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Brexit Phase Two - Trade

Wordsmith

LE
Book Reviewer
The EU draft budget redirects billions of euro to southern Europe - Finance Apprise

The details of the reform are still being clarified, but according to diplomats and officials, the expectations are the result of redeployment from Poland, the Czech Republic and the Baltic countries to southern countries such as Italy, Greece and Spain and even to some regions of France.
Several things are noticeable from this.
  • Poland and Hungary - already unhappy with the EU - will be unhappier still if their structural funding is cut. They'll make noises about leaving to pressure the European Commission. And Vald will go fishing in troubled waters by offering a very good trade deal - which Poland and Hungary will be unable to accept under EU rules.
  • Money is being transferred from some of the poorest nations in the EU to some of the richer ones.
  • By an amazing coincidence the money is being transferred to eurozone countries most liable to collapse when the recession comes along - 'Italy, Greece and Spain and even to some regions of France'.
The money being transferred will be a couple of orders of magnitude short of what's required to stop a eurozone collapse and will also stoke up tensions within the EU. I can understand why their're doing this - because meaningful reform of the EU/eurozone is politically impossible. But it'll have f-all effect when the next recession rolls along. And in the meantime, Eastern Europe will be royally fornicated off by the loss of funding.

Wordsmith
 
The EU draft budget redirects billions of euro to southern Europe - Finance Apprise

The details of the reform are still being clarified, but according to diplomats and officials, the expectations are the result of redeployment from Poland, the Czech Republic and the Baltic countries to southern countries such as Italy, Greece and Spain and even to some regions of France.

Panic in the EU...

Taking money from the more Euroseptic eastern EU states to give to the EU 'Old Guard'… what could possibly go wrong wth that plan!
 

Wordsmith

LE
Book Reviewer
Taking money from the more Euroseptic eastern EU states to give to the EU 'Old Guard'… what could possibly go wrong wth that plan!
If the European Commission really wants to sort out the deep seated structural problems in the EU, it could tell Germany to cut its excessive budget surplus and fine it (under existing powers) if it didn't. It could also tell France to get its budget deficit down from 100% of GDP to 60% of GDP - again using its powers to fine France it it didn't.

The silence thus far on both issues - which both pose a threat to the long term stability of the EU - has been deafening.

Wordsmith
 
The EU draft budget redirects billions of euro to southern Europe - Finance Apprise

The European Commission (EC) also plans to introduce changes to the conditions for applying for funding, including compliance with the rule of law, and there will also be more restrictions on how to use European money

The details of the reform are still being clarified, but according to diplomats and officials, the expectations are the result of redeployment from Poland, the Czech Republic and the Baltic countries to southern countries such as Italy, Greece and Spain and even to some regions of France.

One of the reasons for decreasing the fund will be also filling the funding gaps that will open after Brexit. In the words of EU budget commissioner Gunther Oettinger, “it is necessary” to cut 5% to 10%.

Panic in the EU...
If the EU is panicking, why has it shown a united front the whole way wrt to negotiating with the UK?

Are you expecting individual MS to break cover over the summer and autumn to cut the UK a better deal?

We have seen no evidence of this and whilst I might be wrong, I think that you are advancing the same tired arguments about the EU needing the UK more than we need it, our biggest trading partners that have been proven to be false since the referendum.

You appear to be stuck in 2016 matey
 
There’s already one in the house, never felt the need for two.
Congratulations on yours. Your mum must be thrilled.
an MBA is always a red rag to those who don't have one.... you neatly illustrate the problem.

Good MBAs (top 20 in the world) are still valuable, but these days everyone has one off the back of a cornflakes packet.

But FWIW my postgrad in Economics was a lot harder, and my MSc in International Business more interesting. I don't think my mother was thrilled about any of it, and she didn't like the years and years of negations in developing nations.
 
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Baglock:

Follow this train of thought:

1. The EU is not the biggest exporting trading partner for the UK (the sale of UK made goods and services to external countries). The “Rest of World” is a bigger trading partner, by a considerable percentage.


2. The EU is the biggest importing trading partner for the UK (the sale of EU made goods into the UK). This is because of punitive tariffs, duties and trade restrictions imposed by the EU on its member states. The UK cannot buy from outside of the EU without its citizens paying money to the EU to prop up its inefficient production.


3. The UK is one of three nations who are net contributors to the EU. Other than Germany and France, the other EU nations suck at the EU teats, consuming money from UK citizens.



Those three facts scream two words – Exit or Reform. The EU is showing no sign of reforming so its Brexit.



Now follow this:

Current UK situation: The UK is currently contributing more than it is receiving (lose) for the privilege of importing more from the EU than it exports to the EU (lose) and paying more for non EU imports than it should (lose).

Lose, Lose, lose.



Current EU situation: The EU is receiving financial contributions from a member state (win) which is a net loser in trade balance with the EU (win), and is paying duties to the EU for trade outside of the EU (win).

Win, Win, Win.



It is obvious to a reasonable observer that this isn’t a fair and balanced arrangement


Future UK State post Brexit:

· Removal of net contributions to the EU will improve the financial situation. (Win)
· Removal of free access to UK markets from EU nations will improve the financial situation. (Win)
· Removal of trade restrictions to external nations will allow access to cheaper goods and services (both ways) improving the financial situation. (Win – both cheaper imports and better access to markets)

Win, Win. Win.



Future EU State post Brexit:

· Removal of net contributions from the UK will cause a budgetary shortfall and must lead to reduced programs and services and to either extra contributions from net contributor nations, or increase in the number of net contributor nations.(loss)
· Removal of free access to UK markets from EU nations will have a negative impact on the trading positions of many EU nations. (loss)

Loss, Loss

And it’s a compounding loss. Nations with substantially reduced trade balances will find themselves contributing more, or for the first time, to the EU budget.

I am not seeing a problem with a hard Brexit based on the above.

Happy to support the above with references if required.
 
If the EU is panicking, why has it shown a united front the whole way wrt to negotiating with the UK?

Are you expecting individual MS to break cover over the summer and autumn to cut the UK a better deal?

We have seen no evidence of this and whilst I might be wrong, I think that you are advancing the same tired arguments about the EU needing the UK more than we need it, our biggest trading partners that have been proven to be false since the referendum.

You appear to be stuck in 2016 matey
Under the dictatorial rule of the EU they have to show a united front.
 
Baglock:

Follow this train of thought:

1. The EU is not the biggest exporting trading partner for the UK (the sale of UK made goods and services to external countries). The “Rest of World” is a bigger trading partner, by a considerable percentage.


2. The EU is the biggest importing trading partner for the UK (the sale of EU made goods into the UK). This is because of punitive tariffs, duties and trade restrictions imposed by the EU on its member states. The UK cannot buy from outside of the EU without its citizens paying money to the EU to prop up its inefficient production.


3. The UK is one of three nations who are net contributors to the EU. Other than Germany and France, the other EU nations suck at the EU teats, consuming money from UK citizens.



Those three facts scream two words – Exit or Reform. The EU is showing no sign of reforming so its Brexit.



Now follow this:

Current UK situation: The UK is currently contributing more than it is receiving (lose) for the privilege of importing more from the EU than it exports to the EU (lose) and paying more for non EU imports than it should (lose).

Lose, Lose, lose.



Current EU situation: The EU is receiving financial contributions from a member state (win) which is a net loser in trade balance with the EU (win), and is paying duties to the EU for trade outside of the EU (win).

Win, Win, Win.



It is obvious to a reasonable observer that this isn’t a fair and balanced arrangement


Future UK State post Brexit:

· Removal of net contributions to the EU will improve the financial situation. (Win)
· Removal of free access to UK markets from EU nations will improve the financial situation. (Win)
· Removal of trade restrictions to external nations will allow access to cheaper goods and services (both ways) improving the financial situation. (Win – both cheaper imports and better access to markets)

Win, Win. Win.



Future EU State post Brexit:

· Removal of net contributions from the UK will cause a budgetary shortfall and must lead to reduced programs and services and to either extra contributions from net contributor nations, or increase in the number of net contributor nations.(loss)
· Removal of free access to UK markets from EU nations will have a negative impact on the trading positions of many EU nations. (loss)

Loss, Loss

And it’s a compounding loss. Nations with substantially reduced trade balances will find themselves contributing more, or for the first time, to the EU budget.

I am not seeing a problem with a hard Brexit based on the above.

Happy to support the above with references if required.
I don't know where to begin.

1. Firstly the rest of the world is further afield. Try reading up on Gravity model of trade - Wikipedia in short it's insanity to make trade more onerous with the trading bloc on our doorstep. Every study, including the UK governments own predicts that trade with the RoW will not plug the gap in the frictions imposed by leaving the EU

2. I'm in no rush for a race to the bottom.


3. I've already pointed out to you that the UK is already losing as much money in lost GDP due to brexit uncertainty. The'savings' are a mirage. We paid money to enjoy the benefits of a club that stimulates the UK economy. We are saving nothing.

Even under WTO rules we lose. Don't believe me, listen to a former WTO chief. It's not a magic bullet. It's another lie sold by demagogues to the gullible.

What Would A No-Deal Brexit Would Look Like? We Asked A Former WTO Chief - LBC

These points have been addressed endlessly throughout the brexit threads, so I'll disengage with you, unless you have anything different to say, or more in date than 2016, or related to current events.

I repeat, there is zero sign that the EU MS are going to cave in to the demands of an embarrassing, petulant and insulting UK government

Besides which, if you want to see what the result of a hard brexit will be to just one area, check out the brexit aviation thread. In short disaster. No flights, or signing up as a rule taker with the FAA as a possible backstop.

Good day to you
 

Wordsmith

LE
Book Reviewer
Follow this train of thought:

[Snipped for Brevity]

I am not seeing a problem with a hard Brexit based on the above.
As I've asked on a number of occasions before "what advantages can the EU give us over and above those we had/have as a sovereign nation"?

Had the Common Market - the organisation we joined - remained purely a free trade area, there would have been huge advantages to being a member. Instead the Common Market mutated into the EU - which in turn shows signs of mutating into a European Superstate.

You have to do an analysis of the benefits and costs of belonging to the EU. The original benefit - a large free trade area has gradually mutated into a protectionist one. There has been a gradual erosion of national sovereignty, with an increasing number of decisions taking place in Brussels (by QMV) rather than at Westminster. And the eurozone is an accident waiting to happen when the next recession comes along - hence the plans to transfer structural funding from the poorer nations of the EU to the wealthier eurozone nations most at risk of collapse.

Hence, the benefits we get from the EU are far outweighed by other factors. As such, I suspect history will judge Brexit as very fortunately timed. We'll be out of the EU before the bulk of the s**t hits the fan.

Wordsmith
 
I don't know where to begin.

1. Firstly the rest of the world is further afield. Try reading up on Gravity model of trade - Wikipedia in short it's insanity to make trade more onerous with the trading bloc on our doorstep. Every study, including the UK governments own predicts that trade with the RoW will not plug the gap in the frictions imposed by leaving the EU
Gravity model of trade:

An economic theory postulated in the 1950s, when each nation ran its own little inefficient merchant navy, before shipping containers and RORO, when men humped bags of produce into nets inside holds - FFS there were steam reciprocating engined ships plying trade then, and tramp steamers chugging around the port of London.

In the late 80s I was in Tokyo, talking to the Japanese steel industry. That year U.S. steelworkers earned $22.63 an hour vs. $18.52 in Japan. US steel manufacturers had embarked on a wholesale payroll-cutting campaign in which 60% of the industry's 428,000 workers lost their jobs. In 1984 the Reagan Administration had negotiated voluntary restraint agreements, which limited imports to about 20% of the 100 million tons sold annually in the U.S.

I asked the Japanese how they could buy steaming coal and iron ore from Australia, ship it to Japan, refine it into steel, then ship it to the USA for less then the Americans could make it locally, from local steel and local iron ore. They laughed. Shipping was cheap. Labour was expensive, it was far cheaper to import produce by ship, convert it and ship it, than make it locally with inefficient plant and expensive labour.

In the early 90s I had an economic lecturer spouting about the Gravity model of Trade. I told him about my conversation in Tokyo, and he quickly changed the subject.

Shipping is a minor cost, and we are in a global village. The Gravity model of Trade belongs where it started, in the 1950s.
 
Even under WTO rules we lose. Don't believe me, listen to a former WTO chief. It's not a magic bullet. It's another lie sold by demagogues to the gullible.

What Would A No-Deal Brexit Would Look Like? We Asked A Former WTO Chief - LBC
Pacal Lamy is a French Political consultant, and a former EU Trade Commissioner - the member of the European Commission responsible for the European Union's (EU) common commercial policy.

I REALLY wouldn't go quoting him on his opinions on Brexit. Its like asking Himmler what he thought of the Nazi party,
 
Gravity model of trade:
Shipping is a minor cost, and we are in a global village. The Gravity model of Trade belongs where it started, in the 1950s.

It costs more to ship an item the last 10 miles by road from the dock gate, than it costs to ship it 14,000 miles by Container Ship, and as the boats get bigger, unit costs drop so low its no longer a manufacturing cost factor.
Its now not unusual for the parts of a car to have travelled 25,000 miles or more by sea before they mate up into a finished car.
 
It costs more to ship an item the last 10 miles by road from the dock gate, than it costs to ship it 14,000 miles by Container Ship, and as the boats get bigger, unit costs drop so low its no longer a manufacturing cost factor.
Its now not unusual for the parts of a car to have travelled 25,000 miles or more by sea before they mate up into a finished car.
Its another example of outdated last millennium trading logic. What next? " The trade winds might not be right as the tea clippers go past Cape Horn so we had better stay in the EU"?

What utter balderdash. You couldn't make it up, its like a comedy show. My conversation in Tokyo was in June 1988, almost exactly 30 years ago. and Baglock quotes an economic theory from 1954.
 
Have a little think about the differences between the UK and Chinese economies and then get back to me :)
One is trapped in the politi-trade agreement from hell, and the other trades with everyone?

I bet Baglack, that the underpants you are wearing right now, as you read this, are made in China. Stop reading and take a look.

Not made in France. Not made in Spain or Germany. not even made in Greece.

Made in China.

And you paid import duty on those keks, to the EU. Ask yourself why?
 

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