Brexit and the waning days of the United Kingdom

[Josquius]

Though thats pretty bad news.  All projections for our contribution had it going down in years to come. It going up will just fuel the kippers.

[Zanza]

Some Brexiteers thought that the German industry would lobby to get them a good deal. I think that was always wishful thinking and surprise, surprise the federation of German industries fully supports the government line on the four freedoms.

Germany should not jeopardise its trade relations with the rest of the European Union in a deal on Britain's departure from the bloc, the chief of the BDI Federation of Germany Industries said, throwing his weight behind Chancellor Angela Merkel.

[...]

Markus Kerber, managing director of the BDI Federation of Germany Industries, told Reuters it was important to stress that the four freedoms could only be enjoyed with EU membership.

"It must be a priority for the German government and the EU to defend the single market as a crucial European project," Kerber wrote by e-mail, adding Germany's trade with the rest of the EU should not be jeopardised by granting Britain exceptions.

[Zanza]

From guardian comment section:

Imagine if back in in early 2015 someone had said that by the end of 2016 Prime Minister Theresa May would be looking to do a post-brexit trade deal with President Donald Trump aided by Foreign Secretary Boris Johnson and Nigel Farage, while the Ex-Shadow Chancellor is doing Gangnam Style on national television.

[Zanza]

Good article on the various scenarios and red lines Britain and the EU have and why that will cause complicated negotiations.

http://www.economist.com/blogs/buttonwood/2016/11/trade-offs

Trade-offs
Brexit means...a lot of complex trade decisions

POLITICIANS campaign in soundbites but reality deals in awkward paragraphs. For all the sloganeering (Brexit means Brexit) and the prevarication, the British government must finally decide what kind of trade-offs it is willing to accept when it leaves the EU. The UK trade policy observatory at the University of Sussex has an excellent new paper out on the choices facing the country, which was the subject of a lunchtime seminar today.

The British government seems to have four red lines. It wants to stop free movement of labour; to be allowed to pursue an independent trade policy; not to contribute to the EU Budget; and to break away from legal oversight by the European Court of Justice. (All of these can be summed up by the slogan "taking back control"). The EU's sole red line seems to be that Britain cannot benefit from "cherry picking" - for example, benefiting from membership of the single market in terms of goods trade, but not allowing free labour movement.

To understand the trade-offs, we must first understand the terms. The single market is an idea that Britain originally pushed for - a trading area where the regulations are harmonised so that goods and services can be traded on an interchangeable basis. Without it, there is the danger that trade is restricted because, for example, Slovenia might impose rules on car design which mean that it effectively excludes vehicles made in other EU countries. But in order to make the single market work, there have to be common rules; and the imposition of those rules is something that British voters seemed to rebel against. A further confusion is between access and membership. Every country in the world, even North Korea, has access to the single market; it is membership that makes it easier for companies to sell their goods.

Then there is a customs union. This simply means a free trade area where all members have common tariffs against goods from outside. Again, such a deal is efficient but prevents member countries from agreeing separate deals with other countries (as Britain wants to do). Then there is the European Economic Area (EEA) which is a peculiar type of free trade agreement, operated by just Norway, Iceland and Lichtenstein. This gives some freedom to negotiate deals with countries outside the EU but requires accepting freedom of movement and budget contributions. Then, there is falling back on World Trade Organisation rules; these would involve trading with the EU but with tariffs imposed on goods and with possible barriers to trade in services.

Britain's red lines mean that being part of the EEA or the customs union would be impossible. And falling back on WTO membership would be economically damaging. So the hope seems to be, as Brexiteers have argued, that Britain could have a free trade agreement similar to those signed (just) with Canada or South Korea.

But that is where the trickiest bit of the negotiations would occur because of the EU's red line; it does not want Britain to benefit from a cherry-picked deal that might encourage other countries to follow the path to the exit.

A free trade agreement would avoid tariffs but still require agreement on rules of origin. These would require UK manufacturers to show that more than 60% of the goods they export to the EU were made in their home country - tricky in a world of global value chains where cars, for example, use a lot of imported components.  It might also involve a mutual recognition agreement, so that EU countries could accept that the UK's standards for testing and certification. Without such agreements, UK goods could face barriers just as steep as those deriving from tariffs. But here is the rub. If the UK agreed to mutual enforcement of standards with the EU, it could not then agree to sign a separate deal with other countries (such as China) involving separate standards.

Perhaps the UK could do a deal in which certain sectors were effectively part of the Customs Union, as the government seems to have promised Nissan? Such a deal would have to be ratified by all other EU members, making it hostage to one intransigent Parliament.

Worst of all, Canada's free trade deal does not cover services, the area where the UK tends to have a trade surplus; 37% of the UK's services exports go to the EU. A deal that lets German cars into the UK but prevents British accountants and lawyers from selling to German clients would not be not a good one. As the paper concludes

"The UK seems to be more wedded to its red lines but also risks losing more by not modifying them"

All this will require a lot of patient negotiation, which seems unlikely to be completed by March 2019 when the formal date for EU exit may occur. So that may require an interim period in which the UK maintains the EU trading arrangements, including free labour movement and budget contributions. That might be economically sensible (some think Britain may choose to continue in this limbo forever). But it would be politically tricky; Theresa May would face the 2020 electorate with Britain still effectively in the EU.

Full paper: https://www.sussex.ac.uk/webteam/gateway/file.php?name=uktpo-briefing-paper-5.pdf&site=18

The British red lines can be thought of as the UK's
defensive objectives. Defining these red lines is inherently
problematic. What does control over movement of labour
mean for actual arrangements to manage the entry of
EU citizens? Similarly, does no compulsory EU budget
contributions mean no EU budget contribution under any
circumstances? Trade policy involves both tariffs and nontariff
barriers on goods and services (see Box 2, page 6 on
'The Importance of Services in the Negotiations'). Does an
independent trade policy require control over all this and
for all sectors?
At the same time, the government and most
commentators have indicated a desire for trying to
maintain as good access as possible to the EU (Single)
Market for both goods and services, while meeting the
red lines. These represent the UK's principal offensive
interests. Once again, defining the offensive interest is
not straightforward. Does access to the Single Market in
goods mean no tariffs on exports to the EU, or does it
mean full access to the EU's regulatory union? What is
meant by access to the Single Market in services? What is
apparent is that, where the red lines / defensive interests
are largely motivated by political considerations, the
offensive interest is motivated by economic considerations
– i.e. with maximising access to the EU market (our
principal destination and supplier for goods and services).

[Tamas]

Boris is really being a major twat. The negotiations haven't even started and he is running around talking nonsense that makes future negotiation partners look like weak idiots, if they were true. This is going to end well. Not.

http://www.bbc.co.uk/news/uk-37995606

Mr Johnson reportedly told the Czech newspaper Hospodarske Noviny he did not believe the UK would remain in the EU customs union after Brexit.
He was quoted as saying he believed such a move could be done while "maintaining free trade" with EU states, suggesting the UK could remain within the single market.
Speaking to the BBC's Newsnight, Mr Dijsselbloem - who is also president of the eurozone's Eurogroup - said Mr Johnson was putting forward options that "are really not available".
"He's saying things that are intellectually impossible, politically unavailable, so I think he's not offering the British people a fair view of what is available and what can be achieved in these negotiations," he said.
EU leaders have continually warned that the UK cannot expect access to European markets after Brexit unless it accepts the free movement of labour.

The Dutch minister told the programme that both the UK economy and the European economy would be in "a worse situation" post-Brexit.
"There is no win-win situation. It's going to be a lose-lose situation and in the best case if we set aside all emotions and try to reach an agreement that is least damaging to both of us we can minimise the damages," he added.

Mr Johnson also reportedly said it was a "complete myth" that free movement was one of the fundamental freedoms of the European Union.
In response, the European Parliament's lead negotiator on Brexit, Guy Verhofstadt, tweeted: "Can't wait to negotiate with @BorisJohnson, so that I can read him Article 3 of the Treaty of Rome."
The section includes removing "obstacles to freedom of movement for persons".

[Richard Hakluyt]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

[The Minsky Moment]

Boris is really being a major twat. Boris

Simplified.

[PJL]

Or as Theresa May would say, Boris is Boris.

[mongers]

Or as Theresa May would say, Boris is Boris.

It's why she appointed him, knew he wouldn't be able to be anything else; nice of her to set him up to fail, what with him being a future leadership challenger. 

Nothing like putting the country's interests before narrow party politics?

[Tamas]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

[The Larch]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

Boris Johnson's approach to Brexit has been ridiculed by European ministers after he told Italy it would have to offer tariff-free trade in order to sell its prosecco in the UK.

Carlo Calenda, an Italian economics minister, said it was insulting that Johnson had told him during a recent meeting that Italy would grant Britain access to the EU's single market "because you don't want to lose prosecco exports".

"He basically said: 'I don't want free movement of people but I want the single market,'" he told Bloomberg. "I said: 'No way.' He said: 'You'll sell less prosecco.' I said: 'OK, you'll sell less fish and chips, but I'll sell less prosecco to one country and you'll sell less to 27 countries.' Putting things on this level is a bit insulting."

Brilliant negotiation tactics.

[Zanza]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

I find Michael Gove's position here very irresponsible.

[Richard Hakluyt]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

I find Michael Gove's position here very irresponsible.

It must be something in the water, their precious bodily fluids have got contaminated or something.

It is usual for me to disagree with the opinions of British politicians, but the sheer stupidity of some of the recent pronouncements is simply stunning.

[Tamas]

He's made a fool of himself talking to the Italians too :

https://www.theguardian.com/politics/2016/nov/16/european-ministers-boris-johnson-prosecco-claim-brexit

I find Michael Gove's position here very irresponsible.

It must be something in the water, their precious bodily fluids have got contaminated or something.

It is usual for me to disagree with the opinions of British politicians, but the sheer stupidity of some of the recent pronouncements is simply stunning.

I had been largely dismissing the "post truth politics", as I was sure populists were always going for lies and the stupid vote, but it seems to be proven right when leading figures can get away with comments so far and so obviously removed from reality.

[Josquius]

Politicians used to want to be remembered well by their side at least.
Now they just want to be remembered at all costs.