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WTO governance and commitments (tariff, quota) apply to EU bloc viz. third-country WTO members. UK-EU "no deal" cannot default to academic calculation, but de minimis range determined by WTO members' and based on WTO member historical trade balances. That is total UK share of total EU bloc is not tabula rasa, but comparable to EU bloc trade with and duties applied to third-country products' origins.

Completing divestment of total UK share from total EU bloc trade balance is an arithmetic exercise. It is the subject of the formal joint notice to WTO. Nominally this difference positions UK by "default" for preferential quota and tariff treatment by EU

Tariffs placed by the EU, at a Most Favoured Nation level of 3.2 per cent upon agricultural products exported from Northern Ireland, would have significant adverse effects, whilst average WTOlevel tariffs on agricultural imports into Northern Ireland would create inflationary pressures.

or WTO standards. EG. BEETS, CAPS, EU prerogatives. Let us remember for Sammy Wilson's sake, NI is the UK.

To the extent UK goods and services can be segregated from those originating in EU27 at every point in any supply chain by product code is the political exercise of Phase II settlement in which the UK has thus far, apparently refused to participate. Which is to say, Tory gov has deferred to EU authority at bi-lateral ("no deal") -> WTO-level specification. And I expect Tory gov to default to this defensive strategy with every other prospective trade partner.

In the esri paper, distribution of UK trade to each EU member --deranged from political, heterogenous human prerogatives as well as FX hurdles to investment and sales-- predicates a persistent, erroneous belief that UK is free to dictate bi-lateral trade arrangements with each member. This a silly, incongruous basis by which to project EU bloc relations to the UK.

Because EC tariff quota mediate members' third-country trade.

+50% is exaggeration, when delta 0 to 3.2% will do to dramatize the disadvantages conveyed by BREXIT. Withdrawal from a customs union.


Diversity is the key to economic and political evolution.

by Cat on Tue Jan 23rd, 2018 at 07:04:28 PM EST
[ Parent ]
I have argued on many occasions that the Brexiteers' breezy assumption that the UK can simply default to WTO tariffs and rules in the event of a no-deal Brexit is erroneous. For one thing, a no-deal Brexit implies leaving on bad terms without payment of the exit payment which the EU27 claims is due.  In that context the EU may not be disposed to offer the UK most favoured nation status.

In addition, there has been no agreement on a methodology for carving out UK share of current EU28 WTO trade quotas, and in that context, it cannot simply be assumed that proportionate (to what?) quotas will be granted to the UK. The Joint letter from the EU and the UK Permanent Representatives to the WTO is a statement of intent only, and implies a harmonious Brexit process and Treaty will be agreed.

Finally, the EU is actively engaged in negotiating bi-lateral trade deals with all its major trading partners to the point where trading by default WTO rules will apply only to a diminishing residual share of total EU external trade. The WTO is effectively a moribund organisation which has not been able to conclude a successful trade round in many years. There is nothing to prevent the EU27 withdrawing from the WTO and applying punitive tariffs to the UK if it deems the UK to have been in dereliction of payment of debts rightfully due.

Remember, a no deal Brexit implies leaving on very bad terms indeed, and the EU27 will be under no obligation to make life easy for the UK even if Ireland, in particular, is caught in the cross-fire. The one thing the EU cannot allow happen is for the UK to be seen to "have cake and eat it" outside of all the other obligations EU members have to observe. Other ways can be found to compensate Ireland and specific industries most effected.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 23rd, 2018 at 09:59:07 PM EST
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