jump to navigation

Everything is great! August 26, 2019

Posted by WorldbyStorm in Uncategorized.
trackback

“I think we can get through this, this is a great, great country, the UK, we can easily cope with a no-deal scenario,” Boris Johnson insisted in Biarritz, as he made his debut on the international stage as prime minister with a series of bilateral meetings with world leaders including Donald Trump, the EU council president, Donald Tusk, and the Indian prime minister, Narendra Modi.Johnson said preparations for no deal were being ramped up to help secure an agreement, but also “so that if and when we are forced by the obduracy by our European friends to come out on 31 October without a deal that things are as smooth as they can possibly be”.

But why should one trust his assurances – and more to the point why would he leave such hostages to fortune? He cannot possibly know how well or poorly the UK can cope with a no-deal (for example he’s given his ‘assurance’ that medicines will not run short and said that food will not be scarce. Big of him but how on earth can he be certain that supply chains won’t be disrupted by hitherto unexpected issues if things turn sour?).

And there’s a good example of just how matters can go. The news that:

Boris Johnson has played down the prospects of striking a trade agreement with Donald Trump within 12 months, saying that timetable was “tight” and would require flexibility from the US.

This despite Trump suggesting that it would be quickly achieved. Though whether Congress factored Congress in is another thing entirely.

And a further example of the dangers of making predictions:

Just 6% of an estimated 20,000 cross-border traders are prepared for cash flow and liquidity issues in the event of a no-deal Brexit.

That is according to new research carried out by InterTradeIreland.

It also found a similarly small amount have examined the possible legal implications for business contracts if the UK leaves the EU.

The research is based on the views of more than 750 business managers across Northern Ireland and the Republic of Ireland.

Here’s an unprecedented process in peace time recent history – the withdrawal of a large economic power from its previous economic relationships and the replacement of those with less good ones. It beggars belief that such a process wouldn’t at a minimum be disruptive in the extreme. All the positive rhetoric in the world isn’t going to change that.

Comments»

1. CL - August 26, 2019

“A team of experts, including a former high-ranking British official in the European Commission, has drawn up a plan to replace the Northern Ireland backstop, which has become the major hurdle to a Brexit deal….
The proposal, drawn up by Jonathan Faull — who held several director-general posts and was head of a special Commission task force on Brexit — and legal academics Joseph Weiler and Daniel Sarmiento, “maintains the integrity of both the EU’s single market and the UK’s territory;” “does not require Ireland to be treated differently from the rest of the EU or Northern Ireland to be treated differently from Great Britain;” and “does not tie the U.K. to the EU customs union, thus allowing the U.K. to pursue its own trade policy,” …
the new proposal is not based on technological solutions,..
The group behind the new proposal said their plan would allow the backstop to be stripped out of the legally-binding Withdrawal Agreement”
https://www.politico.eu/article/experts-propose-alternative-to-brexit-backstop-no-deal-uk-eu-ireland/

Liked by 2 people

saintsandscholars - August 26, 2019

That’s an interesting proposal, but it wouldn’t preserve the status quo ante. I imagine what most people want most is that the existing complex lattice of back and forth commercial movements should be able to continue. This proposal (from what the Politico article says at any rate) seems to be about introducing legal sanctions against cross border contamination of the prevailing regulatory systems north and south, to the extent that they differ. That’s a much lower level objective.

Liked by 1 person

Fergal - August 26, 2019

Forgetting the wee north fir the moment…all this Yellowhammer stuff on how disastrous a no-deal would be for Britain… food shortages, medicine supplies smaller, supply chains upset…etc… how did Britain ever manage before the single market(1992?)? Really, did it suffer from any of the above? If not, why not?

Liked by 1 person

Joe - August 26, 2019

If not, why not? Because there were agreed trading arrangements between and among the UK and all other EU/EC member states pre-1992. So trade, imports and exports, happened under those arrangements and stuff was on the shop shelves.
In a no-deal scenario, there will be no agreed trading arrangements (tariffs, customs, quality standards required for products being traded and so on) between Britain and the rest of the EU. Expect that there will be various fixes and arrangements put in place pretty quickly in a no-deal scenario – but it could get nasty and messy just as easily. And there has to be a danger that stuff that has been on the shelves up to now, might be hard to get at least for a spell until things settle down.

Whatever about the UK shop shelves, what about stuff on the shelves in shops in the RoI? Will we have shortages and blockages too? Waterford Whispers has already warned of the danger of a shortage of northern Tayto in the south …
But more seriously, too little has been said by the RoI government and media about potential shortages (food products, medicines, other stuff) in the RoI, given the RoI’s huge trading relationship with the UK.

Liked by 1 person

EWI - August 26, 2019

But more seriously, too little has been said by the RoI government and media about potential shortages (food products, medicines, other stuff) in the RoI, given the RoI’s huge trading relationship with the UK.

That’s because there is an outsize trade imbalance in such goods in the ROI’s favour. Any such shortages will be in the UK.

In 2015 Ireland exported €112.4bn of goods and €15.6bn (13.9%) of these goods went to the UK. The top 5 categories of goods exported to the UK in 2015 were: Meat & meat preparations (€1.9bn), Medical & pharmaceutical products (€1.5bn), Organic chemicals (€1.0bn), Essential oils, perfume materials; toilet & cleansing preps (€0.8bn) and Dairy products & birds’ eggs (€0.8bn).

Imports of goods amounted to €70.1bn in 2015 and €18bn (25.7%) of these imported goods arrived from the UK. The top 5 categories of goods imported from the UK in 2015 were: Petroleum, petroleum products & related materials (€1.9bn), Gas, natural & manufactured (€1.1bn), Miscellaneous manufactured articles n.e.s. (€1.1bn), Essential oils, perfume materials; toilet & cleansing preps (€0.8bn) and All other commodities and transactions (€0.7bn).

https://fdw.ie/brexit-business-trade-ireland-uk/

Like

Joe - August 26, 2019

Thanks EWI. “€18bn (25.7%) of these imported goods arrived from the UK.” Potential there for some shortages surely?

Liked by 1 person

EWI - August 27, 2019

Thanks EWI. “€18bn (25.7%) of these imported goods arrived from the UK.” Potential there for some shortages surely?

As has been shown above, they’ve vastly more vulnerable than we are (food and medicines, where we’re *exporting* to them). So any attempt at mischief should be short-lived. You can of course still put a few carrots down in your plot, if you like.

Like

WorldbyStorm - August 26, 2019

It’s a good question. 1992 wasn’t a simple start point – already relationships with other EC/EU states had been in place. Routes, management of same and processes were extant. So the single market was an extension of already existing structures – in a way a consolidation.

There’s much more developed links across Europe after near enough 30 years more, and it has to be Europe since that’s the closest largest market, more over it is a single market – prior to the SEA it was bilateral (well not entirely since the EEC/EC was moving towards a consolidation of the market and lowering trade barriers) between multiple states.

So now a UK business that is in a Britain that has left the EU has a range of new barriers, not just simply transporting materials into the UK (or out) but the costs of doing so in terms of tariffs and so forth. Suddenly what had an effectively zero cost yesterday has a (potentially) significant cost today (and again, non-tariff costs increase – delays, inspections, etc, etc).

The EU is effectively a complex FTA with 27 other states. Now the UK is foregoing that, adding to the costs both financial and time of trading with those 27/EU states from scratch and also having to try to boost trade elsewhere which makes little sense since the closest geographic markets are those that are most convenient and useful to a state.

It goes further, the issue isn’t simply about trading ie can we get the goods to markets inside or outside the UK, it’s about standards and regulations – for example, for years I worked in an electrical goods supplier. Because the standards were uniform across the EU a good produced in one state could be used in another. German goods were sold into Ireland, consumer units for fuses could be assembled from German and French made components in a factory in Dublin with the assurance everything was of a certain standard and complied with uniform regulations. Now that stops being automatically the case since UK goods may reach that standard but won’t automatically have to. Why buy from the UK when one can buy from the ROI or another state within the EU? Because there’s a subtle push effect against or from the UK in all this.

Like

WorldbyStorm - August 26, 2019

Actually that’s a better answer than my own Joe and you raise a good question too. What are we going to find stripped out of daily life? Some of it will be cosmetic or innocuous but I’ll bet some of it won’t.

saintsandscholars, that’s a great point – people just want the status quo ante. Anything less than that is… less than that.

Like

Fergal - August 26, 2019

Cheers Joe and Wbs… I kind of jumped into that question … forgetting that Britain … had been trading with the EEC since 1972…

Liked by 1 person

WorldbyStorm - August 26, 2019

But it is an interesting point you raise Fergal because so much of what the EU and EC and EEC before it is under the hood. I had a post only a few weeks back on how the Brexit period has been a massive learning process about borders and tariffs and so on that I had little real grasp of. And a lot of it is pretty innocuous. In a way a problem I have now is that the concentration on CFSP and related areas has meant that a lot of the more mundane and innocuous stuff has been allowed to be shaped by conservatives and so-called ‘centrists’ to ends that while still relatively mundane and innocuous aren’t entirely so by any stretch of the imagination and in some areas are deeply problematic. In away perhaps it is the old issue with the left of not fully engaging with economics despite it being supposedly our meat and drink and I’m definitely guilty of that.

Like

Bartholomew - August 26, 2019

This is completely anecdotal, but… I’m a daily sea swimmer, and about a year ago, I noticed a major increase in container ship traffic going down the Irish sea. It used to be unusual to see freight ships, but since about last August it’s become unusual not to see one, and often more than one at a time. And there have been newspaper reports of new shps operating to Rotterdam and elsewhere. So I suspect that goods that can only come on trucks, on a roro ferry, will be in short supply, particularly fresh fruit and veg. Longer shelf life items, less so. (Of course, panic buying could mean all bets are off.)

Liked by 1 person

WorldbyStorm - August 26, 2019

Yeah, and isn’t part of the problem that TIR containers can be waved through a third-party territory so the land bridge (aka Britain) is okay to transport stuff across from say France to Ireland but the simple logistics at the ports in the UK aren’t ready to handle the broader checks and this may cause delays.

Re panic buying agree entirely. And that can be a self-fulfilling prophecy.

Like

benmadigan - August 27, 2019
EWI - August 26, 2019

The group behind the new proposal said their plan would allow the backstop to be stripped out of the legally-binding Withdrawal Agreement

But, but, but… the backstop only exists in the absence of a workable agreed alternative. It is literally only here as a guarantee of good-faith dealing by the British (who daily show us why it’s necessary).

Like

2. Saints and Scholars - August 26, 2019

On further reflection, I suspect there is even less to the Faull proposal than the little that met the eye first time around. Again relying only on the Politico article (i) Is this intended as a strictly reciprocal bilateral commitment between UK and ROI that is somehow “noted” in the wider EU-UK agreements/declarations. That would be a lousy starting point. (ii) Not a lawyer, but if I read the article right, it implies that it would be the originating jurisdiction that would police the crossborder compliance of its traders rather than the destination one. You have to imagine that the UK would be considerably less motivated to do that vigilantly. No matter what, ROI will have the weight of the 27 on its back to maintain the sanctity of the internal market – at the risk, nominally at any rate, of being excluded from the SM if it doesn’t. UK has no such stick at its back. And, as said previously, this is a much narrower and leakier commitment than one to maintain the same regulatory “ecosystem” altogether. On the face of it, I would be surprised if it gets traction. Looks like another unicorn pulled from the same hat as “alternative arrangements”.

Liked by 1 person

WorldbyStorm - August 26, 2019

Yeah, I was just rereading the Politico piece and it seems awful thin, and as you say, putting the onus on the originating jurisdiction is okay, but… the constraints would be very weak and not difficult to see it being open to question (and being bypassed) from the get go.

Like

Saints and Scholars - August 26, 2019

If the substance of how this goes weren’t so important, the drama would be much more unalloyed enjoyment. It will be interesting to see if this gets traction in the “usual suspects” of the Torygraph, Spectator, Mail etc. where its sheer simplicity gives it a superficial plausibility. Lets see what the next few days brings but, on the face of it, I would suspect that the forensic withering eyes or Barnier, Weyand and co.,, never mind our own experts won’t give this any serious airtime.

Adding an obvious addendum to the last post, the UK is not only inherently unmotivated to enforce, but as an entity positively looking to diverge from EU standards, it is even less of a reliable participant in any such regime.

Like

WorldbyStorm - August 26, 2019

+1 They don’t see it as a glitch, it’s a feature. My own limited experience in electrical goods makes me wonder do they realise what they’re getting themselves into? But then again they seem obsessed with services and remarkably uninterested in goods etc.

Liked by 1 person

Saints and Scholars - August 27, 2019

Although, because they will not countenance FOM, the UK has sold its EU trading services sector down the river.

Liked by 1 person


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: