Negotiating trade

I am amazed at how the media still go on and on about future trade, just as Remain wishes them to do. Remain wishes to muddy the water. Most countries trade just fine with each other under WTO rules. The average world tariff under WTO rules is now very low, and considerably lower than the costs of EU membership as a proportion of our EU trade.

More importantly Remain can never answer the question what new barriers do the rest of the EU want to impose on their trade with us, given that they sell us so much more than we sell them. By what mechanism would they be able to impose new barriers? How do they get the changes through? How do 27 other countries decide new barriers? How do they impose them unilaterally without us retaliating? What barriers could they agree that are compatible with their and our membership of the WTO?


The Remain issue seems to have narrowed now to the question of passports. Most Remainians now seem to accept that Germany and the others will not wish to face a 10 % tariff on exporting their cars, so they have shifted to services. All the main banks that say they are worried about the passport have subsidiaries in other EU states, so after Brexit they can use one of their subsidiaries to route service around the EU whilst still doing much of the work in London as they do at the moment. The most popular of all the passported products, mentioned in the government publication is the UCITS  fund. Most of these are based in Luxembourg or Dublin any way so Brexit will make no difference to their domicile.

What the Remainians seem to forget is the current arrangements for our trade remain in place unless and until they are amended. It is best to amend them by mutual agreement. If the rest of the EU wishes to amend the current tariffs and non tariff barriers in an adverse direction without our agreement they need to make sure they do not infringe World Trade Organisation rules in doing so, as they are bound by them as we will be on exit. They will also need to remember that if they vary them adversely to us unilaterally then we can vary them adversely to them unilaterally, subject to WTO limits on both sides. They have rather more at risk, as the higher tariff of 10% on  cars is permissible under WTO rules, whereas most other products are limited to much lower tariffs. The UK has no wish to impose new tariffs and barriers on the rest of the EU despite being a heavy importer, and assumes the rest of the EU will come to the same view as they export so much to us.


  1. Lifelogic
    April 30, 2016

    Indeed fear not, we will certainly be far better off out. There will be a huge boost to the UK economy coming from lower tariff barriers for imports too, as well as from a cull of regulation and simply having a government that is far more nimble and democratic in reacting to situations, as Patrick Minford and many others sound economists have pointed out.

    A further boost would come from replacing Osborne with someone who abandons job destroying wage controls, ever higher taxes, ever more complex taxes, pension and landlord capital thieving, IHT ratting and his endless government waste. A chancellor who understands that lower, simpler taxes work best for everyone in the end and even raise more in tax in the end. One who understands that higher wages come from competition for staff not from damaging laws preventing the low paid from working.

    Daft laws introduced by economic illiterates like Cameron and Osborne will clearly kill some jobs and damage the economy.

    1. Hope
      April 30, 2016

      JR, Mr Gove writes a good piece in the DM today. Clear concise and worrying that the UK is paying vast sums of our taxes to help Albania join he EU. More worrying are the stats of Albanians in UK jails which cost us £18 million a year, another drain on public services. The Alabanians get here using fraudulent card ID cards from Italy or Greece because they do not need passports. Nor is there a way of checking what criminal record any of them have. I carpet all points made by Mr Gove which some of us have been raising against the torrent of lies from Cameron saying we are safer in the EU! Mr Gove states the UK veto w watered for the negotiates Cameron took part in. What veto and how w it watered down be use he never got anything of substance in return. Was this another free give away to make it harder for the UK to get out?

      Major thinks all those who want sovereignty should move to North Korea. Vile insidious little man whose Fanatism to John the ERM and be part of an EU superstate cost thousands of jobs, business to go bust and thousands of homes to be lost. He never ruled out not joining the Euro either. He is wrong that we might find democratic self government in North Korea, but even less likely in the EU! Like his protege, a traitor of the worse kind willing to give our beautiful country away to a foreign power after millions lost their lives to keep its independence as a free governing nation. Remind what was Major’s legacy to your party? A generation in opposition!

      1. Hope
        April 30, 2016

        What veto was Mr Gove referring g to that was watered down in return for nothing of substance by Cameron?

    2. Lifelogic
      April 30, 2016

      I see that the British Infrastructure Group (of MPs and peers) has warned that motorists stuck in traffic jams are losing money on wasted fuel because “poorly designed” junctions contribute to congestion.

      Have they only just worked this out? This road blocking has been going on for over twenty years?

      Empty bus/bike lanes, huge islands, “environmental” areas and nearly empty buses, stopping every few hundred yards, cannot help much either. But is it not “poor design” these junctions were deliberately designed in order to congest the cars and trucks that over pay for all the roads. That is the government and LEA policy. It cost the country a fortune in fuel, extra pollution and wasted time, mugs motorists and renders industry uncompetitive. The disruption for the idiotic HS2 project (for many years to come) will make things even worse.

      They even built bus stops built out into the roads (rather than lay-bys) so the bus blocks the road at every stop or bus lanes that forced the cars to queue behind one right turning car for several minutes or get mugged for £80.

      Reply I have been lobbying for more roundabouts and fewer traffic lights for some time.

      1. Lifelogic
        April 30, 2016

        Indeed and as usual you are quite right. But it has made little difference. The green crap, lets block the roads and “bikes trains, buses, walking” is good and “cars, planes & trucks” are bad continues regardless. As does the motorist muggings to pay for all this lunacy. We cannot even have a decent hub airport it seems thank to Cameron’s foolish choice of eco-nut London Mayoral candidate.

    3. Lifelogic
      April 30, 2016

      Osborne presides over low productivity, virtually no real wages increases, massively increased taxes, mass low paid (net liability) migration, a record peace time trade deficit, a huge and still increasing massively public debt, an NHS that is dysfunctional, rationed, over loaded and deteriorating by the day.

      While nearly all the “public services” deliver little of any real value at all to the public. The roads have huge under capacity yet he seems he want Swansea Lagoons, HS2 and the absurdly expensive Hinckley Point C.

      Is there anything he has actually got right on the economy?

      1. Hope
        April 30, 2016

        He was going to give us 80 percent spending cuts and 20 percent tax increases. Unfortunately he hit this the wrong way around! He was going to stop child benefit being sent to children in EU countries who never set a foot in this country, instead he stopped chil benefit to British citizens! Students put in a life time of debt, EU students given free tuition at some of our best universities, free education to our EU competitors! Supports the EU Climate Change Act to put ordinary people into fuel poverty and causing industry to shut losing thousands of jobs! EU competition rules preventing govt help to people in Port Talbot. EU helped Chinese steel companies with our taxes! US imposes over 200 percent tariff on Chinese steel, but Obana says the UK is better in the EU!

        1. Lifelogic
          May 2, 2016

          Indeed all that too.

    4. getahead
      April 30, 2016

      Well put Lifelogic.

  2. DaveM
    April 30, 2016

    The remainers seem to have switched to describing how long it will now take to negotiate trade deals. Personally I don’t care if it takes 100 years if it means leaving.

    Meanwhile the EUBC has the abolition of roaming charges on its website accompanied by a picture of someone on a beach. I travel all over Europe regularly and therefore am aware that by paying a couple of quid before you leave enables you to use your home tariff anyway.

    The TV debate is – rightly or wrongly – going to be crucial in this referendum. The Leave speakers will need every single answer at their fingertips. I hope you are available to brief them Mr Redwood!

    1. Hope
      April 30, 2016

      The EU is nothing about trade as w learned 49 years ago when the Tiry party conned the public. It is about creating a superstate to stop France and Germany going to war. Read Gove’s article today it is very good, apart from the nonsense claim a negotiation took place.

    2. Leslie Singleton
      April 30, 2016

      Dear DaveM–The main answer to have ready, when we are told as we always are that half our exports go to the EU, is that three quarters of Canada’s go to the USA without the slightest need or desire for anything resembling political union– very far from it in fact. I always wonder what Remainers think about this. And when I say think I mean think because they never say.

    3. Anonymous
      April 30, 2016

      Project Fear needs to be challenged with Project (Worry? ed):

      Albania, Macedonia, Turkey, Montenegro, Serbia join the EU by 2020.

      We Brits are going to have to work extremely hard to counter the negative effects on our economy if we Remain – but the BBC don’t mention it.

      5% of UK prisoners are Albanian already and they aren’t even a member state yet.

      It doesn’t matter how many jobs you create or how many houses you build or how much you tackle welfare if there are 88 million people able to take them.

  3. stred
    April 30, 2016

    Many voters may think that if the Remaniacs do not win, then Eural or someone like the revered John Major will be in charge of negotiations and they will get amother offer like the cast iron 4 year reducing offer brought back this time. They can’t imagine the real Conservatives getting rid of such drips and sending someone with ability in to bat. First question to Herr Junker- Would you like to ask BMW, Mercedes, VW, Axa, Danone, Philips and the French and Dutch farmers what tariff levels they would like. We suggest WTO in 2 years time. Dont ring us, we’ll ring you.
    And would it be possible to open some British insurance and bank offices in Luxembourg, as a few may not be tax dodging in the EU already.

  4. Antisthenes
    April 30, 2016

    The EU is no longer about trade it has not been for a long time now. Other mechanisms and means have overtaken the EU approach which can facilitate trade between individual and groups of states without the cost associated with the EU way of trading.

    The raison d’etre of the original EU that of stopping Germany and France going to war against each other no longer applies. In fact the very thing that drove the making of the EU is actually accomplishing for Germany in peace what it could not do in war. German hegemony is well on it’s way to becoming a fact.

  5. Original Richard
    April 30, 2016

    If our current trade deal with the EU through EU membership leads to a trade deficit of £60bn/year or more then perhaps trading with the EU using WTO rules upon leaving may well be beneficial to us.

  6. David
    April 30, 2016

    The WTO is but one global organisation that makes the EU utterly pointless. Each country already has two layers of government: national sovereignty and global governance. As a political and economic regime, the EU is like all middle management everywhere – any unnecessary layer of bureaucracy.

  7. formula57
    April 30, 2016

    Concerning reliance on WTO arrangements, Professsor Chris Grey says on the LSE Europp blog that: –

    “As for WTO most-favoured-nation status, its rules would mean that the UK’s trade with the EU would face tariffs on 90% of exports by value, including tariffs of, for example, 32% on wine imports and 9.8% on car imports. The MFN format does not mean free trade, which is why countries create FTAs rather than simply trading within the generic WTO framework.”

    Professor Grey also makes the point that international trade deals “are increasingly based not upon bilateral agreements between countries …. but upon regional platforms and blocs such as the EU” and that those “relate not simply to free trade but to what are ineluctably political agreements about such things as labour rights, state ownership of industry and environmental standards”. Accordingly, a country only interested in FTAs might find itself disadvantaged by not offering what other want.

    (See )

    Concerning ” what new barriers do the rest of the EU want to impose on their trade with us” those might arise less from newly devised restrictions and more in material ways from exiting a common market to rely thereafter on the much narrower terms of free trade agreements. As the European Citizen blog explains in discussing free trade areas: –

    “A common market is much more than a FTA because it not only deals with tariffs and import quotas, but also deals with the free movement of goods, services, establishment (freedom to set up businesses throughout the common market), capital and people. This requires some restrictions on the law-making of member states (they can’t legislate for import quotas, discriminate against goods from outside the country with different tax rates, etc.), and requires common law making so goods, etc., can move freely without being blocked by different technical standards. This common law making and standards means that there would need to be a common court and law-making institutions in any case. That’s why the EU needs to have institutions, but NAFTA doesn’t.”

    (See )

    Clearly, the free movement of goods is one example where modern production techniques of the like that see Airbus aircraft wings made in the UK and then sent to France for fitting are facilitated by a common or single market.

    I do not share the views of those who suggest the UK post Brexit would find it difficult and face long delays in arranging a new trade deal with the EU but clearly there seem to arise a number of risks and disadvantages that properly cannot be lightly dismissed.

    Reply The average WTO tariff is around 2%! UK exports overall would attract lower tariffs than we pay at the moment when coupled with our contributions to the EU. Wine and cars are high tariffs relative to most under WTO rules and those are the two France and Germany certainly don’t want to impose!

    April 30, 2016

    I believe there is an EU law or directive, though I may stand corrected, which allows an employee to demand that his salary be paid in Euro.

    Remainian MPs should lead their flock and ensure their salaries,pension contributions and funds be in Euro. Putting money where their collective mouth is. For humanitarian reasons, it may be good of us to ask them to consult a financial advisor outside their usual orbit of nincompoops and those with large conical paper hats with the logo “D” on it.

    Many MPs are too young to have witnessed the labour-progressive teaching methods of yesteryear so perhaps the D-hat does not have any negative connotation for them. Therefore they may wear their dunce cap with pride or in the case of Corbynitistas, flat floppy cap and bicycle trouser clips with pride.

    1. Denis Cooper
      April 30, 2016

      I also stand to be corrected but I think that will only apply where the euro is legal tender, and probably also the only legal tender – which it certainly is in the eurozone, by Article 128(1) TFEU in the EU treaties. But the UK is exempted from Article 128 among others, and has neither adopted the euro nor made it legal tender. There may be other EU countries which have not yet adopted the euro but have passed a domestic law to give it legal tender status alongside the national currency, and then I suppose it could get complicated. There is of course nothing to stop an employee asking to be paid in euros and the employer agreeing to do so.

  9. oldtimer
    April 30, 2016

    Non tariff barriers will be used where possible, but I suspect many of these are already in place throughout the EU. Previously I posted about rules on the ownership of pharmacies in Germany. These effectively preclude the establishment of large chains, like Boots here in the UK, and thus protect the interests of small owners. It is an isolated but, I think, telling example of what can be and is done.

    That said, I agree that the arguments of the Remain campaign are overblown and even, as Soubry’s comments early in the campaign about the end of trade, absurd.

    1. Lifelogic
      April 30, 2016

      Almost everything that “finger up the bottom and rather likes it” and “I want a serious debate” Anna Soubry says is absurd, vulgar, a blatant lie, pathetic or all four. Her main talent is to talk rubbish through anyone who is trying to make any sensible points on Question Time and the likes.

    April 30, 2016

    Many Remainians in the Labour Party associate “trade negotiations” with trades union pay negotiations and BMA Inert-Cognition-Syndrome ; hence, they cannot imagine intelligent negotiations, or indeed imagine.

  11. Bert Young
    April 30, 2016

    The “trade” topic in the campaign is nothing more than a red herring . If you manufacture something or provide a service that someone else wants and it is available at a competitive price , someone will want to buy it . Trade initiatives and barriers do nothing more than create obstacles that , one way or another , are overcome .

    This country is very well placed to offer the world a whole range of products and services ; it has done so for centuries and it has built a successful international financing system to back these initiatives up . I experienced this in the period of the 60’s to the late 80’s building a professional management support service throughout Europe the USA and Japan . Of course there were obstacles of one sort or another from time to time , but it was always possible to navigate through them and build a profitable and successful outcome . The only constant and annoying feature to me was the interference of EU bureaucracy to the operations in Belgium , Germany and France ; without them the functions serviced would have been more efficient and viable .

    We have nothing but to gain from ridding ourselves from interference ; the entrepreneurial background and spirit that exists in this country can benefit substantially when the drags are removed .

  12. ian wragg
    April 30, 2016

    John, on other blogs we are constantly being asked what will Brexit look like which you so succinctly address.
    No one asks the Remainiacs what the UK will look like in say 5 years after staying in.
    It must be emphasised that we are not voting on the status quo but joining an unknown future as a tiny island off mainland Europe. One which much of Europe would love to see marginalised.
    It looks like the LSE will be going to Frankfurt regardless of what they say. is it a deliberate ploy to keep us beholden to Brussels.

  13. Kenneth
    April 30, 2016

    Personally I cannot see there being a trade war with the continent as unemployment rate on the continent would rise considerably.

    However, should the threats become reality, the very high volume of products we import from the continent must surely give us a powerful weapon that can be used to protect our services?

    If, in the unlikely event, the eu nations try to constrain our services trade then could we retaliate through products tariffs?

  14. Anonymous
    April 30, 2016

    Headline news BBC this morning “Roaming charges throughout the EU on mobile phones to be slashed owing to Government deal. Officials don’t know if they’ll stand if we vote to leave.”

    That’s to get the youngsters out voting, I guess.

    1. Anonymous
      April 30, 2016

      By 2020 phone users will be able to call cheaply from Albania, Montenegro, Macedonia, Serbia and Turkey.

      The accession of these poverty stricken states into the already enlarged EU is the real Project Fear. And it’s on the side of Leave.

      It doesn’t matter if our economy does well in the EU. In fact the better it does the worse things are going to get for us. If we are to equalise our standard of living and opportunities with these peoples – as seems the aim of the EU – then we have a long way to fall.

    2. Original Richard
      April 30, 2016

      Tell those people who consider that reduced mobile ‘phone roaming charges in the EU are more important than sovereignty and democracy that when we leave the EU they can have duty free again each time they travel to and from any European country.

      By the way, are these reduced mobile ‘phone charges reduced also for non-EU countries such as Norway, Switzerland and Liechtenstein ?

  15. Elsey
    April 30, 2016

    The world would be a better place if governments kept their nose out of other peoples business. Why do we need bureaucrats to negotiate trade? Business is perfectly capable of doing it’s own negotiating. Just look what happens when government backs off even slightly.

  16. Denis Cooper
    April 30, 2016

    As an aside, there’s a letter from somebody in the Telegraph today saying that his wife is determined to vote to stay in the EU because their son has been living in Paris for five years and she fears that his residency status would be put at risk if we left the EU.

    The government knows full well that we would not be expelling the well-behaved citizens of other EU countries who are already settled here, and there would be no good reason for the governments of those other countries to start expelling our citizens.

    It could only be stupidity and spite, and having thus depicted the leaders of “our European partners” as stupid and spiteful why do the Remainders still think that they should have a large hand in the government of our country?

    The way our government is fighting this referendum campaign is a disgrace, one affront after another to the democracy they hypocritically claim to uphold. They have shown themselves to be unfit for office, and can only rely on the opposition being worse.

  17. Yosarion
    April 30, 2016

    we here time and time again about how wonderful the BBC is at making TV programs and selling them worldwide, I wonder how they sell these products into the US and the rest of the World before the EUSSR

  18. Denis Cooper
    April 30, 2016

    “Most countries trade just fine with each other under WTO rules.”

    But not just under WTO rules, according to Richard North:

    “Minford, however, is mistaken in assuming that the bulk of our trade is conducted under WTO rules. He makes the common error of believing in a non-existent binary structure for world trade. This is one in which international trade is regulated either via the mechanism of the preferential trade agreement (also known as the free trade agreement) or solely under WTO rules. In his book, there is nothing in between.

    The truth is very different, as we point out in an earlier post: there are all manner of trade agreements, bilateral, plurilateral and multilateral, lying outside the WTO framework. These create complex networks of trade relations. So prevalent and important are these, it can be said that there is not a single advanced economy in the world that relies exclusively on WTO rules.”

    And the practical consequence of that much more complex situation would be:

    “Should we simply “walk away” from the EU, as he proposes, a range of non-tariff barriers – both regulatory and procedural – would take immediate effect. These would bring UK exports to the EU almost to a complete halt. By any measure, the WTO option would be a disaster.”

    My reaction being that according to the IMF it would be a disaster not just for the UK, or just for the UK and the rest of the EU, but for the whole world, and “That is why it would not be allowed to happen, not unless world leaders are complete idiots.”

    However while it would not be allowed to happen it would require some action to prevent it happening, which means ensuring that all those present trade agreements continue until such time as they can be gradually replaced by new agreements.

    As I have said before, like Dora the Explorer we need a map to give us a route from where we are to where we want to get, and we will have to negotiate the various obstacles.

    Reply This simply will not happen! The current rules remain in place until someone changes them.

    1. Denis Cooper
      April 30, 2016

      As I understand if we are a party to a current agreement in our sovereign right then it will continue to operate provided that all the other parties are content for that to be the case. I guess that it will always need everybody’s consent to be formalised in writing, maybe just by an exchange of letters or maybe by more than that, perhaps a formal protocol agreed and ratified by all parties and added to the agreement.

      However if the EU is a party to a current agreement and we are not a separate party in our own right, and therefore the agreement only applies to us because we are in the EU, then that will be a different matter.

    2. Original Richard
      April 30, 2016

      Do not the trade rules we have with the EU continue as they are now for 2 years after requesting to leave the EU (Lisbon Treaty Article 50) ?

      1. Denis Cooper
        May 1, 2016

        Yes, or less than two years if negotiations are completed more quickly, or more than two years if all parties agree to extend that period.

  19. Tad Davison
    April 30, 2016

    Well said! If only everyone had your acumen and powers of persuasion. I’m going to forward a link to this post to the BBC so they can’t say they overlooked it.

    Boy am I going to have some fun with any ‘IN’ campaigner who is silly enough to call at my door to try to canvass my support! I imagine they’ll either draw straws to see who gets the short one, or miss me out altogether, which is a pity as they might just learn something.

    Tad Davison


  20. Tad Davison
    April 30, 2016

    I see that BBC News are going big this morning on the EU’s plans to reduce roaming charges for mobile phones used within the European Uni0n. They will eventually be scrapped altogether.

    I suspect it is their aim to paint a rosy picture of the EU and all the superfluous goodies it can offer, whilst deflecting attention away from the other things that are wasteful and a hindrance upon business.

    It is little gestures such as the reduction and abolition of roaming charges that influences the decisions of those shallow people who cannot be bothered to take a deeper interest in the EU debate. I think therefore we need to match the EUs proposals and shoot their fox.

    Tad Davison


    1. Lifelogic
      April 30, 2016

      Indeed, that is certainly the BBC agenda they are being absurdly biases as one would expect of all the over paid, Libdim, fake green, lefty, Guardian reading, magic money tree, art graduates employed at the BBC

  21. Denis Cooper
    April 30, 2016

    I see the EU is trying to claim credit for cuts in mobile phone roaming charges:

    when as Richard North has explained in detail:

    the initiative for this came from international bodies outside the EU, not from the EU which actually dragged its feet and had to be pushed into action.

    In 2013, effectively it was all over, with the OECD invoking WTO provisions, stating that “international mobile roaming services are believed to fall under the scope of these provisions” and “more clearly so under section 5 a) of the Annex on Telecommunications”.

    “EU or no, the writing was on the wall. We saw in 2013, India committing to removing roaming charges. African countries followed, alongside Latin America. ASEAN members are set to do likewise. In the United States and the Caribbean, things are also moving in the right direction.

    As for the EU, it has been slow to the point of hesitant, its actions marked down as unambitious. Its claim to be looking after consumer interests is hollow, representing nothing more than them taking credit for an unstoppable movement that was going to happen anyway.”

  22. alexmews
    April 30, 2016

    Thx John. As i am not “in the City” i dont know the degree to which Brexit will impact that important tax-generating sector. More detail on this would be good. I know that broadly that sector, publically, is for Remain and – to the extent the FT represents them (arguable) hysterically so. Martin vdW had a good piece in the Spectator yesterday speaking about macro changes going on in investment Banking generally which i found interesting.

    I am not one to throw stones – but there are some pretty horrific typos in your piece! Perhaps a quick edit. Londin!

  23. Ian Wragg
    April 30, 2016

    Today in our small market town Leave EU and G.O. have a stall attracting plenty of attention .
    Where is the official leave organisation which has £7million of taxpayers money.

  24. Sean
    April 30, 2016

    I in the leave campaign, but I really think we we lose the fight to the stupid.

  25. fedupsoutherner
    April 30, 2016

    John, can you tell us if the situation with Russia and Ukraine would get worse if we came out of the EU please? This is all I hear now. People saying that Russia wants us to come out as it will be to their advantage. Also, are we more likely to lose the financial services in London to Germany if we come out?

    A Brief explanation would be appreciated.

    Reply If we leave we will get our veto back over City regulation for domestic and non EU business which will help the City considerably.
    Our response to Russia is through NATO where we will remain as a prominent member.

  26. BOF
    April 30, 2016

    To digress slightly from today’s diary, I would just like to comment that I hope that a friend of John Major’s, if he has one, will quietly tell him that in the UK we have a democratically elected sovereign parliament (when we vote leave) and North Korea has a sovereign military dictatorship. There is a subtle difference.

  27. Lindsay McDougall
    May 3, 2016

    Will somebody please answer questions I have asked several times:

    (1) What services does the EU Single Market purport to cover?
    (2) What proportion of existing EU service exports to EU-27 countries has come about through ordinary market forces that have nothing to do with Single Market rules?
    (3) What is involved in ‘completing the Single Market’ in services? The alleged boost that this will give to UK exports of services to the EU is the PRINCIPAL basis for the high cost of Brexit that the Chancellor is alleging.

    As I understand it, the UK has been pressing Brussels for this ever since the Maastricht Treaty became law on 1st January 1993 and has got absolutely nowhere.

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