Future trading relationship UK & EU

[TUK020]

I am becoming increasingly dismayed at the lack of leadership and vision in our Government's approach to the talks on our future trading relationship with the EU.
All of the players seem to be approaching this as a zero sum game, and the most popular label/analogy is that of "Divorce", with all of the antagonistic overtones that that carries.

Arguably the two most important issues facing the collective EU countries today are a) the scale of immigration stemming from both refugees and economic migrants from North Africa and the Middle East, and b) lack of economic growth.
A way of tackling both topics would be for the EU to establish a 'free trade outer ring' to help spread prosperity to areas such as Ukraine, Balkans, Turkey , Egypt, Libya, Morocco et al, but without free movement rights.
For the EU, an ideal scenario would be a set up where they control the product standards, rules, and arbitration mechanisms for such a free trade outer ring, and also find some strong trade oriented, security capable country to champion such a division. I wonder who that could be.

Or alternatively, we could let everything dissolve into a pissing contest over EU budget separation bills, Gibraltar foreign residents rights, agricultural protection etc, and pretend that WTO rules are an attractive alternative.

[baldchap]

I am in no way alarmed in the long run.

Businesses trade, and will continue to do so, despite politicians interference, not because of it.
The wheels will keep turning and the divs will keep arriving, excepting the odd short term blip.

Disclosure: Half my portfolio is in the EU.

[odysseus2000]

Kind of interesting how the media are full of Brexit, resignations & such while the market doesn't seem to care.

I have no idea what any of this means as all the discussion, road maps etc are so complicated as to make studying them a massive chore with the near certainty that they will all have to be replaced with something simpler if things are to work in practice.

It would be nice if we had leadership, but the market seems to like the politicians chasing their own tails, perhaps believing that they can't do much harm a short they run around in circles.

Regards,

[odysseus2000]

Media full of Brexit, markets don't care.

I have no idea what all the Brexit stuff means, it is so complicated & imho will need huge simplification to work in practice.

Almost as though the market likes politicians chasing their own tails, perhaps believing they can do no harm running around in circles.

Regards,

[odysseus2000]

Boris gone too!

Kind of looks planned.

Bracing for a leadership contest or an election, but for now the markets don't care, so perhaps the belief is that the government can stand this.

Interesting times!

Regards,

[tjh290633]

You may have noticed that the PM has said that they are actively preparing for a no deal situation. The WTO draws ever nearer.

TJH

[odysseus2000]

Interesting to read Boris Johnson's resignation letter with his belief that the proposed deal would leave the UK essentially where it was before Brexit, but with no input on the governing laws:

https://www.bbc.co.uk/news/uk-politics-44772804

Regards,

[PeterGray]

Shame he doesn't come to the obvious conclusion, and start campaigning to remain!

[tjh290633]

The obvious conclusion is to walk away from the negotiations, as they are going nowhere.

TJH

[odysseus2000]

Peter Gray
Shame he doesn't come to the obvious conclusion, and start campaigning to remain!

As I recall, Boris campaigned for Brexit, got a mandate & agreed to serve under May who had campaigned for Bremain & then agreed to do Brexit.

The PM then held & election & lost most of her majority but carried on promising Brexit, but hasn't delivered.

In these circumstances can one not argue that Boris has consistently backed Brexit whereas May & several cabinet colleagues have been inconsistent.

One can consider all this just the ways of Westminster, but the politicians are elected as servants of the voters & currently one has to wonder what they are doing & to be concerned about the weak £ & how we are being seen by other nations & the effect on people's lives.

Regards,

[odysseus2000]

Fascinating interview with a Trump in the Sun:

https://www.thesun.co.uk/news/6766531/t ... -deal-off/

No doubt polarising opinion yet more, and also perhaps bringing forward what imho looks like an inevitable UK political crisis leading to either a new PM or an election.

The situation in its most basic terms looks to me like either we side with Europe, break with the US & cancel Brexit, or we break with Europe & have a good deal with the US & enact Brexit.

There are strong polarising issues both ways and lots of people are going to be very unhappy, but trying to have Bremain & call it Brexit is not working.

There has never been consensus or a majority in the political classes for Brexit as voted for and rear guard operations by Bremain have been very effective.I begin to wonder if there is currently enough strength to make Brexit happen & fear that this could be an issue of such diversive power that the UK will enter a long period of distressing times.

Regards,

[redsturgeon]

I would agree with all your points Ody and would add that anyone who thought the the USA had some especially favourable deal lined up for the UK post Brexit must surely by now have realised that Trump has his sights on any country who exports more to the US than imports from them and the UK is such a country.

John

[PeterGray]

I think the other factors to bear in mind are firstly that Trump has a clear track record of saying one thing and the something else soon after. Secondly, it's clear Trump would like to see the EU break up, he doesn't like trading blocks that challenge the US's dominance, and in particular those that export more the US than the other way round. So he will make all the right noises about what a wonderful deal we could have with the US if only we cut ourselves off from Europe, but they would mean very little when it came to the crunch. We'd still be negotiating with a far larger trading block that has aggressive foreign trade policies and sees reducing a balance of trade deficit as key, and does not hesitate to apply penalising tariffs if they think it suits their short term interests.

Any notion that a US trade deal could replace free access to the EU markets, and on anything like as acceptable terms is seriously mistaken.

Peter

[BobbyD]

Secondly, it's clear Trump would like to see the EU break up, he doesn't like trading blocks that challenge the US's dominance, and in particular those that export more the US than the other way round. So he will make all the right noises about what a wonderful deal we could have with the US if only we cut ourselves off from Europe, but they would mean very little when it came to the crunch.

Trump dislikes the whole rule based international system EU, WTO, NATO... which, by design, weakens Americas ability to leverage its dominance. This is just an attempt to separate a weakling from the herd so it can be run down more efficiently prior to eating.

[odysseus2000]

PeterGray
Secondly, it's clear Trump would like to see the EU break up, he doesn't like trading blocks that challenge the US's dominance, and in particular those that export more the US than the other way round.

Not sure this makes sense as he is on a mission to make NATO stronger and that requires strong European economies.

His emphasis is more on balance trade with similar tariffs both way, rather than a break up of the EU.

US policy has been since the first world war to foster a strong Europe and it was via the Marshall plan that Europe was stabilised and set on a good course after the second world war. I don't see any evidence to suggest that the US has changed its strategic vision for Europe or how a broken up Europe would be anything other than a serious worry for the US.

Clearly Trump does not like several European policies including large scale immigration which he sees as weakening Europe and changing its character, but this is not the same as wanting to see the trading block broken up, or a series of nations with long histories becoming so internally polarised that nations states are threatened with fragmentation into subsets.

Regards,

[odysseus2000]

BobbyD
Trump dislikes the whole rule based international system EU, WTO, NATO... which, by design, weakens Americas ability to leverage its dominance. This is just an attempt to separate a weakling from the herd so it can be run down more efficiently prior to eating.

US policy is to strengthen NATO and to have trade with more equitable tariffs.

How these policies can be described as wanting to "...separate a weakling from the herd so it can be run down more efficiently prior to eating." is beyond me.

The US had two good opportunities to do this in the first and second world wars, but in both cases choose to come in and help re-establish peace and prosperity on the European continent.

The alternative could be a Russian dominated Europe or a fractured and bleeding Europe not unlike the tragedy in Syria which would be a big trouble for the US.

Regards,

[RececaDron]

Trump dislikes the whole rule based international system EU, WTO, NATO... which, by design, weakens Americas ability to leverage its dominance. This is just an attempt to separate a weakling from the herd so it can be run down more efficiently prior to eating.

Trump's ethos is that the powerful should dominate the weak.

His entire MO is to weaken everyone who is not him, and every nation that's not the US. Regarding the latter, that is so the US can, as you state, "leverage its dominance".

Every action Trump takes follows this pattern. It's as plain as day.

He detests institutions that allow weaker nations to gain strength by pooling resources. He wants all the other nations standing alone so that the US can dominate any and all bilateral national relationships, bullying its way into getting its own way.

He cleverly dresses up his desire to end regional trading blocs and have weaker nations standing alone as supporting nationalists in those countries, but his interests are diametrically opposed to those countries' so-called nationalists.

What's shocking is that the nationalists cannot see this obvious fact, claiming instead that Trump's endorsement validates their goals. They are desperately naive, unwittingly complicit in the weakening of their own nations and regions to the benefit of dominant nations like the US (& China). It's a shocking misreading of the geopolitics at work here.

[odysseus2000]

RececaDron

He detests institutions that allow weaker nations to gain strength by pooling resources. He wants all the other nations standing alone so that the US can dominate any and all bilateral national relationships, bullying its way into getting its own way.

He cleverly dresses up his desire to end regional trading blocs and have weaker nations standing alone as supporting nationalists in those countries, but his interests are diametrically opposed to those countries' so-called nationalists.

What's shocking is that the nationalists cannot see this obvious fact, claiming instead that Trump's endorsement validates their goals. They are desperately naive, unwittingly complicit in the weakening of their own nations and regions to the benefit of dominant nations like the US (& China). It's a shocking misreading of the geopolitics at work here.

If this was his aim he would be happy with the status quo and enhancing it by asking nations to reduce their defence spending and to continue with a European Union that has gone from a market of equals to political marriage dominated by Germany at the expense of all others.

The fundamental problem with Europe is one of secular decline. The entire continent is failing to develop the new business of the 21st century and is so focused within that it is failing to see how technically far behind it is becoming by the day.

Unfortunately, many believe that Europe is forever destined to hold its place as a centre of excellence and that the institutions which exist are good and will lead to ongoing prosperity. Sadly it ain't so. Europe has failed miserable to be a significant player in the internet economy: think of any significant internet business and you will not find it is European.

Regards,

[PeterGray]

Not sure this makes sense as he is on a mission to make NATO stronger and that requires strong European economies.

That's not entirely clear, and it's quite possible to have conflicting interests.

Trump has threatened to pull out of NATO if some European countries don't spend more on defence. If they do, it's win/win for the US - less burden from NATO and more business for US arms manufacturers. But he's made it clear he doesn't see NATO as essential, in way all recent administrations have done. You might choose just to put this down to his "negotiation" approach (ie bullying). but I don't think it's that clear.

The other big issue for him is balance of trade. That's partly down to the fact that a lot of US citizens find European cars more attractive than US ones, but also that the US has different standards for foodstuffs to the US (in general weaker). If he can pick off the UK, and bully us into accepting lower agriculture standards - which will hammer UK farming, because we won't be able to export to our main market - Europe - anymore, then (in his world view) it's a gain for the US.

Peter

[odysseus2000]

PeterGray
The other big issue for him is balance of trade. That's partly down to the fact that a lot of US citizens find European cars more attractive than US ones, but also that the US has different standards for foodstuffs to the US (in general weaker). If he can pick off the UK, and bully us into accepting lower agriculture standards - which will hammer UK farming, because we won't be able to export to our main market - Europe - anymore, then (in his world view) it's a gain for the US.

If the UK accepted more US food, with a population of 60 million compared to 350+ million in the US and Europe, there is only so much food we could eat.

Meanwhile he has (maybe had now) secured more US food going to China with its circa billion population that is a much bigger market than the UK.

UK farming is highly subsidised and that is to remain at least for the near term according to Gove, so not sure how UK farmers would suffer, especially as many now offer high standards of product than many other nations giving them a bit of potential pricing power.

Regards,