the EU and our people realise the truth again that we can stand on our own two feet.
    The Remoaners for political gain and voter dependency have been depressing the spirit of our people for decades. The Slouch -Economy as I put it. No hope.Ready for any kind of cliff edge described to them. The ever present life-sucking belief in imminent doom.

    Not one TV Remoaner personality has emigrated due to Brexit. Still here with their anoraks and cheese sandwiches in their kangaroo-type pouches at the front. Over-sized hiking boots and a tiny backpack with a cheap plastic gaudy purple and orange shiny raincoat, smartphone and packet of pork scratchings inside.Even if it’s raining a pair of sunglasses perched on their head so their hair doesn’t get dazzled.

    1. NickC
      January 14, 2018

      Brit, Very good. I especially like your description of a Remainer “Even if it’s raining a pair of sunglasses perched on their head so their hair doesn’t get dazzled.”

    2. Lifelogic
      January 14, 2018

      Nothing wrong with Pork Scratchings, often best snack you can get in a UK pub – to go with the pickled egg. Though many no longer sell either alas. An excellent low carb snack to wash down with your pint of bitter. Most pork scratchings types were surely leaver.

      Remainers would surely go for a tube of pringles (Honey Mustard, Jalapeño probably).

  3. Sir Joe Soap
    January 14, 2018

    This is precisely what you should be circulating to our business community-threats and opportunities.
    With the Euro at 1.12, add on reciprocal tarriffs from EU countries… there’s a big wide world out there making cars, white goods, wine, cheese… at lower rates to the ÂŁ… let’s start getting businesses and people to look at those opportunities for substituting product made in the dictatorial, over-regulating, polluting EU, as well as increasing our farming and fishing capability here in the UK.
    HMG should be pushing out leaflets, funded Cameron-style, to encourage businesses and people to buy stuff made in the UK and Commonwealth… we let these people down so badly 40 plus years ago-let’s put that right now!

  4. Mark B
    January 14, 2018

    Good morning.

    The Customs Union and the Single Market are used to keep competitors out, prices high, and maintain a captive market for large corporations goods, thereby, guaranteeing their profits and bloated share prices. All this at a high price to the consumer. ie You and me !

    The Customs Union is not a new idea. Napoleon used it against the British to starve us into submission forcing us to seek trade elsewhere. I believe the Customs Union of today, if high and new tariffs are imposed will have much the same effect. eg British holiday makers will simply go elsewhere.

    The Single Market is far worse. Whilst there are many changes to the way trade is being done which will in time render the CU ineffective, the Single Market has far, far more reach and longevity. It is simply the means by which the Commission, or High Authority as it is also know (see the deal TM has signed 😉 ) that allows the EU to exert control over nation states. Any agreement to allow the EU to not only demand that we maintain regulatory convergence with it, but also allows it to oversee us (also see the deal that TM has signed) is simply unacceptable. We voted to be an independent nation once more, not some vassal state via proxy !

    Clearly neither is good for the UK that voted to become an independent nation once more. So leaving the EU must mean we leave both the CU and the SM. Oh, and not regulatory convergence or EU oversight.

    As to the thorny question of the Irish border, I would like to raise the issue with the regards to how French Guiana in South America deals with it. Much like some of the Spanish colonies, French Guiana is part of the EU by being part of France. This irrespective of its location. It uses the EURO in its currency, votes in French and EU elections and adopts French and EU law. It also borders two countries that are clearly NOT in the EU, Brazil and Suriname. So how is it therefore that Brazil and Suriname are not required to have imposed upon them the same demands as what is being imposed upon, or indeed accepted by the weak and pathetic UK Government ? Something for people here and our kind host to ponder, me things 😉

    1. jerry
      January 14, 2018

      @Mark B: French Guiana is nothing like the NI Brexit problem, neither Brazil nor Suriname or their citizens claim any sovereignty over French Guiana, nor is there a open border between them. Thanks for showing that you do not have a first clue about the history of Ireland!

      1. NickC
        January 14, 2018

        Jerry, Mark B is perfectly correct, and his comment is finely worded. He is especially apposite about the EU’s CU. And the only country in the British isles that claims sovereignty over its neighbouring people is Eire (Arts 2 & 3 Eire constitution, then amended in 1999). Thanks for showing that you do not have a first clue about the history of Ireland!

        1. rose
          January 15, 2018

          I thought the demand for sovereignty over N Ireland by a foreign power had now been given up.

      2. Mark B
        January 14, 2018

        Jerry

        Taken from the Good Friday Agreement. See Link from Wikipedia below if our kind host allows, or just Google, ‘Good Friday Agreement.’

        For the first time, the government of the Republic of Ireland accepted in a binding international agreement that Northern Ireland was part of the United Kingdom

        https://en.wikipedia.org/wiki/Good_Friday_Agreement

        I could retort with some cheap wisecrack, but won’t 😉

        Can you please provide details of the wall and Customs Posts surrounding French Guiana preventing people and goods entering please ? etc ed

    2. Denis Cooper
      January 14, 2018

      On the Irish border question, we are talking about movements of goods across an international border which does exist, and which is even marked on roads as well as on maps, but which the new Irish government would prefer to pretend does not exist in case too open an acknowledgement of its existence might provoke fresh outbreaks of nationalist terrorism, see for example:

      http://johnredwoodsdiary.com/2017/12/02/the-irish-border/#comment-904608

      http://johnredwoodsdiary.com/2017/12/04/two-views-of-brexit/#comment-905007

      And because the new Irish government has adopted that absurd, extreme and intransigent position the UK government has followed suit in stupidity by also surrendering to the implied threat of terrorism and apparently agreeing that even when we have left the EU every person and every business and other organisation across the whole of the UK shall continue to be subject to all EU laws.

      I would like to repeat that in 2016 exports of goods from Northern Ireland to the Republic of Ireland amounted to just ÂŁ2.4 billion, see the table on page 5 of this House of Commons Library report:

      http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8173

      and that amounted to about 0.1% of UK GDP, ÂŁ1940 billion in 2016:

      https://www.statista.com/statistics/281744/gdp-of-the-united-kingdom-uk-since-2000/

      And it seems that 0.1% tail will be allowed to wag the whole of the UK dog.

    3. Ian Wragg
      January 14, 2018

      Excellent post. The EU has many borders with non EU countries but doesn’t demand regulatory convergence.
      This is a straw man to enable Brussels to continue overseeing us.
      Every effort will be made to ensure we don’t escape the clutched of the monster EU.
      It is just a bullying protectionist entity.

  5. Lifelogic
    January 14, 2018

    Indeed but the May government clearly do not seem to realise this and are clearly planning for a very damaging & expensive BREXITINO.

    Tories too shy to fight the left online warns the new chairman Brandon Lewis. Well you have to have a sensible & positive vision to sell. How are you going to sell the May’s vision of high tax, expensive energy, over regulate everything and endless waste to anyone?
    Who wants Corbyn’s socialism light, might as well have the real thing they will think?

    The moronic May government now seem to be attacking landlords yet again and creating another meal ticket for essentially parasitic lawyers. Not content with taxing them on profits they have not even made.

    Is the government’s intention to kill the private rented sector dead and have no such properties available to rent at all? They have already attacked buy to let mortgages with absurd restrictions, put 3% on their stamp duty, forced green crap onto landlords and double taxed landlord’s interest.

    Thatcher sensibly gave some tax breaks to encourage provision of more rented accommodation. The more rented accommodation there is the more choice tenants have and the better the quality & cheaper the rents will be. The above agenda will kill provision, push up rents and merely benefit a few, essentially parasitic, lawyers.

    1. Lifelogic
      January 14, 2018

      Brandon Lewis on Marr this morning seemed very unimpressive indeed. Why on earth has May chosen him. Still not quite as bad as Baroness Warsi Cameron’s choice I suppose.

      Below is the complete and utter remainer drivel he came out with before the referendum. He thought Cameron’s pathetic “thin gruel deal” was good and that he had ensured that “Britain’s sovereignty remains paramount”.

      What a complete plonker or perhaps just a liar he was. Yet another lawyer.

      http://www.brandonlewis.co/national-issue/eu-referendum-gives-britain-a-choice/

    2. BOF
      January 14, 2018

      @Mark B Very good points indeed and Ireland will just have to suck it up because the border will have to be controlled. There are many examples around the world of electronic borders where people hardly know the difference.

      1. Mark B
        January 14, 2018

        Thanks 🙂

    3. mickc
      January 14, 2018

      You are right. If we are to have Socialism, and it seems we are under the current version of the Conservatives, let’s have the real thing under Corbyn.

      There has to be change in this country….Corbyn will do it. When I was younger I did not understand the reasons for the 1945 Labour landslide; I do now!

      1. Rat1960
        January 15, 2018

        Mick, You might like to have a good look at the post war labour government. It introduced PAYE so that the *people* paid taxes for Welfare. As well as introducing mass Nationalisation: Rail, Gas, Electric, Water, Communications and Bank of England
        It budgeted ÂŁ100m for the NHS, came in at ÂŁ250m. Suggested that was introduction costs. Came in at ÂŁ250m the second year. So it was off to America for a loan to keep the economy going. Rationing was still in place and eventually the Government negotiated German repatriation costs to a big fat zero. Having expended on welfare over investment we were already not keeping pace with German economic development. So flat broke, with unemployment rising, the nation turned back to the well past it Churchill in 1952. It still took a further two years for rationing to end. Careful what you wish for …

      2. Dioclese
        January 15, 2018

        But do you remember what a disaster it turned out to be?

        For a glowing example of Labour’s incompetence I give you two words : Gordon Brown

  6. Fedupsoutherner
    January 14, 2018

    Why are talks continuing when the EU have quite clearly stated that we will not get what we want? Is there a reason that talks are being dragged out? Why not just say what we want and if they can’t accommodate us then we will trade using WTO rules? Its all becoming tedious.

    1. majorfrustration
      January 14, 2018

      Could not agree more

    2. bigneil
      January 14, 2018

      Not only tedious but very expensive -at ÂŁ55m a day. Throwing poorer people’s taxes down the drain is quite easy it seems. Still, the EU army and handing out free lives for millions from “open borders” needs a lot of funding doesn’t it.

    3. Denis Cooper
      January 14, 2018

      I think we are getting very close to the point where we could reasonably declare to the world that for our part we would still prefer to have some kind of special trade deal with the continuing EU, but it has become obvious to us that the EU does not want that, and is not prepared to negotiate in good faith, and so we are abandoning that proposal and accepting that in future trade between the UK and the continuing EU will be on basic WTO terms. That would not mean that all negotiations would stop, just any negotiations directed towards agreeing a special trade deal.

      1. Mark B
        January 14, 2018

        Dennis

        As I am sure I have told you before. The mythical Trade Deal is just a ruse to justify our government staying in the EU in all but name and handing over billions. As you yourself have pointed out, they sell us more than we sell them, so it really should be them asking for a deal.

    4. NickC
      January 14, 2018

      Fedupsoutherner, There is considerable Leave support for this position. And as Denis comments, we should accept that the EU won’t be sensible, and move quickly to WTO only trading.

      1. rose
        January 15, 2018

        I have remain friends who have come round to this position too.

  7. Helena
    January 14, 2018

    Those who continue to argue that we need to leave the Customs Union of the EU need to answer one very simple question.

    Given that our trade has been growing faster in recent years with the rest of the world than with the EU Customs Union, why is there any need to leave the EU Customs Union? Staying in gives us the best of both worlds

    Reply I dont think you understood my question

    1. Ajay Gajree
      January 14, 2018

      The Common External Tariff.

    2. Mark B
      January 14, 2018

      Because being part of the CU means that we have to set tariffs against non-EU countries in favour of EU countries, thereby preventing us from sourcing cheaper goods and services which keeps prices artificially higher.

      It also has the indirect effect of stifling competition, efficiency, invention and the emergence of developing nations, particularly in Africa.

      For example. There is no tariff on fresh Tuna entering the EU as there are processing plants but, there is a high price on tinned Tuna ! This prevent jobs in the processing being created, manufacturing and support infrastructure, plus energy supply and distribution and associated infrastructure.

      When you realise the scale of support industries and services needed you can see that tariffs are not just a barrier to trade but are a barrier to ordinary people trying to make ends meat.

      Leaving the EU proper and sourcing say, tinned Tuna or whatever from developing nations will help them grow there Middle-class, their own internal markets and in the long run, reduce migrant flows.

      Win-win !

      1. Know-Dice
        January 14, 2018

        “ordinary people trying to make ends meat.

        Was that Tuna?

        1. Paul Davison
          January 15, 2018

          Making both ends “meat” is a phrase that only applies to sausages!

      2. miami.mode
        January 14, 2018

        Mark B.

        Jeremy Corbyn was on Peston this morning and I was pleased to hear him say that being out of the Single Market and Customs Union would give us the opportunity of purchasing goods from developing nations and thus assisting them accordingly.

    3. Malcolm White
      January 14, 2018

      The problem with the Customs Union is that we cannot negotiate our own trade deals with non-EU countries. Which means that we are prevented from improving on the WTO terms on which we trade with them and thereby prevented from increasing our trade still further.
      Also, as Ajay stated, we also have to apply the EU’s common external tariff meaning that food, shoes and clothing (to name a few) are subject to high import tariffs.

    4. Denis Cooper
      January 14, 2018

      http://johnredwoodsdiary.com/2018/01/11/housebuilding-in-uk-advances/#comment-912200

      “The establishment of the EU Customs Union is set out in Article 28 of the Treaty on the Functioning of the European Union. As the UK will no longer be a Member State, or under the treaties once it leaves the EU, it will not be part of the EU’s Customs Union.”

      1. Mark B
        January 14, 2018

        But Turkey is part of the CU.

        1. rose
          January 15, 2018

          Not the CU, only a CU.

          1. Denis Cooper
            January 15, 2018

            Correct, the EU member states are members of the EU Customs Union and as Turkey is not an EU member state it is not in the EU Customs Union, instead it is in an extraneous customs union with the EU Customs Union.

            http://ec.europa.eu/trade/policy/countries-and-regions/countries/turkey/

            https://www.avrupa.info.tr/sites/default/files/2016-09/Custom_Union_des_ENG_0.pdf

            Article 3.3:

            “The customs territory of the Customs Union shall comprise:

            – the customs territory of the Community as defined in Article 3 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code,

            – the customs territory of Turkey”

    5. Know-Dice
      January 14, 2018

      Staying in doesn’t give us “the best of both worlds” – it ties our hands to what the EU want to setup as a protectionist regime…

      Without getting into specifics too much – Raw green coffee beans from Africa attract zero import tariff, but processed beans attract 7.5% – how does that help third world countries? It makes them more reliant on a ÂŁ12+ billion that we ship out each year…

      Professor Patrick Minford says today – No deal will cost the EU ÂŁ500 billion and benefit the UK by ÂŁ650 billion

    6. Andy
      January 14, 2018

      Do you know what a Customs Union is ??

      1. NickC
        January 15, 2018

        Andy, Do you know that EU law has primacy over UK law (Dec 27)?

  8. Rien Huizer
    January 14, 2018

    I hope you are not going to ignore the fact that the apparent trade surplus in goods between Holland and UK is entirely caused by re-eaxports. Trade between UK and Holland in goods originating from Holland or destined for Holland is basically in equilibrium and only half of the gross export figure. That is cause by the fact that the port of Rotterdam (and to a lesser extent the port of Zeebrugge), is the single most important port for originally containerized goods with UK destination (and vice versa). Shipborne imports into the UK tend to be via RoRo ships and containers are either loaded onto trailer chassis or unpacked, palletized and then loaded onto traditional trailers. The UK trailer ports (and the channel tunnel exits) have little room for customs inspection and UK container ports are largely unsuitable for large ships. So in the short term there might be a need for a UK customs inspection presence in the port of Rotterdam, or dedicating a portion of the port area to that. Flexibilty and creativity required. But no reasons for immediate concern, as the Dutch government concluded.

    Reply Yes, there is a Rotterdam effect but we are in heavy deficit anyway with the Netherlands. Have you looked at food labels recently in the supermarket.

    1. Rien Huizer
      January 14, 2018

      Unfortunately the document is in Dutch, but the Dutch statistics office published a report on UK-TN (The Netherlands) trade and that shows that in 2016 (latest year with complete, definitive and properly categorized figures) the share of re-exports and imporst specifically for export production to UK (often a guise for dropping an intracompany profit in a Dutch tax shelter structure) is more than 60% of the raw trade figure. That would put the “made in Holland” below the imports from the UK figure. It is not only the “Rotterdam effect” of course. The foodstuffs issue is complicated but however one looks at the figures, there is a relatively large dependence on the UK market (around 10% off total “made in Holland” exports to the UK in that sector). Finally, it is very difficult to understand the “services” numbers on both sides. No doubt (again given taxation issues) that sector is polluted by intra company “service fees” that can be located for tax optimisation. Some of those will end up in UK accounts and others in Dutch. Look for instance at who pays freight: the UK sub importing, say cocoa powder (90% of the world’s raw cocoa is processed in one location in Holland, oddly enough) for confectionary in the UK could buy including freift, and drop a transport fee in a Dutch sub, or pay a UK firm to transport, etc I think it is pretty difficult for any outsider (and that would include non-specialized MPs on both sides) to develop a meaningful scenario for the consequences on this trading relationship for various forms of Brexit.
      If I come across an English version of the report (app 140 pages), I will mail it to you because it is extremely detailed yet leaves open the most interesting questions.

    2. NickC
      January 14, 2018

      Rien, You are the first EU supporter I’ve seen who accepts the “Rotterdam” effect. Actually Felixstowe can handle the biggest container ships, just like Rotterdam. I suspect many of these giant ships go to Rotterdam in preference because their loads are split – some to the UK, some to France, Germany, etc. Loads destined for the UK only will tend to go to a UK port in future.

      Most EU-UK trade can utilise the TIR procedure of customs sealed trucks or containers, thereby obviating the complicated customs inspections so beloved of Andy and other Remain commenters, who never seem to have solved a practical problem in their lives.

      1. Rien Huizer
        January 14, 2018

        Many reasons why of course, but Felxstowe (owned by a Dubai fund) does not have a large capacity yet but it may become much more important in the future. But then the problem arises, how about inland transport. One of the attractions of using a “hub” (assuming it is state of the art like Singapore, HK or Rotterdam) is that it is very cheap to transfer carco to smaller ships. That requires a certain type of layout which Felixstowe (I believe) does not have. But you are right, Rotterdam is not the sloe “UK” container port. I did not claim that of course.

  9. Richard1
    January 14, 2018

    Dan Hannan says the best FTA in operation at the moment is that between Australia and NZ, which is based on mutual recognition of equivalent standards rather than an EU- style rules based harmonisation. He recommends that we shoot for such an arrangement in the long run with the EU, and that if we have to have a transition period in the interim, we use EFTA as the basis for it, in order that there is no question that we can proceed with an independent trade policy from March 29 2019. What’s your view on this?

    1. jerry
      January 14, 2018

      @Richard1; The usual muddled thinking from Mr Hannan!

      1. libertarian
        January 14, 2018

        Jerry

        Really, most of the rest of the worlds FTA’s rely to a large extent on mutual standards recognition, so why shouldn’t a future EU/UK agreement?

      2. Richard1
        January 14, 2018

        Why is that muddled? From what I know of the Australia -NZ FTA it seems a very good template. Mr Hannan is concerned about a transition period post Brexit during which the U.K. continues to be subject to existing and new eu rules, with no say over them, but no ability to strike new trade arrangements with other countries. This seems entirely logical to me – have you any arguments against it?

      3. acorn
        January 14, 2018

        Too true jerry. Hannan gets it wrong more often than Prof Minford. Both idolise the “new classical economics” faction of the Chicago School of Monetarists; the mecca of Reagan/Thatcher neo-liberalism.

        1. Rien Huizer
          January 14, 2018

          I do not see much of the Chicago school (monetarism, macro is largely irrelevant, micro-economic efficiency far more important for grotwh) in Minford’s model work. Neo-leberalism is a term used by leftist normative economists to denote people who are agnostic about state interference and in favour of factor mobility. More or less what I believe the EU is all about.

          1. acorn
            January 16, 2018

            “macro is largely irrelevant”, which planet are you from?

        2. Lifelogic
          January 14, 2018

          Minford and Hannan are basically right as events have shown in the past and will show in the future. Assuming we actually get a proper Brexit!

        3. Richard1
          January 14, 2018

          So what’s wrong with Hannans proposal?

      4. NickC
        January 14, 2018

        Jerry, Just because you have no idea of the difference between mutual recognition and harmonisation . . . . .

    2. Denis Cooper
      January 14, 2018

      Well, Daniel Hannan has never been too concerned about the virtually unrestricted freedom of movement of persons which is required by EFTA just as much as by the EU. From a year ago:

      http://johnredwoodsdiary.com/2017/01/06/things-i-do-not-like-about-the-single-market/#comment-850964

      “For a start it has to be recognised that EFTA under the 2001 Vaduz Convention is not quite the same beast that it was originally when the UK helped to set it up through the 1960 Stockholm Convention.”

      “The updated EFTA Convention, the Vaduz Convention, was signed on 21 June 2001 and entered into force on 1 June 2002 … It included several significant changes, of which the most important was the integration of the principles and rules established between the EU and the EEA EFTA States in the EEA Agreement … Important new provisions included the free movement of persons, trade in services, movement of capital and protection of intellectual property.”

      “The objectives of the Association shall be 


      
 (c) to progressively liberalise the free movement of persons 
 ”

      I don’t see how the UK government can conscientiously sign up to that when its stated policy objective is exactly the opposite, namely to reimpose restrictions on the free movement of persons.”

    3. Rien Huizer
      January 14, 2018

      And complete freedom of movement…

      1. Denis Cooper
        January 14, 2018

        Not quite.

  10. jerry
    January 14, 2018

    More to the point is why some Brexit supporters refuse to use the WTO label, calling it “a no deal exit” instead, and why do they not suggest where we will be able to find these cheaper imports whilst explaining why we can not already import them.

    Thus only those who fear WTO rules, and those who use fear of WTO rules make any headlines when it comes to what WTO rules will mean – often lying about the effects as the rant.

    1. NickC
      January 14, 2018

      Jerry, The EU tariff rules are incredibly complex; I suggest you do your own research. You also seem to have set up your own strawman – “some Brexit supporters refuse to use the WTO label”. I don’t know any Leave voter who refuses to use the WTO label, and I think I know a lot more than you do. However, the Remain Uriah Heeps certainly treat the WTO as a bogey-man in order to make our flesh creep.

  11. LenD
    January 14, 2018

    Absolutely..we can go right back to WTO rules for trading..it will be like back to the 1950’s and 1960’s. I remembet well they were great years..the rolling stones and the beatles..red double decker buses and pints of bitter with fish and chips. Of course we’ll need to resurrect a merchant navy to transport the goods to foreign parts and rearrange some of our servive industries that are still tied up too much with europe..especially the financial services..it is clear now that we are not going to get any kind of a new deal with the EU that will meet our needs..they are going to hang us out..so we might as well do our own thing..until we see a way forward

    1. Atlantic Span
      January 14, 2018

      Len D. I work in the shipping industry,and I ‘d like to point out that we would not need a merchant fleet to trade with the rest of the world given that most of the goods shipped around the world are carried in the main by 20 companies,none of which are British.https://moverdb.com/shipping-companies/ The top ten companies in this list probably account for the majority of the containers shipped. Yes it would be great to have a resurgent UK merchant service,but I can’t see it happening.

      1. LenD
        January 14, 2018

        Atlantic Span..the problem is a lot of these companies referred to like Maersk etc are owned and headquartered in EU countries..if there were to be a crisis like outbreak of war or other terrible upset..these companies would be bound to look after their own first

    2. Diogenes
      January 14, 2018

      Great years: 1966, “there’s one for you, nineteen for me” Taxman, G. Harrison.

      1. Lifelogic
        January 14, 2018

        Income tax reached a peak of 98% (83+15% investment surcharge) under the brilliant double first in Greats Denis Healey I think in 1974. When the county went cap in hand to the IMF.

        Why are some bright people so often totally lacking in any sense? And Corbyn and McDonnall would clearly be even worse.

        Mind you P Hammond even taxes you on profits and capital gains you have not even made. So more than a 100% tax rate from him.

  12. Alan
    January 14, 2018

    We have a surplus on providing services to the EU and a deficit in providing goods. The deficit on goods far outweighs the surplus on services. These facts will probably continue to be true after we leave the customs union, although doing so will probably affect goods more than services.

    I don’t know why we fail to sell more goods to the EU than we buy. Our low productivity must have something to do with it. But it bodes ill if we cannot compete on an even playing field with other countries close to us. We are likely to find that eventually we have to make our industry more productive. We will not always be able to sell to distant countries that have lower productivity than us.

    We don’t sell as many services to the EU as we ought because the single market in services is still far from complete. That will get worse as we leave the EU. We would have done better to stay and work hard to improve the single market in services.

    1. Andy
      January 14, 2018

      Very true. The bottom line is that we don’t produce much because it is expensive to produce things in the UK. If you’re a company you won’t base yourself in the UK.

      1. libertarian
        January 14, 2018

        Andy

        Do you know anything factual at all about the UK? UK Manufacturing is very robust and as a % of GDP is very similar to Germany . Thats odd because in the last 18 months we’ve experienced record inward investment .

        Your posts are great as the show up the lack of knowledge and awareness of the average Remainer

        1. Diogenes
          January 14, 2018

          Were my eyes blurred, or did I see on 06/01/2018 at 03:04pm a person having just bought a small business in the Dordogne? If not for supporting the very robust UK manufacturing with some outward investment to create a French subsidiary, it might have been for his old age, when having retired, he will make a bit of pocket money by selling cheese from his own goats’ milk.

          Or, maybe there are two libertarians on this site?
          Or as the French say “Nul n’est exempt de contradictions”

      2. NickC
        January 14, 2018

        Andy, It is no more expensive to make things in the UK, than in Germany. We don’t produce more things because making things is hard, and we’re lazy. Or possibly other reasons . . . like we’ve been in the EU whilst our industries have disappeared. By the way its also quite difficult to sell coffee in Cardiff if your shop is in Calais.

    2. jerry
      January 14, 2018

      @Alan; “I don’t know why we fail to sell more goods to the EU than we buy. “

      It might have something to do with product ownership, why would a EU27 company prefer to give work to the UK rather than their own country or at least a EU27 country. Even when assembly is UK based the productivity is governed by the supply chain that can be almost 100% EU27.

      1. libertarian
        January 14, 2018

        Jerry

        Which products are these? Please give a specific example

        1. Diogenes
          January 14, 2018

          Looking for some “white” products for your kitchen/laundry? Where will you buy from? EBAC (UK), Miele (Germany), Indesit (Italy), Electrolux (Sweden), …

    3. Original Richard
      January 14, 2018

      “We would have done better to stay and work hard to improve the single market in services.”

      It seems that a majority of those who voted to remain still believe in the myth that by remaining in the EU we can reform it. They do not like the EU as it is at present but think they can reform it.

      I think that Mr. Cameron’s and Mrs. May’s attempts at negotiating with the EU have shown that there is no chance to reform the EU and in fact since the referendum the EU has become even worse with intentions to develop an EU army and the plan for large scale immigration from the Middle East and Africa.

    4. Andy
      January 14, 2018

      The reality is the EU is a deck stacked against the UK and in favour of Germany and France – it always has been. It has proved impossible to complete the single market in Services because of Franco-German intransigence. The attitude displayed by the EU towards the UK, the ill mannered behaviour towards Mrs May personally, has underlined why we need to leave. And when we do we should prioritise Commonwealth Nations over and above EU States. I hope it costs the German car industry and French agriculture, Dutch and Spanish horticulture dear.

  13. Duncan
    January 14, 2018

    The process of leaving the EU would of course be made far easier if we had a leader who actually wanted the UK out of the EU. May’s natural instinct is one of compliance and capitulation. She has readily proven this over her many years in politics. It should come as no surprise that with this particular politician as PM the EU see an opportunity to force the UK into a corner both economically and constitutionally

    What still intrigues me even today is why Tory politicians chose a Europhile rather than a Eurosceptic as Tory leader?

    (Untruth about me removed ed)

    My problem is that I feel I am being played and manipulated. That the people of the UK are being manipulated by a political class. That what we see is carefully calibrated and coordinated to construct a perception in the minds of the people in direct contradiction with as yet an undisclosed truth with the intention to confused or at worst deceive

    And yet when we do leave the EU how will we know we have actually left? What undeniable proof will there be to corroborate such a state of affairs?

    The UK is facing threats from all sides and May as PM makes it all so much more difficult. She makes Labour look strong. She cowers when the EU confront her. She opposes the leader of our greatest ally to curry favour with the liberal left. She’s a disaster for the UK and if left to fester she will open the door for a Marxist takeover of Great Britain

    Thanks to all those MP’s in my party who voted for May as leader just to play your petty internal party politics. You may have unwillingly damaged the nation you purport to love

    1. NickC
      January 15, 2018

      Duncan, That’s not right. Mrs May was not voted in by Tory MPs, she became PM by default. However, it is true that if Tory MPs had objected sufficiently strongly (eg via the 1922 committee) then she would not be PM.

  14. Peter Miller
    January 14, 2018

    I have recently moved away from anticipating a hard Brexit, mostly as a result of France and Germany wanting to punish Britain for its temerity in voting to leave its regulation obsessed organisation.

    Now I am much more hopeful that reason will prevail as more and more EU countries show their determination to stand up to Franco-German bullying and insist Brexit negotiations result in a mutually beneficial deal.

  15. ChrisS
    January 14, 2018

    Even some people posting here continue to peddle the illusion that we should stay within the EU and reform it from the inside.

    Anyone who follows events in Brussels knows only too well that the EU is un-reformable, at least in any direction we would wish to see it go.

    The only reforms we are going to see are less freedom of action for nation states, more integration, more control from Brussels and compulsory Euro membership. Britain, with it’s opt-out from the Euro, will come under increasing pressure to give up our currency when we are the only non-member. Eventually they will contrive to use QMV in every way possible to make it impossible for us to continue outside the single currency.

    There can be no doubt whatsoever that this is the direction of travel.

    1. NickC
      January 15, 2018

      ChrisS, You are right. Especially about the Remain illusion that the EU can be “reformed”.

  16. A.Sedgwick
    January 14, 2018

    Another element that needs constantly repeating and government support is to stop importing items that can be produced here. I now look at everything I buy where it was manufactured and was horrified yesterday when buying a calendar to find some were printed in China.

    Mark B’s early post highlighting the nonsense over the Irish border, French Guiana being a precedent needs wide publicity too.

    1. Mark B
      January 14, 2018

      Thanks 🙂

  17. Epikouros
    January 14, 2018

    Being a member of the EU confers no trade advantages. As despite the EU market purportedly being free for all members it is not. The euro and Brussels imposition of its strange and unnecessary rules and regulations whether by design or by accident, I suspect the former, add a protection and advantage to some members at the expense of others. The UK I do not know whether it is out of spite or some other nefarious reason(probably because we refuse to play their unification game and to screw out of us as much as they can being one of its richest members) appears to be singled out be especially disadvantaged.

    On top of which the EU debars its members from sourcing elsewhere goods and services that can be acquired more cheaply and where are to be found readily markets to accept goods and services in return. If only members were allowed to enter into bilateral trade agreements with them which they are not.

    Good European trade practices can be found with a little research into history. The Hanseatic league is one example where from the Baltic along the northern parts of Europe city states banded together to create a prosperous free trading network. It had no central authority, like Brussels politburo, just an understanding on which if any question arose they just gathered together and sorted it out, a kind of council of ministers that met only as needed. Elizabeth I for good or ill put pay to it as she recognised how well it made the league prosperous. She closed English ports to it so as to create an English trading network for herself and so started the British expansion through out the rest of the world. The rest as they say is history.

  18. formula57
    January 14, 2018

    “If they want us to go to WTO terms we will be able to find cheaper imports from non EU sources and produce more at home.” – so if the Evil Empire actually wants a deal with us, we would be better off rejecting it to benefit from the cheaper imports from elsewhere and the boost to local industry then? The quislings will not like that!

  19. Bert Young
    January 14, 2018

    Apart from not wishing to buy anything French I never look at labels ; I buy what I consider to be good value and what I genuinely need . Things made in Germany are normally dependable , items produced in (named country ed) are not . ” Made in England” was always an indication of reliability and good design ; clothing from Lancashire and Yorkshire was the very best . As time has passed sadly labour costs forced much of what we made overseas , today there are signs that technology is winning the labour battle and bringing tings back .
    As I gaze now into the future I believe that Brexit will restore our initiative and win back markets , these markets will be “open” ones and not influenced by any of the restrictions that come from Brussels . Europe will remain an important ingredient for our goods and services but the rest of the world is out there for us to serve and supply . I believe in British determination and the under-pinning it receives from our education and training skills .

  20. Caterpillar
    January 14, 2018

    Thank you for a clear explanation of why the UK should be preparing for a clean Brexit.

    Ignoring the economics, it should be remembered that the UK voted to leave the EU, the existing CU is part of what we voted to leave. For me, the CU is one of the reasons I voted to leave, both economically and ethically.

  21. Denis Cooper
    January 14, 2018

    This morning Andrew Marr said “once we leave the EU, if we leave the EU”.

    Thanks for that t0 David Davis with his refusal to do anything to counter the flood of Remoaner propaganda, as well as the various carelessly worded statements he has made in the past, just as much as to Nigel Farage for his cretinous call for a repeat of the 2016 referendum.

    How can we believe that the government really intends that we shall leave the EU when the responsible government department refuses to defend that official policy against the constant public attacks and allows all manner of distortions and outright falsehoods to be put into circulation without any challenge?

    The only good thing in that Marr interview with Emily Thornberry was when she pointed out that we trade very well with the USA without any special trading deal.

    She could have gone on to say that in any case the trade deal with the US which has been negotiated by the EU would be of marginal economic significance, as I have repeatedly pointed out including to Theresa May herself at a public meeting when she had grossly exaggerated its potential importance.

    For example, probably most recently:

    http://johnredwoodsdiary.com/2017/11/30/no-deal-is-better-than-a-bad-deal-3/#comment-904260

    “… the resulting economic benefits are very unlikely to meet the false expectations created by the politicians promoting it. For example, David Cameron in June 2013 … “

    1. Andy
      January 14, 2018

      Eurosceptics have been spewing falsehoods for 30+ years. And that is becoming more evident everyday.

      1. Denis Cooper
        January 14, 2018

        Name one falsehood I have been spewing for 30+ years, or even 30 days.

      2. Original Richard
        January 14, 2018

        No Eurosceptic falsehood has ever matched that of the EU supporters claim that membership would never mean any loss of sovereignty.

      3. NickC
        January 14, 2018

        Andy, I was going to vote Remain, then I thought of you when I entered the voting booth. So I voted Leave just to give you something to rant about.

    2. MickN
      January 14, 2018

      Am I alone in thinking that Nigel Farage has been very clever here. With this second referendum chatter he has made it more likely that we will be offered the worst possible deal and therefore have to walk away and onto WTO.

      1. Anonymous
        January 14, 2018

        I wouldn’t bank on him playing 4D chess. It is clear that the Brexit win was not convincing enough for many.

      2. stred
        January 14, 2018

        On Nigel Farage’s show this morning someone asked what the question would be on the second referendum paper. Lord Adonis was the guest and after saying he would use his unelected position to vote for a second referendum his answer was- 1. Do you with to accept Mrs May’s deal negotiated with the EU- 2.Or Do you with to stay in the EU.

        Obviously, this is the Blair, Mandelson, Clegg, Grieve, Soubry, Miller, Soros, Lord Kerr Lord This, Lord That, the CBI, and the rest of the collaborators, plan from early days. May and 78% of the cabinet will be pleased to see David Davis offered a ridiculously offensive punishment deal that is unacceptable and the dim electorate, stuffed with more Andys and fewer older numerate practical voters, will vote to stay in and keep paying the second highest fees for the priveledge of buying more of their stuff, while still not getting a full services deal.

        They count on genuine Brexiteer Torys being too afraid to walk out of the party and say goodbye to any future appointment. No wonder the Yanks still insist on keeping their weapons when they see defenceless Brits having to accept this kind of dictatorship of the unelected and unable to do anything about it.

  22. RupertP
    January 14, 2018

    I imagine that a significant part of the reason why we have a trade deficit with the EU and a trade surplus with the rest of the world is that there is a big incentive for our imports to come from the EU (0% tarrifs by being a member of the single market) whilst imports from much of the rest of the world (USA, China etc) are subject to WTO terms and the common external tariff.

    Put another way, it is likely that we would expect to start importing more from the rest of the world and less from the EU if we traded with both the EU and the rest of the world on WTO terms. If we did free trade deals with other countries in the rest of the world and not the EU, we would probably find the situation reversed and have a deficit with the rest of the world and a surplus with the EU.

  23. Sakara Gold
    January 14, 2018

    Whichever way this turns out, we will still be importing far more than we export and the government of the day will still be spending far more than it receives in taxes. As interest rates are now rising (and the BoE has signaled that they will continue to rise) it will become progressively more expensive to service the still growing national debt.

    Financial crises appear out of nowhere, what has bothered me about Brexit for ages is the possibility of a sudden and serious run on sterling forcing the BoE to rapidly raise domestic interest rates, which would be severely disruptive to our credit based economy.

    1. NickC
      January 14, 2018

      SakaraGold, The GBP is a floating currency, so a sudden “run on sterling forcing the BoE to rapidly raise domestic interest rates” isn’t going to happen. We are not in the ERM (or Euro) now. The BoE rate will rise when the government can’t sell enough debt at the the current rate; or when inflation lights up. And that is coming here, Brexit or no Brexit. And it’s also coming to the Eurozone as well.

      1. Rien Huizer
        January 14, 2018

        Although the GBP is a floating currency (as are USD and EUR) , very large movements are undesirable and controlling these movements (somewhat) requires international cooperation. Given a high debt/GDP ratio and an overall need to import capital to balance the BOP, there is limited room for mistakes. Likewise just raising domestic interest rates would have many unpleasant consequences capable of setting of unfavorable feedback mechanisms. Hence the range of motion of the BoE is very limited and, given that they are independent, they will be as proactive as they can, with priority for financial system stability over domestic policy concerns. Unless the Exchecquer wants to play with fire.

        1. NickC
          January 15, 2018

          Rien, “controlling these movements (somewhat) requires international cooperation” – there speaks the EU mindset. And if you believe the BoE is independent (any more than the ECB), then I have a nice bridge I can sell to you . . . .

  24. NHSGP
    January 14, 2018

    The recently enforced Trade Facilitation Agreement that came into effect last spring from the WTO binds us and them to keeping border

    =============

    Bind. That word. You are walking towards the light. Being bound means you cannot increase barriers or tariffs against another WTO member without their agreement.

    UK is a member, France is a member. How is France going to do what the EU says and impose tariffs?

    It’s only if politicians like yourself are idiots and agree to it.

    So far that’s what I see going on. You are going to cave into the EU. You aren’t even going to offer the public a vote on that deal. Accept or reject the deal with the EU.

    Offer that now, and then the EU has to think hard about screwing the UK. If it tries, the public says no, and you can axe all welfare for all migrants as a starter.

    Then start charging them the full 3K a year cost of NHS insurance.

    Start charge them the full cost their dependents schooling.

    1. Denis Cooper
      January 14, 2018

      If you want to comment on that agreement maybe you should first look it up.

  25. hans chr iversen
    January 14, 2018

    let us look at the facts and figures as they stand, yes we do have a trade deficit with the EU and not with the rest of the World
    -But friendly WTO border rules are not the same as one home-market with few barriers like the EU single market and customs union
    -The majority of countries in the World trade much more with their neighbours than with the rest of the World. (The US trades as much with Mexico and Canada than with the rest of the World.
    -A bigger share of our exports now go to the EU than in 2015, 48.0 % and in 2017 48.6%
    -Our import share from the EU has also grown compared to the rest of the World in 2016 and 2017.
    -We trade more or less as much with the 27 as we trade with the rest of the World.
    -A 5% drop in trade wit the EU, would mean we would have to increase trade with China, India, Brazil and Russia by 25% to compensate for the lost trade.

    I will therefore let the facts and figures speak for themselves, when I say WTO rules are not the best solution for the UK

    1. Rien Huizer
      January 14, 2018

      Imports from places like China etc would go up if the UK started to use its own ports (rather than EU 27 ports) for imports from these areas that are now handled by EU ports. In other words, the UK surplus with the ROW would shrink and the deficit with the EU as well.

    2. NickC
      January 15, 2018

      Hans, Taking into account the Rotterdam effect (4% of exports, guessed by the ONS), the latest figures (2016; 2017 not yet available) show 61% of exports to the RoW, and 39% to the EU (latest Pink Book, Table 9.1).

      I will therefore let the facts and figures speak for themselves, when I say WTO rules are the best solution for the UK.

    3. Denis Cooper
      January 15, 2018

      But we have been trading perfectly well with the USA on basic WTO rules for a long time, Emily Thornberry has just admitted as much. The question is how much better it would be if we did have a special trade deal with the USA, and if that special deal was like the TTIP negotiated by the EU then the answer that question would be “not very much”. As I have pointed out from time to time, eg two years ago here:

      http://johnredwoodsdiary.com/2016/02/13/lets-get-rid-of-eu-austerity/#comment-801195

      The conduct of the EU since the referendum has been so poor that I increasingly feel that it is simply not worth the hassle of trying to negotiate any special trade deal with them for the sake of a marginal economic benefit.

  26. acorn
    January 14, 2018
  27. Denis Cooper
    January 14, 2018

    This is from a year ago:

    http://brexitcentral.com/must-leave-customs-union/

    “Why we must leave the Customs Union”

    While this is from 1992:

    http://www.econlib.org/library/Enc1/EuropeanEconomicCommunity.html

    “The EC’s most important achievement has been its customs union. It was completed in 1968, when each of the six members abolished tariffs and quotas on goods from the other five member countries and adopted a common external tariff on goods from the rest of the world …”

    “… most studies conclude that the European Community is a trade-creating customs union. But the benefits are surprisingly small, typically less than 1 percent of national income, or only five months’ normal economic growth.”

    Once again, overall only a marginal economic benefit, and as I do now so Eichengreen did in 1992 when he working out how many months of average economic growth it would take to match that one-off extra benefit, and the answer was five months.

  28. Peter
    January 14, 2018

    The bad news is that it’s unlikely Theresa May will deliver a clean Brexit.

    The negotiation will be dragged out as long as possible and an expensive and unreasonable fudge will be agreed. Brexit in Name Only.

    Theresa, according to recent reports, wants to remain beyond the start of Brexit now.

    ‘The table is tilted. The game is rigged.’ George Carlin.

  29. Denis Cooper
    January 14, 2018

    And now I’ve just seen the Labour MP Chuka Ummuna repeating a common but mistaken analysis that Norway, Iceland and Liechstenstein are not in the EU but they are in the EU Single Market by virtue of membership of the EEA, and so by analogy in principle the UK could also be a non-EU member of the EU Single Market … but, rather unusually, his own colleague Stephen Kinnock has got it right on that particular point:

    https://www.politicshome.com/news/europe/eu-policy-agenda/brexit/opinion/house-commons/91774/stephen-kinnock-mp-european-economic

    “The EEA is an internal market that is closely aligned to the EU’s Single Market, but membership of the EEA is emphatically not the same as membership of the Single Market.

    Important examples of the difference between the EEA and the Single Market include that the EEA excludes the EU’s common agriculture and common fisheries policies, and that the EEA is subject to the jurisdiction of the EFTA Arbitration Court rather than to the European Court of Justice.”

    Unfortunately having got that much right he then goes off the rails by suggesting that the other EEA members and the EU might allow the UK to stay in the EEA but with a right to unilaterally control the movement of persons into the UK, a delusion in my view.

    Maybe he thinks that we would only claim that right to control free movement after we had been allowed to stay in the EEA and the necessary EEA agreement changes had been agreed and ratified and come into force, but I expect that the EU and the other countries would easily see through that kind of trickery.

    1. rose
      January 15, 2018

      Fancy a Member of Parliament not noticing that Norway is not in the CFP.

  30. Denis Cooper
    January 14, 2018

    And now I’ve seen Labour’s Barry Gardiner talking absolute nonsense about maintaining the status quo during the transition period …

    Please, JR, when, if ever, is somebody in the government or even in the Tory party going to point out that this is complete twaddle, and maybe offer to send him a dictionary so that he can look up the definition of “transition”, and perhaps even come to understand that he is talking complete twaddle?

    Or is it official government policy that it is possible to have a “transition”,

    https://en.oxforddictionaries.com/definition/transition

    “The process or a period of changing from one state or condition to another.”

    when in fact nothing changes?

    1. acorn
      January 14, 2018

      Denis, I may be misunderstanding you but, a period of transition where nothing changes is perfectly legitimate. It is just as legitimate as the 14 calendar days to cancel a contract under the Consumer Contracts Regulations; nothing changes in those 14 days.

      Also, the Davis Brexit department does not rebut the remainers claims, because it has no weapons or suitable ammunition for such weapons. It has no idea what will happen post Brexit and never has.

      The “leave” campaign was a pack of lies and deceit, sold by some clever Snake Oil salesmen, with a mission to make the UK the number one global tax dodging; money laundering, capital of the World. Which is likely why the EU Commission is currently investigating all the UK’s offshore tax havens in connection with any post Brexit UK/EU relationship.

      1. Richard Taylor
        January 14, 2018

        I’m afraid you are wrong Acorn.
        Davis has consistently talked about implementation, not transition.
        It was first introduced by the PM in her Lancaster House speech and wrongly claimed by Starmer as a Labour idea.
        However, this period is in theory to start march 2019.
        It will only be needed to implement the new procedures both here and in the EU, which should be agreed in principle by the Autumn of this year.
        If that period is for example up to 2 years for the trade arrangements to be finalised, both EU and UK will need to seek approval of the WTO so it will need to be time limited and unlikely they would agree to longer.
        But it doesn’t stop other issues such as Fisheries, migration, cooperation agreements with EU agencies…being signed off and implemented earlier, or even later.
        There will undoubtedly be a phasing as it will be impracticable to conclude everything to the same timescale.

        1. acorn
          January 16, 2018

          I am fairly sure there is misunderstanding when Davis is using the words transition and phasing in WTO agreements. The majority of FTAs have built in phasing of components, some up to fifteen years; as part of the implementation of the FTA. Is this what Davis is calling a transition; or, just the time out delay of Art 50.

          You don’t need to have a transition to the start of an FTA, you build it into the FTA.

      2. Denis Cooper
        January 15, 2018

        Get yourself a dictionary, acorn, change is intrinsic to transition.

        1. acorn
          January 16, 2018

          Better is the end of a thing than its beginning, and the patient in spirit is better than the proud in spirit.

          Be not quick in your spirit to become angry, for anger lodges in the bosom of fools.

    2. BlakeS
      January 15, 2018

      Denis..you have to think about transition like being akin to a halfway house..just like when people get out of prison as part of their parole arrangement they have to attend the half way house until they get their old thinkink habits corrected.

      1. Denis Cooper
        January 15, 2018

        I’m not so keen on the transition period being a period of parole during which we could be taken back and locked up in the prison at any time…

  31. Denis Cooper
    January 14, 2018

    And a Labour MP arguing that the best thing to do with the railways would be to put train and track back together and have it all in public ownership, with a Tory MP then agreeing with her except that he would not have it in public ownership. Neither bothering to mention that unless we were prepared to set aside the solemn international commitments we have made through the EU treaties that kind of plan would have to wait until after we had left the EU, indeed the way we seem to be heading now it would still will not be permissible even when we had left the EU and the s0-called “status quo” or “standstill” transition period had ended, that is if it ever did end.

    1. rose
      January 15, 2018

      “that kind of plan would have to wait until after we had left the EU”

      The Leader of the Opposition seems to understand this.

  32. acorn
    January 14, 2018

    The Single Market Act of the EU, states four fundamental freedoms which it considers are inviolate. The free movement of goods; services; labour and capital.

    Brexiteers are only concerned with the free movement of labour. They should be much more concerned with the free movement of capital. The free movement of capital can do far more damage to the UK economy than the free movement of Labour.

    Foreign direct investment (FDI) can be a positive for emerging nations with limited resources of skilled labour, but is not necessary for advanced nations that issue their own floating; globally traded, currencies. Portfolio investment is hot money that can fly into a currency area and fly out an hour later; playing havoc with your currency exchange rate.

    Brexiteers should be thinking about introducing capital controls. The Banksters, particularly the Casino Banksters, will cry blue murder to stop it. So you know it will be good for the little people.

  33. Richard Taylor
    January 14, 2018

    John refers to the imports from the Netherlands (and Belgium can be grouped in reality).

    The ports of Rotterdam and Antwerp have become huge clearing hubs for imports to the EU. Practically every pair of branded sports footwear such as Nike, Adidas… are cleared here and then move through the EU supply chain to the consumer.
    It’s a huge logistical operation with sometimes dozens of containers coming in daily and then working their way be land around the whole of the EU.

    The Rotterdam effect, is the effect of goods losing their country of origin, as they arrive in the EU from the RoW and then assume the Country of Origin of the country that clears them through customs, thus distorting the real trade route.
    It can work the other way. Some oil for example, goes to the Netherlands for refining before onward shipment outside of the EU.

    In footwear, perhaps not the largest sector for imports, but a significant one, much of the UKs footwear comes in this way.

    Outside of the EU single market and customs union there will be some changes and they will almost certainly lead to cheaper prices and more jobs.

    1. Chinese and other C/O footwear will probably be shipped directly to the UK and cleared here.
    2. Outside of the EU the anti-dumping duties will be removed on footwear and clothing, as they are largely in place to satisfy Mediterranean and Eastern European nations.
    3. UK Importers will be more competitive in the domestic market, suffering less from some of the larger companies that operate EU wide like Deichmann, Wortmann Group and several large wholesalers that will mean nothing to most of you, but supply the supermarkets and high street retailers here in the UK.

  34. John O'Leary
    January 14, 2018

    “…should the EU wish to impose new barriers on their trade with us”

    They won’t be new barriers they will be existing barriers applicable to all third countries (in accordance with EU discrimination rules). We will be imposing them on ourselves by electing to become a third country by leaving the EEA.

    1. John O'Leary
      January 14, 2018

      That should have been “WTO non-discrimination rules”

    2. Denis Cooper
      January 15, 2018

      Contrary to the misunderstanding repeatedly promoted on a certain blog – which has now in any case given up on its original idea that we should try to join EFTA and stay in the EEA – the reality is that as far as the EU is concerned we become a third country when we leave the EU, and that could not be averted by staying in the EEA.

  35. Chris
    January 14, 2018

    If this report is true, Soubry and Grieve should have the whip withdrawn. It is disgraceful, in my view.
    https://www.express.co.uk/news/politics/904658/brexit-news-eu-uk-tory-rebels-anna-soubry-dominic-grieve-eu-mps-michel-barnier-Brussels
    BREXIT UNDER THREAT: Tory rebels and Remainer MPs head to Brussels to meet with Barnier

    LEADING Brexit rebels are heading to Brussels today to meet with the EU’s chief negotiator Michel Barnier as pressure grows on the Government to reconsider remaining in the single market and customs union. ….

  36. Ken Moore
    January 15, 2018

    This just fills me with despair. It’s clear that John Redwood’s superficial understanding of how the EU works hasn’t improved with time. Come on JR you studied Philosophy at Oxford to PHD level and this is the best you can do ?. If you churned out this garbage at Oxford you wouldn’t have got past your first year. Why have you grown so intellectually lazy and complacent ?. I have repeatedly advised you to study Richard North’s EU referendum blog but it seems you are too stubborn to admit he might just have a point.

    Few countries trade solely under WTO rules a complex web of other agreements is needed. Chemicals, airframe parts, autoparts , pharma all present an array of complex problems that can’t just be wished away. We have to face the fact that we have secured Brexit..but haven’t got the slightly idea what to do with it so are just blundering around.

    Reply I did not study philosophy at Oxford. I do understand how we trade under WTO rules, and have done so successfully in the past when leading industrial companies.

    1. Denis Cooper
      January 15, 2018

      Richard North has capitulated!

      1. ken moore
        January 16, 2018

        Nonsense..Dr North has devoted countless man hours to the study of the Eu and it’s institutions and has devised a pragmatic plan for Brexit. Compare this with the non existent plan of the vote leave campaign and the ‘back of an envelope’ stuff coming from the Conservative party.

    2. ken moore
      January 15, 2018

      Thank you for your reply.
      Apologies for my misunderstanding I note you studied History at Oxford.

      I do not doubt you have much practical experience of trading under WTO rules but it would be almost impossible for one person to have the breadth of experience needed to cover all industries from farming, aviation to chemicals etc. The level of complexity is mind boggling.

      I presume you also have knowledge of the web of treaties that have been signed by WTO members to facilitate trade with the EU. Many of these run to 100’s of pages and took years to complete. I see no reference to any of these in your articles.
      Few countries trade solely under WTO rules. Instead there is a composite of specific bilateral treaties, reinforced by some trading concessions, all working alongside multilateral agreements.

      Treaties

      http://ec.europa.eu/world/agreements/searchByType.do?id=1

      Mutual recognition agreements (MRA’s)

      http://ec.europa.eu/growth/single-market/goods/international-aspects/mutual-recognition-agreements/

      etc.

      To trade with the EU such agreements will all have to be negotiated to prevent trade grinding to a halt in key areas.

    3. Soft and Stable Brex
      January 17, 2018

      Considering his comments about the WTO Trade Facilitation Agreement here and his insistence on saying that we trade with the US, etc on solely WTO terms, despite it being blatantly untrue and pointed out to him many times, I’m skeptical he understands much about the WTO at all.

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