7 ms·

But it's unlikely for EU nations to significantly damage trading relationships with the UK. Germany, for example, exports a huge volume of cars to the UK and it

by p4wnc6 10y ago

But it's unlikely for EU nations to significantly damage trading relationships with the UK. Germany, for example, exports a huge volume of cars to the UK and it comprises a significant portion of German GDP. Yes, there's volatility around exactly how such a trade deal will get worked out, but it's unrealistic to lump "access to European markets" into one big ball and assume that Brexit means that whole topic will be impacted negatively. In reality, most significant European trading partners with UK just want to keep on trading with them mostly as they have been, and will work out deals that allow such trading to mostly continue. There doesn't seem to be much reason to think such trade deals will be radically changed in a way that damages anyone for the long term.

mioelnir 10y ago
But a hit to german trading to the UK is a small price to pay instead of the hit it would take by setting precedent that you can just willy-nilly leave with all the perks. And I can tell you, the german-language media is already full of "priority number one if to stop a cascading copycat effect". As a snarky side remark, what will the UK do in the future instead of continuing to import cars, regardless of terms? Rely on its domestic automotive industry?
- kalleboo 10y ago
  > As a snarky side remark, what will the UK do in the future instead of continuing to import cars, regardless of terms? Rely on its domestic automotive industry? One of the more credible arguments for leaving the EU is so the UK can negotiate their own international trade deals, as they feel the EU has been slow in negotiation. Opening up free trade to the US and Japan would probably be a priority.
  - Tomte 10y ago
    That's the same United States who have already said that deals with Britain will be scheduled for after a deal with Europe and other big trade blocks?
    - kalleboo 10y ago
      Obama said that. Probably just to help the Remain campaign as a favor to Cameron. Trump has said the opposite, Hillary has said nothing aside from repeating how "close our ties are".
  - Oletros 10y ago
    > Opening up free trade to the US and Japan would probably be a priority. And how the deal will be better than the deal between EU and USA/Japan?
    - kalleboo 10y ago
      Different priorities. For instance, the UK doesn't have an automotive industry to protect like Germany does. So they could get a trade deal that's more tailor-made to them. Obviously it's a huge risk as well since they're a smaller economy.
hsitz 10y ago
"In reality, most significant European trading partners with UK just want to keep on trading with them mostly as they have been, and will work out deals that allow such trading to mostly continue." Do you know what you're talking about? That's a sincere question. My understanding is that the UK's significant trading partners are members of the EU, and that it's the EU, not the individual partners, who will have to decide on any new trade deals with the UK. As others have said, what sort of precedent would the EU be setting if they gave a withdrawing member the same benefits it had as an actual member? The EU does not want more members withdrawing.
- phicoh 10y ago
  Logically, it doesn't make sense for the EU to impose harsh restriction on trade with the UK. The reason the UK is allowed to leave is that the EU is a voluntary association. By and large, the EU is an association of individual countries, not a federal nation state with its own army. So the countries in the EU have a lot of freedom. If they misbehave you can only kick them out. What countries would want to leave the EU? I'm not aware of any of the poorer countries wanting to leave. And it would not affect the EU much. For the richer countries, the EU is an enormous benefit, so leaving would be rather silly. The UK is the only country that has been questioning its EU membership for many decades. But it seems to be unique in the position. So for normal trade in goods and services, it doesn't make sense for the EU to impose too many barriers. The financial sector is an exception. It does make sense for the EU to grab more power there. The big issue however, is that many countries have significant parts of their population that are against the EU. So there is a real risk that the UK will be hit with sanctions, not because it makes sense for the EU, but because it makes political senses in some of the EU member countries. That would be sad, but that's the world we live in.
TheOtherHobbes 10y ago
Real numbers here. http://openeurope.org.uk/today/blog/how-would-key-export-sectors-fare-under-brexit/ http://openeurope.org.uk/today/blog/how-would-key-export-sec... Some key UK export sectors - especially finance - have a very low probability of being able to carry on as normal. The German car industry accounts for around 3% of GDP. Sales to the UK are less than 1% of German GDP. The UK financial industry accounts for around 10% of GDP. Sales to the EU are around 4% of UK GDP. As a rough guess estimate, post-Brexit disruption is going to lose 1-2% of that, and could lose more - because there's very little London can do for Europe that can't be done just as easily in Frankfurt. The UK has a lot more to lose than Germany does. But the EU traditionally plays hardball with negotiations. Ask Greece. So there is no chance at all the UK isn't going to have to make significant - expensive - sacrifices to keep trading. This vote is literally the most staggeringly stupid and self-destructive act I've seen in my lifetime. Take away the jingoism and the flag-waving and the blatant lies about immigration and sovereignty, and you have a country which relies on a huge captive market voting to - at best - change the terms of access to that market in ways that cannot possibly be more advantageous than they are now. Some trade will continue, but the overall effect on the UK is going to be very negative indeed.
- p4wnc6 10y ago
  1% of GDP tied to a single trading partner and a single industry is a pretty big deal. Likewise, 4% of GDP in finance commerce to Germany is a big deal. Seems like good evidence that the parties will want to ensure trading continues mostly the same as it has been. A big question is whether the rest of the EU would be able to block such arrangements. I don't think they will either want to or be able to.
  - throwawaysocks 10y ago
    But the stickiness of geography for finance and autos are very different. Replicating a segment of London's financial sector in Frankfurt is easier than replicating BMW/VW to UK.
    - smm2000 10y ago
zmmmmm 10y ago
> Germany, for example, exports a huge volume of cars to the UK and it comprises a significant portion of German GDP ... In reality, most significant European trading partners with UK just want to keep on trading with them mostly as they have been Even if one accepts that existing trade will be accommodated through direct agreements, that only protects existing industries. What does it mean for future industries and how existing industries grow and change? When a new industry develops and wants to export, they are going to find they face trade barriers until such time as the EU and UK get around to negotiating a new (or modified) trade agreement. That's a huge disadvantage and will see a lot of investment, especially in tech companies go to the EU where previously it might have gone to the UK.
- upstandingdude 10y ago
  This sounds like a huge deal to me. Lets say you want to invest and built a presence in a new market. Until now if you wanted to go to Europe you could have picked UK as you main point of operation, now you have to decide, huge market with easy open trade or UK.
snowwrestler 10y ago
The biggest hit is not in goods trade but in financial flows. With the UK part of the EU, major financial institutions could base in London to serve the entire EU. Once the UK exits the EU, they can't, at least not without a lot of extra costs and paperwork. London, one of the 3 financial capitals of the globe, will lose its status in favor (probably) of a more diverse mix of European cities. This will have downstream effects on other trade flows in and out of the UK.
- iofj 10y ago
  I don't think many UK citizens see big financial flows as being to their advantage. For 90%+ of them, I think that assessment is correct. Globalization has been dealt a serious blow here, and if you're pro-equality, that should be a good thing. Take an obvious and very direct example. Cleaning staff. Not having to compete with EU illegal immigrants will improve their labor conditions. Building workers and Polish guest workers who send all money back home and live in extremely poor conditions, same. Yes that probably means the next time you need your toilet repaired, you'll pay more, but you'll pay more so the plumber can have a better life. Even for tech startups, this may be an improvement. I know over 4 London-based startups that don't directly sell to customers. They "consult" for a foreign entity (a US company in 50% of the cases, other 2 use Asian proxies), which then sells to EU customers because selling digital products to EU customers from outside of the EU is far cheaper and simpler than doing it from inside the EU. One thing I absolutely do not get is why socialists and even those left-inclined are so massively pro globalization. That just makes no sense whatsoever. There are constant complaints about globalization here. How Monsanto/Big finance/Suez/... convinced congress/EU/ECB/... that X is going to happen/be legal which means state/city/even small town Y gets shafted in Y way. For once, that becomes a little harder. But yes, it's probably the wrong thing for center London tech and finance workers and managers. The EU is reacting, imho, in the worst possible way. The press in France, Netherlands and Belgium is full of articles on how it was stupid, boneheaded, evil, weak for Cameron to allow the vote in the first place. It's generally all being blamed on Cameron, and his mistake is allowing people to vote in the first place. Very EU, being so overtly anti-democratic. But let's face facts here: the EU will try to make this work the same way the other referendums worked [1][2]. When the votes turned against the EU, they canceled the rest of the voting ("postponed" the term used, but they never happened). And then they cheated (the referendum happened because the law said it should happen before the law was changed. The law was changed without referenda). So I'm giving the odds of a Brexit happening at best 30-40%. Granted, that's far better odds than I gave it yesterday, so maybe I'll be wrong again. But the EU has a long history of ignoring democratic votes. The sky is not falling, this is not the worst thing to ever happen, and frankly, the market is wrong. This is a massive overreaction. [1] https://en.wikipedia.org/wiki/French_European_Constitution_referendum,_2005 https://en.wikipedia.org/wiki/French_European_Constitution_r... [2] https://en.wikipedia.org/wiki/Dutch_European_Constitution_referendum,_2005 https://en.wikipedia.org/wiki/Dutch_European_Constitution_re...
Oletros 10y ago
> But it's unlikely for EU nations to significantly damage trading relationships with the UK Well, they can have the same deal that Norway or Switzerland have with the EU. The problem is that to have that deal they have to agree to be part of Shengen Area
- digi_owl 10y ago
  1. Switzerland is not part of the EEA, they have their own agreements with EU. 2. It is quite possible to opt out of EU regulations while part of the EEA. But the Norwegian government do not have the balls to do so. 3. Norway had an older agreement with Denmark and Sweden about passport-free travel. It was not Shengen compatible. So either Norway had to join Shengen, or Norwegians had to get used to getting passports to visit said nations.
- upstandingdude 10y ago
  I run a business and I do not ship to Switzerland simply because the hassle is too big and there are hard to calculate risks involved. It is just not feasible. Dealing inside the EU is pretty much the same as it would be within borders.

by p4wnc6 10y ago

mioelnir 10y ago

But a hit to german trading to the UK is a small price to pay instead of the hit it would take by setting precedent that you can just willy-nilly leave with all the perks. And I can tell you, the german-language media is already full of "priority number one if to stop a cascading copycat effect". As a snarky side remark, what will the UK do in the future instead of continuing to import cars, regardless of terms? Rely on its domestic automotive industry?

kalleboo 10y ago
> As a snarky side remark, what will the UK do in the future instead of continuing to import cars, regardless of terms? Rely on its domestic automotive industry? One of the more credible arguments for leaving the EU is so the UK can negotiate their own international trade deals, as they feel the EU has been slow in negotiation. Opening up free trade to the US and Japan would probably be a priority.
- Tomte 10y ago
  That's the same United States who have already said that deals with Britain will be scheduled for after a deal with Europe and other big trade blocks?
  - kalleboo 10y ago
    Obama said that. Probably just to help the Remain campaign as a favor to Cameron. Trump has said the opposite, Hillary has said nothing aside from repeating how "close our ties are".
- Oletros 10y ago
  > Opening up free trade to the US and Japan would probably be a priority. And how the deal will be better than the deal between EU and USA/Japan?
  - kalleboo 10y ago
    Different priorities. For instance, the UK doesn't have an automotive industry to protect like Germany does. So they could get a trade deal that's more tailor-made to them. Obviously it's a huge risk as well since they're a smaller economy.

hsitz 10y ago

"In reality, most significant European trading partners with UK just want to keep on trading with them mostly as they have been, and will work out deals that allow such trading to mostly continue." Do you know what you're talking about? That's a sincere question. My understanding is that the UK's significant trading partners are members of the EU, and that it's the EU, not the individual partners, who will have to decide on any new trade deals with the UK. As others have said, what sort of precedent would the EU be setting if they gave a withdrawing member the same benefits it had as an actual member? The EU does not want more members withdrawing.

phicoh 10y ago
Logically, it doesn't make sense for the EU to impose harsh restriction on trade with the UK. The reason the UK is allowed to leave is that the EU is a voluntary association. By and large, the EU is an association of individual countries, not a federal nation state with its own army. So the countries in the EU have a lot of freedom. If they misbehave you can only kick them out. What countries would want to leave the EU? I'm not aware of any of the poorer countries wanting to leave. And it would not affect the EU much. For the richer countries, the EU is an enormous benefit, so leaving would be rather silly. The UK is the only country that has been questioning its EU membership for many decades. But it seems to be unique in the position. So for normal trade in goods and services, it doesn't make sense for the EU to impose too many barriers. The financial sector is an exception. It does make sense for the EU to grab more power there. The big issue however, is that many countries have significant parts of their population that are against the EU. So there is a real risk that the UK will be hit with sanctions, not because it makes sense for the EU, but because it makes political senses in some of the EU member countries. That would be sad, but that's the world we live in.

TheOtherHobbes 10y ago

Real numbers here. http://openeurope.org.uk/today/blog/how-would-key-export-sectors-fare-under-brexit/ http://openeurope.org.uk/today/blog/how-would-key-export-sec... Some key UK export sectors - especially finance - have a very low probability of being able to carry on as normal. The German car industry accounts for around 3% of GDP. Sales to the UK are less than 1% of German GDP. The UK financial industry accounts for around 10% of GDP. Sales to the EU are around 4% of UK GDP. As a rough guess estimate, post-Brexit disruption is going to lose 1-2% of that, and could lose more - because there's very little London can do for Europe that can't be done just as easily in Frankfurt. The UK has a lot more to lose than Germany does. But the EU traditionally plays hardball with negotiations. Ask Greece. So there is no chance at all the UK isn't going to have to make significant - expensive - sacrifices to keep trading. This vote is literally the most staggeringly stupid and self-destructive act I've seen in my lifetime. Take away the jingoism and the flag-waving and the blatant lies about immigration and sovereignty, and you have a country which relies on a huge captive market voting to - at best - change the terms of access to that market in ways that cannot possibly be more advantageous than they are now. Some trade will continue, but the overall effect on the UK is going to be very negative indeed.

p4wnc6 10y ago
1% of GDP tied to a single trading partner and a single industry is a pretty big deal. Likewise, 4% of GDP in finance commerce to Germany is a big deal. Seems like good evidence that the parties will want to ensure trading continues mostly the same as it has been. A big question is whether the rest of the EU would be able to block such arrangements. I don't think they will either want to or be able to.
- throwawaysocks 10y ago
  But the stickiness of geography for finance and autos are very different. Replicating a segment of London's financial sector in Frankfurt is easier than replicating BMW/VW to UK.
  - smm2000 10y ago

zmmmmm 10y ago

> Germany, for example, exports a huge volume of cars to the UK and it comprises a significant portion of German GDP ... In reality, most significant European trading partners with UK just want to keep on trading with them mostly as they have been Even if one accepts that existing trade will be accommodated through direct agreements, that only protects existing industries. What does it mean for future industries and how existing industries grow and change? When a new industry develops and wants to export, they are going to find they face trade barriers until such time as the EU and UK get around to negotiating a new (or modified) trade agreement. That's a huge disadvantage and will see a lot of investment, especially in tech companies go to the EU where previously it might have gone to the UK.

upstandingdude 10y ago
This sounds like a huge deal to me. Lets say you want to invest and built a presence in a new market. Until now if you wanted to go to Europe you could have picked UK as you main point of operation, now you have to decide, huge market with easy open trade or UK.

snowwrestler 10y ago

The biggest hit is not in goods trade but in financial flows. With the UK part of the EU, major financial institutions could base in London to serve the entire EU. Once the UK exits the EU, they can't, at least not without a lot of extra costs and paperwork. London, one of the 3 financial capitals of the globe, will lose its status in favor (probably) of a more diverse mix of European cities. This will have downstream effects on other trade flows in and out of the UK.

iofj 10y ago
I don't think many UK citizens see big financial flows as being to their advantage. For 90%+ of them, I think that assessment is correct. Globalization has been dealt a serious blow here, and if you're pro-equality, that should be a good thing. Take an obvious and very direct example. Cleaning staff. Not having to compete with EU illegal immigrants will improve their labor conditions. Building workers and Polish guest workers who send all money back home and live in extremely poor conditions, same. Yes that probably means the next time you need your toilet repaired, you'll pay more, but you'll pay more so the plumber can have a better life. Even for tech startups, this may be an improvement. I know over 4 London-based startups that don't directly sell to customers. They "consult" for a foreign entity (a US company in 50% of the cases, other 2 use Asian proxies), which then sells to EU customers because selling digital products to EU customers from outside of the EU is far cheaper and simpler than doing it from inside the EU. One thing I absolutely do not get is why socialists and even those left-inclined are so massively pro globalization. That just makes no sense whatsoever. There are constant complaints about globalization here. How Monsanto/Big finance/Suez/... convinced congress/EU/ECB/... that X is going to happen/be legal which means state/city/even small town Y gets shafted in Y way. For once, that becomes a little harder. But yes, it's probably the wrong thing for center London tech and finance workers and managers. The EU is reacting, imho, in the worst possible way. The press in France, Netherlands and Belgium is full of articles on how it was stupid, boneheaded, evil, weak for Cameron to allow the vote in the first place. It's generally all being blamed on Cameron, and his mistake is allowing people to vote in the first place. Very EU, being so overtly anti-democratic. But let's face facts here: the EU will try to make this work the same way the other referendums worked [1][2]. When the votes turned against the EU, they canceled the rest of the voting ("postponed" the term used, but they never happened). And then they cheated (the referendum happened because the law said it should happen before the law was changed. The law was changed without referenda). So I'm giving the odds of a Brexit happening at best 30-40%. Granted, that's far better odds than I gave it yesterday, so maybe I'll be wrong again. But the EU has a long history of ignoring democratic votes. The sky is not falling, this is not the worst thing to ever happen, and frankly, the market is wrong. This is a massive overreaction. [1] https://en.wikipedia.org/wiki/French_European_Constitution_referendum,_2005 https://en.wikipedia.org/wiki/French_European_Constitution_r... [2] https://en.wikipedia.org/wiki/Dutch_European_Constitution_referendum,_2005 https://en.wikipedia.org/wiki/Dutch_European_Constitution_re...

Oletros 10y ago

> But it's unlikely for EU nations to significantly damage trading relationships with the UK Well, they can have the same deal that Norway or Switzerland have with the EU. The problem is that to have that deal they have to agree to be part of Shengen Area

digi_owl 10y ago
1. Switzerland is not part of the EEA, they have their own agreements with EU. 2. It is quite possible to opt out of EU regulations while part of the EEA. But the Norwegian government do not have the balls to do so. 3. Norway had an older agreement with Denmark and Sweden about passport-free travel. It was not Shengen compatible. So either Norway had to join Shengen, or Norwegians had to get used to getting passports to visit said nations.
upstandingdude 10y ago
I run a business and I do not ship to Switzerland simply because the hassle is too big and there are hard to calculate risks involved. It is just not feasible. Dealing inside the EU is pretty much the same as it would be within borders.