The economic consequences of Brexit (Vol 2)
Discussion
Greg66 said:
Counter example... someone, somewhere in the world makes steel cheaper than we can afford to. Our steel industry supplies domestic manufacturers. If the manufacturers buy cheap imported steel, the domestic steel industry collapses. What do we do?
a) Add no tariff - and benefit from goods we can get cheaply elsewhere at the expense of our domestic steel industry
b) Add enough of a tariff that we can have a 'competitive' local market in steel
What the WTO says about tariffs: Customs duties on merchandise imports are called tariffs. Tariffs give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments.
https://www.wto.org/english/tratop_e/tariffs_e/tar...
ora) Add no tariff - and benefit from goods we can get cheaply elsewhere at the expense of our domestic steel industry
b) Add enough of a tariff that we can have a 'competitive' local market in steel
What the WTO says about tariffs: Customs duties on merchandise imports are called tariffs. Tariffs give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments.
https://www.wto.org/english/tratop_e/tariffs_e/tar...
c) Buy up all of that lovely cheap low grade steel and turn it into high grade steel - adding value and making a profit in the process
d) recognise that producing low grade steel is strategically important to us (is it?) and subsidise our foundries, whilst allowing users of low grade steel to benefit from the cheaper prices?
We're not in the habit of preserving industries at all cost - the cotton mills are long gone, we don't have child labour, we've mothballed coal production and we no longer have thousands of workers bringing in the wheat by hand. In the 80's computers put thousands of secretarial jobs to the axe - we didn't 'solve' that problem by putting a huge tariff on computers did we?
The point is that more stuff, cheaper is basically how an economy grows. We are wealthier because we moved from cast iron to quality steel, from farming by hand to combine harvesters, from typists to computers.
Tariffs used as protectionist measures are basically preserving the least efficient way of producing a given good. Why should our steel foundries improve their productivity, if foreign steel is kept artificially expensive? We're not even sure if it works - despite the tariffs applied to foreign steel, our plants have still needed bailing out.
And the numbers are interesting... how many people would benefit from cheaper steel (the entire construction industry, vehicle manufacturers, shipping etc. etc.) v.s how many would suffer? Given we're in a time of high employment, and companies are screaming out for skilled workers, should we be looking at retraining those people who would suffer and getting them better paid jobs?
Greg66 said:
Counter example... someone, somewhere in the world makes steel cheaper than we can afford to. Our steel industry supplies domestic manufacturers. If the manufacturers buy cheap imported steel, the domestic steel industry collapses. What do we do?
a) Add no tariff - and benefit from goods we can get cheaply elsewhere at the expense of our domestic steel industry
b) Add enough of a tariff that we can have a 'competitive' local market in steel
Option a is at the expense of our domestic steel industry, but b is at the expense of any domestic industry that uses steel. So they end up demanding tariffs to protect them from foreign competitors who get cheaper steel, and so it goes on. Tariffs simply help some producers at the expense of consumers and the other producers.a) Add no tariff - and benefit from goods we can get cheaply elsewhere at the expense of our domestic steel industry
b) Add enough of a tariff that we can have a 'competitive' local market in steel
Dr Jekyll said:
Option a is at the expense of our domestic steel industry, but b is at the expense of any domestic industry that uses steel. So they end up demanding tariffs to protect them from foreign competitors who get cheaper steel, and so it goes on. Tariffs simply help some producers at the expense of consumers and the other producers.
What do you think will happen to the imported prices once home production has been decimated?Dr Jekyll said:
Nothing. If one foreign supplier puts its price up we buy from another. Airbus and Boeing compete for UK orders despite there being no UK airliner manufacturer.
You want to use aerospace as a reason that brexit is not a threat?https://www.flightglobal.com/news/articles/airbus-...
Brexit is a threat. If we lose wing work, thank your vote.
///ajd said:
Dr Jekyll said:
Nothing. If one foreign supplier puts its price up we buy from another. Airbus and Boeing compete for UK orders despite there being no UK airliner manufacturer.
You want to use aerospace as a reason that brexit is not a threat?https://www.flightglobal.com/news/articles/airbus-...
Brexit is a threat. If we lose wing work, thank your vote.
If you really believe tariffs are such a good thing, does that mean the EU should allow members to erect tariff barriers against each other?
Dr Jekyll said:
I am merely pointing out that your argument that we need tariffs to protect home producers because otherwise imports will become more expensive is perverse.
If you really believe tariffs are such a good thing, does that mean the EU should allow members to erect tariff barriers against each other?
I don’t want tariffs at all with the EU.If you really believe tariffs are such a good thing, does that mean the EU should allow members to erect tariff barriers against each other?
A hard brexit will deliver this.
Do you want a hard brexit?
Tuna won’t answer the question, will you?
///ajd said:
I don’t want tariffs at all with the EU.
A hard brexit will deliver this.
Do you want a hard brexit?
Tuna won’t answer the question, will you?
I want to leave the SM and CU if that's what you mean. I don't have a problem with an FTA with the EU, but in the long run going totally WTO might be better. It all depends on what kind of deal might be on offer.A hard brexit will deliver this.
Do you want a hard brexit?
Tuna won’t answer the question, will you?
Tuna said:
or
c) Buy up all of that lovely cheap low grade steel and turn it into high grade steel - adding value and making a profit in the process
d) recognise that producing low grade steel is strategically important to us (is it?) and subsidise our foundries, whilst allowing users of low grade steel to benefit from the cheaper prices?
We're not in the habit of preserving industries at all cost - the cotton mills are long gone, we don't have child labour, we've mothballed coal production and we no longer have thousands of workers bringing in the wheat by hand. In the 80's computers put thousands of secretarial jobs to the axe - we didn't 'solve' that problem by putting a huge tariff on computers did we?
The point is that more stuff, cheaper is basically how an economy grows. We are wealthier because we moved from cast iron to quality steel, from farming by hand to combine harvesters, from typists to computers.
Tariffs used as protectionist measures are basically preserving the least efficient way of producing a given good. Why should our steel foundries improve their productivity, if foreign steel is kept artificially expensive? We're not even sure if it works - despite the tariffs applied to foreign steel, our plants have still needed bailing out.
And the numbers are interesting... how many people would benefit from cheaper steel (the entire construction industry, vehicle manufacturers, shipping etc. etc.) v.s how many would suffer? Given we're in a time of high employment, and companies are screaming out for skilled workers, should we be looking at retraining those people who would suffer and getting them better paid jobs?
You have no idea what you are talking about, to buy all that cheap steel and to work it into high grade steel would still be more expensive than making high grade steel from scratch here in the ukc) Buy up all of that lovely cheap low grade steel and turn it into high grade steel - adding value and making a profit in the process
d) recognise that producing low grade steel is strategically important to us (is it?) and subsidise our foundries, whilst allowing users of low grade steel to benefit from the cheaper prices?
We're not in the habit of preserving industries at all cost - the cotton mills are long gone, we don't have child labour, we've mothballed coal production and we no longer have thousands of workers bringing in the wheat by hand. In the 80's computers put thousands of secretarial jobs to the axe - we didn't 'solve' that problem by putting a huge tariff on computers did we?
The point is that more stuff, cheaper is basically how an economy grows. We are wealthier because we moved from cast iron to quality steel, from farming by hand to combine harvesters, from typists to computers.
Tariffs used as protectionist measures are basically preserving the least efficient way of producing a given good. Why should our steel foundries improve their productivity, if foreign steel is kept artificially expensive? We're not even sure if it works - despite the tariffs applied to foreign steel, our plants have still needed bailing out.
And the numbers are interesting... how many people would benefit from cheaper steel (the entire construction industry, vehicle manufacturers, shipping etc. etc.) v.s how many would suffer? Given we're in a time of high employment, and companies are screaming out for skilled workers, should we be looking at retraining those people who would suffer and getting them better paid jobs?
Tryke3 said:
You have no idea what you are talking about, to buy all that cheap steel and to work it into high grade steel would still be more expensive than making high grade steel from scratch here in the uk
Is that so... OK, assuming you're right.c) Buy up all that lovely cheap low grade steel and turn it into high grade products, making profit in the process
Cheap stuff benefits us.
Greg66 said:
http://www.bbc.co.uk/news/uk-politics-42121442
Am I reading that right? At the moment there is a max volume - a quota - of say avocados imported into the EU from the US.
Going forward the EU and the UK want to agree to split that number on a consumption basis.
So the market for US exports of avocados to the UK and rEU combined will stay the same as it is now.
And we won’t be able to increase our volume of US avocado imports.
How does our end result from all that amount to free trade with the RotW?
Its a start position to limit disruption. The UK and EU wrote jointly to the WTO to explain their strategy, this is now going to be discussed with our WTO partners to come to a workable starting point all parties are happy with. The current EU quota rates is applied EU wide, but there are certain goods that only the UK buys, so the idea is to transfer that percentage to the UK, otherwise if it were to split 1/28 the market for that product would change significantly, which is what they are trying to avoid. (its an indication that despite all the bluster, the EU does recognise disruption is not a good thing)Am I reading that right? At the moment there is a max volume - a quota - of say avocados imported into the EU from the US.
Going forward the EU and the UK want to agree to split that number on a consumption basis.
So the market for US exports of avocados to the UK and rEU combined will stay the same as it is now.
And we won’t be able to increase our volume of US avocado imports.
How does our end result from all that amount to free trade with the RotW?
Once that is done we then move onto the divergence of the EU and UK positions, one of the things UK has to do is set its own WTO tariff rates that will be in place when we leave.
Once that is done we move onto writing FTA's with those countries that wish to negotiate one.
There is scope under the new regime to benefit significantly, for example in Lamb production, New Zealand and UK could do a joint deal with China that enables year round supply, where in UK lambing season UK supplies, in New Zealand lambing season NZ supplies. These are the sort of things we can do outside the EU, it allows a more flexible approach to trade without the domestic markets suffering.
Trading with a close geographic location whilst having limited access for further away regions is counter productive, especially for food, where the seasons of the planet play a major role. This is why the old British Empire worked as a trading system, it drew out the benefits of the realities of living on a planet with seasons, now we have much faster and cheaper transport systems, that advantage is magnified enormously. A local geography biased system is seriously outdated and uncompetitive in any market where the seasons materially affect production.
The joint letter to WTO is https://ec.europa.eu/commission/sites/beta-politic...
///ajd said:
It is still surprising to see how some brexiteers don’t seem to realise that tariffs are a barrier to incoming exports, applied deliberately to protect domestic interests.
Hence when we face barriers externally, it affects exports.
Do these brexiteers realise that our exporters need tariff free trade into foriegn countries and notably the EU?
There is a word for that, it's called imports.Hence when we face barriers externally, it affects exports.
Do these brexiteers realise that our exporters need tariff free trade into foriegn countries and notably the EU?
sidicks said:
///ajd said:
I don’t want tariffs at all with the EU.
A hard brexit will deliver this.
Why would the EU choose to invoke tariffs, which would make themselves worse off?A hard brexit will deliver this.
Even a canada FTA is not really near what we actually need.
Do people who want WTO realise this means our exporters will face EU tariffs?
Tuna said:
Answer what question exactly? I've answered quite a few of your questions and you immediately stop responding.
Q - do you want to avoid facing tariffs and barriers with the EU?You aleady said you want to be out of the CU which implies you are not that bothered about protecting frictionless trade with the EU. Ir perhaps you think we can both have a great deal with the EU and do what we want with RoW?
///ajd said:
The EU already invoke tariffs for countries outside the EU they don’t have an FTA with.
Even a canada FTA is not really near what we actually need.
Do people who want WTO realise this means our exporters will face EU tariffs?
Doesn't that depend on what we agree with Canada?Even a canada FTA is not really near what we actually need.
Do people who want WTO realise this means our exporters will face EU tariffs?
///ajd said:
Is it important for our exporters to have tariff free access into the EU?
Yes or No?
That depends on what the rate is.Yes or No?
If the UK can supply the goods the buyer in the EU wants, at a competitive rate including the tariff, then it doesn't make the slightest difference.
You get larger movements in costs from world oil prices and currency changes than you see from the average import tariff rate.
This is why any effects will be sector variable, you cant say what the impact will be in a broad one size fits all answer.
If the Euro implodes and Germany ends up back in its own currency valued correctly, that's going to affect its exports far more than Brexit and a potential 10% tariff ever will.
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