So we can’t have a special trade deal then?

Britain cannot have a special deal for the City of London, the European Union’s chief Brexit negotiator has told the Guardian, dealing a blow to Theresa May’s hopes of securing a bespoke trade agreement with the bloc.

Michel Barnier said it was unavoidable that British banks and financial firms would lose the passports that allow them to trade freely in the EU, as a result of any decision to quit the single market.

“There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist.” He said the outcome was a consequence of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”

So, as everyone is already setting up, it’s branches (or is it subsidiaries?) somewhere in the 28 and job done.

On the other hand this is great, isn’t it? We can’t have a special trade deal. So, we’ve a short menu. Customs Union, Single Market, Switzerland, Norway or hard Brexit. No special deal means we have to pick from the extant menu.

Hard Brexit it is then and unilateral free trade to follow.

40 comments on “So we can’t have a special trade deal then?

  1. You and I know the two sides will manufacture a mutually-beneficial agreement in the fulness of time. Whatever the outcome, England will manage well enough – as we always have. I’m less worried about Brussels than the likelihood of having to rerun the 1970s.

  2. Hard Brexit it is then…

    Fine by me!

    …and unilateral free trade to follow.

    And wave goodbye to car manufacturing in the UK, as Prof. Minford admits would happen. Unilateral free trade would need to be introduced sector by sector, and food would be the best place to start.

  3. Bring on unilateral free trade. Which won’t happen. Too many special interest groups would lobby for their own special deals. Too many Ministers taken to too many good dinners for them to resist. Theo is making a case for a special 1970s-style deal for the car industry already.

    But whatever it is, it is a sh!t-filled pig sty of our own choosing. Which is infinitely preferable to having swine excrement pushed on us by Brussels because at least there is a chance we can vote the f*ckers out.

  4. “Theo is making a case for a special 1970s-style deal for the car industry already.”

    No. I’m making a case for the status quo, which is not 1970s-style protectionism; and I am, sensibly, suggesting that introducing unilateral free trade sector by sector would make policy more electorally palatable.

  5. @Theo, that doesn’t matter. The free-trade NOW fundamentalists simply won’t accept that the world carrying on as it is will see a near elimination of tarrifs in some decades. Britain has to do it now because consumers. The fact said consumers might find it a tad harder to consume if they are no longer producing is fake news.

  6. Theophrastus – “No. I’m making a case for the status quo, which is not 1970s-style protectionism; and I am, sensibly, suggesting that introducing unilateral free trade sector by sector would make policy more electorally palatable.”

    So you are not using the exact words “1970s-style protectionism”, but how does your suggestion differ in any real way from just that? What is the EU but 1970s-style protectionism with a so sophisticated French accent?

  7. “The fact said consumers might find it a tad harder to consume if they are no longer producing is fake news.”

    That fact being viscerally brought home to tens of millions presently brain-poisoned by socialist bullshit IS the only hope of a decent future Biggie.

    A future that has no place in it for your corrupt, scum-sucking EU pals.

    Despite Theo’s middle class whinging Brexit voters voted for their nation and heritage and not for personal cash advantage.

    As for Barnier’s Bullshit it is just to signal the Fish Faced Cow that her sell-out days aren’t yet over. Despite the fact the sell-outs so far have brought her jack shit.

  8. “…how does your suggestion differ in any real way from just that? What is the EU but 1970s-style protectionism with a so sophisticated French accent?”

    Not opening up the car industry to unilateral free trade is not the same as 1970s-style protectionism or state planning. Essentially, you are claiming they are identical.

    Yes, the EU is 1970s-style protectionism incarnate, and we are leaving it; but that doesn’t imply or require unilateral free trade in all sectors.

    Sure, imports make us richer; but import-dependent economies tend to be poorer.

    Ecksy:

    “…Brexit voters voted for their nation and heritage and not for personal cash advantage.”

    Up to a point, but mass unemployment and the destruction of the car industry would soon change their minds — and fuel remainiac calls for the UK to rejoin the EU.

  9. Theophrastus – “Not opening up the car industry to unilateral free trade is not the same as 1970s-style protectionism or state planning. Essentially, you are claiming they are identical.”

    Isn’t it? There is usually one way to be alive while there are lots of ways of being dead. How can we protect the car industry but not protect it as we did in the 70s? The issue of planning is different but of course it won’t take the Whitehall bureaucrats long to demand a five year plan.

    “Yes, the EU is 1970s-style protectionism incarnate, and we are leaving it; but that doesn’t imply or require unilateral free trade in all sectors.”

    Indeed. So you want to keep the EU’s protections for the car industry. Which are 1970s-style protectionism. We seem to be in agreement. I really do not understand your objection. We have 1970s-style protectionism. You want to keep it for the car industry (and presumably any other industry in a marginal constituency).

    “Sure, imports make us richer; but import-dependent economies tend to be poorer.”

    Float the currency. This is a problem that will solve itself. Even though Britain has imported more than it has exported since the Victorian period – invisibles and all that.

  10. “How can we protect the car industry but not protect it as we did in the 70s?”

    Just keep WTO, rather than unilateral free trade. I think that’s all Theo is advocating?

    Which makes perfect sense, otherwise Nissan have little disincentive to close Sunderland and start up in the Ruhr (because we wouldn’t charge them to export from the Ruhr to the UK but Germany would charge to export from Sunderland to Cologne). This is nothing to do with 1970’s style government planning or anything – it’s a simple arithmetic calculation for Nissan and the other foreign manufacturers with plants (ie lots of employees) in the UK?

    If a deal doesn’t get done, and a pretty good one no less, of course Barnier and the rest can sing for their £50 billion or whatever it is…

  11. What do we mean by unilateral free trade?

    Free movement of:

    Goods
    Services
    Capital
    Labour

    Or all of the above?

  12. “If a deal doesn’t get done, and a pretty good one no less, of course Barnier and the rest can sing for their £50 billion or whatever it is”
    In that scenario what happens is: there’s some brinkmanship. UK threaten not to pay up and Theresa, like a swot panicking 2 months out from the exams, blinks first (off course she blinks first) and comes back waving a piece of paper. Just as she gets her second wave in she is decapitated (politically (eff off eks)) and we get maybe davis or maybe johnson or maybe mogg.

  13. Hallowed Be – I gave Theresa the benefit of the doubt when she first got the job, but she’s managed to limbo dance under even my lowest expectations.

    Larry, the Downing Street cat, would be an improvement.

  14. To clarify, there are bodies such as ISO, UNECE, Codex alimentarius etc that make rules about trade in various products. The EU takes rules from these bodies, while sitting on the boards, and passes them down to its members. The situation won’t change if Brexit ever happens except that the UK will hopefully get a seat on these boards. So what exactly does “free trade” mean in this context? What actually changes?

  15. The EU is only a step on the road to One World tyranny.

    We need to start subverting and destroying all of these Global Elite outfits.

    A “list” of said Global Elite–freely published on the Net–is another good idea for all those working for freedom.

  16. In the unlikely event that we do go unilateral free trade won’t the likes of Nissan be able to import their raw material tax free?

    Whether this cancels out the EU’s import tax on the finished product I don’t know, but it is part of the calculation.

  17. BiND

    Good point. And, in which case, why not opt for zero tariffs on importing relevant raw materials, but keep the standard 9.8% WTO car rate tariff.

    Provided that there are not disincentives to us re raw materials (unlikely?), that gives Nissan et al even more incentive to stay (to sell to Brits) – given that, if they were in the Ruhr, they may have to pay a raw material import tariff (in Germany) during manufacture as well as then suffer a (whole car) tariff on importing into the UK?

  18. Tim , in all seriousness you really have to find out something about passporting and what it means before you opine
    Its not a question of setting up a branch or a subsidiary its a question of having to find the same capital again to trade on shore

    Got it ?

  19. BiG,

    The free-trade NOW fundamentalists simply won’t accept that the world carrying on as it is will see a near elimination of tarrifs in some decades.

    So what’s the point of the EU then? Non tariff barriers? We want to eliminate those too.

  20. The company I work for that does CE marking of safety products, as a procaution, simply set up a small office in Ireland with a couple of staff moved there to simply rubber stamp shit. The expense of that is dwarfed by the additional profits we made this year thanks to the devalued pound. Biggest bonus ever this year for the staff.

    The only people at work worried are those who get the jollies to Brussels to sit on the standards committees and associated gravy train. And they’re all pro EU quislings anyway.

  21. @Newmania. We are into equivalence rulings here. On the day of leaving the Uk will be 100% equivalent to the EU as it has the same regime to the letter. This is a matter of fact. The US is equivalent for insurance even though it’s completely different in form and substance.

    Once we leave the EU will rule on equivalence, or the NSAs will if the EU doesn’t. There is not a snowball in hells chance the EU will say the Uk regime is equivalent.

    With me so far? Why should we be part of a bloc that does such things that clearly contradict their own laws? Am equivalence ruling is supposed to be done on facts but won’t be.

    Subs need capital but rules on surplus transferability and diversification are in play here. Watch this space.

  22. SS2- yes, i wasn’t displeased when Theresa got the top job. I still think Theresa’s a competent minister but her horn, grabbing abilities have yet to be demonstrated as PM. It’s partly the situation with the HofC. John Major had a similar image with a wafer thin majority. That said the election and the result was largely her own doing as PM so it still comes back to her.
    I’m still hoping that the stance is no deal on the 50 billion unless there’s a good trade deal. I suppose behind the scenes there could be two figures, here is the amount we’ll pay whatever, here’s what’s on the table for a good deal. It’s possible that the media report one but the actual commitment is for the other. I think Theresa made a bad error saying that she would not compete on taxes or regulation, what did she get for that concession? nought. Hammond mooted it, but didn’t believe it, but perhaps she bopped it on the head to discourage others in the cabinet who were going to go for that.

    On the issue of protection of the car industry. I’d not make an exception. The whole idea is not to make exceptions. Nissan will build their next factory in Germany? Yeah maybe but they could also build it in Mexico or shanghai, and if we Go free trade, we can get cheaper cars! That’s the whole idea. Yes the workers, but remember it’s the consumers we care about. I realise there’s a political hurdle to get that across but still if you believe its the best then do it.

  23. If we’re fucking dumb enough to say ok no financial services included in a trade deal but here have 40 million quid and all the rest then stick a fork in us. Britain is done.

  24. Hallowed Be

    If we have an import tariff, our government can reduce a different tax (NI?) and remain tax neutral. At that point we “have” cared about our consumers, and still given an incentive for a manufacturer to employ people here (even more caring of our consumers!).

    Remember that we are only taxing ourselves (or not if the take is net nil)…

    Sure, if both sides get rid of the tariffs, or the tariff is not on something that damages us if we waive it, no problem. But cars? No, obviously, keep it, it’s one of the few bits of leverage we have over the EU (as we’re big net importer of cars vis a vis the EU).

  25. The whole fucking EU is a scam where France and protect its shit food and germany can protect its over engineered machines from cheaper or more practical outside competition while trading freely within the single market but they can all protect their services (including fucking hairdressers in France) from superior Anglo competition from within. We signed up to this scam for too long and now they expect us to pay to leave. What a fucking joke.

  26. PF
    “If we have an import tariff, our government can reduce a different tax (NI?) and remain tax neutral.”

    Revenue neutral perhaps but not neutral in terms of who gets taxed. It still skews things.

  27. “It still skews things.”

    Sure, I agree, non drivers potentially get to benefit from the “wider” equivalent tax reduction.

    I would suggest that that’s a relatively minor downside – for the potential upside for a sector of the economy that employs a good number of people (also consumers).

    I’m only suggesting we don’t give that away for nothing. Get the competitive edge right, if the EU don’t want to play ball, and we may even see VW Group (or similar) also seeing the benefit of having manufacturing capability in the UK post Brexit.. That could be fun.

  28. Even though Britain has imported more than it has exported since the Victorian period – invisibles and all that.

    Is “invisibles” a euphemism for dagoes? 🙂

    As for the “Nissan” problem, surely once we’ve given the EU the Spanish Archer, all of the bollocks about illegal state aid goes with it?

    Thus Dress Up can bog off to Nissan’s HQ and say “Look, we know you’re a bit put out by the whole BRExit thing. How’s about we provide a few tax incentives to keep building Micras in Sunderland?”

    Not that I’m in favour of interventionist government (again a 1950’s practice in use well past its sell by date), just pointing out that some things CAN change post-BRExit because the HoC will be in charge of its own paddling pool again, without the frogs and sausage eaters pissing in it all the time.

  29. “Just keep WTO, rather than unilateral free trade. I think that’s all Theo is advocating?”

    Exactly, PF! But SMFS and Ecksy can’t grasp that.

    HB:

    “Yes the workers, but remember it’s the consumers we care about.”

    We are talking hundreds of thousands of workers in the UK car industry and its supply chains and support services. Households saving, say, £500 on a new car every 5-7 years is small beer compared to paying £ thousands each year, often indefinitely, to redundant workers….For the taxpayer, WTO tariffs in car manufacturing offer a much better deal than unilateral free trade.

  30. @Theo,

    Scaremongering about car manufactures yet again – almost like you had a vested interest. Full disclosure requested.

    Anyway, if UK is an unprofitable country to manufacture cars in post-Brexit & WTO with zero import tariffs, so be it, more available to work in what we are profitable.

    imho Leave now, no divorce payment, transition period or other time & money wasting agreements. £50 Billion saved pays for no EU free trade for ~20 years (TW Calc).

  31. Pcar

    I completely agree with your “leave now” paragraph, but the WTO bit on cars is quite different. Theo is not scaremongering, this is what I call “using the calculator” rather than “being good at economics”!

    The UK is not an unprofitable country in which to produce cars, with or without reciprocal WTO or other tariffs (or Nissan and others would not be here), but zero tariffs on a one-way basis is giving the other side an immediate 9.8% advantage / discount. Why? We are basically saying to Nissan: “head to Germany and you can’t lose because we are going to be uber generous”. It’s just gratuitously shooting ourselves in the foot? The rest of the time we are busy trying to encourage inward investment to the UK, not tell it we don’t really care!

    The important thing is that there is no “consumer” advantage to us whatsoever from doing that unilaterally (for cars where we are net importers). It’s simply wrong to say (always) that “the consumer” gains from zero import tariffs, not least because, in this situation, a) we are taxing ourselves, and can simply reduce the equivalent tax elsewhere, and b) it’s a major sector and those car manufacturer employees in the UK are also profitable consumers?

    If we maintained that 9.8% tariff (unless the other side also agree 0%), there is actually more chance then of VW Group / other EU also setting up manufacturing capability in the UK. Which would be just bloody marvellous!

    Unless I’ve completely misunderstood you somewhere in all of that (and which, as always, is quite possible!)..??

  32. “Households saving, say, £500 on a new car every 5-7 years ”

    Theo, but even that is not necessarily true? They pay extra on the car (with the tariff), sure, but could simply get it back via another tax reduction (if it’s tax neutral).

    So, at that point, there is no consumer saving (#), but there is a big potential cost – in this particular example.

    # – As HB says, it’s “skewed”, ie non car drivers might save at the expense of car drivers, but that’s borderline insignificant?

  33. Thus Dress Up can bog off to Nissan’s HQ and say “Look, we know you’re a bit put out by the whole BRExit thing. How’s about we provide a few tax incentives to keep building Micras in Sunderland?”

    Bear in mind that Nissan is owned by the frog government these days. So even if it makes total economic sense to stay in Sunderland, I fully expect some well-choreographed political theatre which involves them moving noisily to some heavily subsidised factory in frogland.

  34. Pcar

    “Scaremongering about car manufactures yet again – almost like you had a vested interest. Full disclosure requested.”

    I have no vested interest, direct or indirect, in car manufacturing.

    Nor am I scaremongering. Rather, I am pointing out what Professor Minford – the advocate of unilateral free trade post-Brexit – concedes would be a consequence of his policy.

  35. “Theo, but even that is not necessarily true? They pay extra on the car (with the tariff), sure, but could simply get it back via another tax reduction (if it’s tax neutral).

    So, at that point, there is no consumer saving (#), but there is a big potential cost – in this particular example.”

    Agreed, PF. You put it all far better than I did.

  36. @Theo

    We are talking hundreds of thousands of workers in the UK car industry and its supply chains and support services.

    Yes, but how many employed by Nissan etc in manufacturing exported cars?

    Design, test, supply-chain, OEM/OE & Aftermarket, etc is irrelevant.

  37. @Theo & PF

    If we go WTO zero import tariff, it must be everything; protect one sector then over time more will plead, lobby, bribe to be protected.

    Pcar wrote: £50 Billion saved pays for no EU free trade for ~20 years (TW Calc).

    Tax adjustments: R&D, Capital Expenditure, Lower Taxes – it is solvable.

    imho lose some, win some – let economy re-balance itself.

    eg leave CFP and more UK fish to sell to ROW.

    .
    @Tim Worstall,

    Input please

  38. “imho lose some, win some”

    Pcar

    Why not win as much as we can? If it helps us (ie, from the other thread – letting foreign banks stay without subsids, this thread – keep the WTO tariff for cars), then why not. Note that both of those are “encouraging” inward investment – they are not “conflicting” arguments?

    French wine – WTO is 38% (I think?). Waive it, I say. Because we can’t produce that, at least not the decent red stuff.

    Ie, pursue the wins?

    My simple way of understanding cars (or anything else) is to exaggerate – imagine that the WTO tariff is 100% (or 200%). Eg, a £20K car is £20K if produced in the UK, or £40K if imported.

    At this point all manufacturing capability shifts to the place of sale (for obvious reasons). As we are net car importers (and “can” produce cars, unlike decent wine), we gain?

    If zero tariffs “both” ways (but not unilaterally) – then of course it simply comes down to business regulation, taxes, quality of work force, etc.

    So WTO both ways (it may help us), or zero tariffs both ways (but we may need to up our game), fine – no problem.

    “Step by step and re slowly rebalance”, I don’t necessarily disagree, and we can evaluate it as we go. But that’s an entirely different game from the potential “shock” of sudden unilateral free trade across all sectors?

    Lobby / bribe / protect – ignore them or (better) jail them..:) CFP – of course, that’a a given (they are our national waters).

    Hallowed Be

    Thinking further, actually it’s “petrol duty”, not “NI”. That gets rid of the (above) skew? Some drivers lose (net), but all drivers gain the duty saving. And even better, reducing petrol duty would piss off every lefty / greeny (and every other idiot) no end; so count me in for all of that..:)

    Apologies, it’s late and I’ve taken the bait…

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