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The US has trade agreements with the EU. The UK does not because it is part of the EU and will have to negotiate them. It's probably going to be hard to negotia
by jonknee 10y ago
The US has trade agreements with the EU. The UK does not because it is part of the EU and will have to negotiate them. It's probably going to be hard to negotiate with people who all want to make an example of how bad an idea it is to leave the EU.
The short of it is there is uncertainty and investments hates uncertainty.
- Amezarak 10y agoA trade agreement is not required for trade, at least as far as I understand it. The absence of one just means you have more flexibility (subject to WTO restrictions) in applying tariffs, but with a weaker pound tariffs become less relevant.
- jonknee 10y agoYes, but that's a far cry from the current single market. You can bet that Brussels is not going to let the UK have access to the single market without huge concessions. Concessions that undermine the whole reason for Brexit. It looks like the WTO rules could be expensive: http://www.reuters.com/article/us-britain-eu-wto-idUSKCN0YG1C8 http://www.reuters.com/article/us-britain-eu-wto-idUSKCN0YG1... An added kicker is that the UK currently has no trade negotiators because they haven't had to negotiate their own deals in a couple generations. They'll need to get up to speed very quickly with a very large number of negotiators. You don't usually have to negotiate all your agreements at once!
- Amezarak 10y agoIf the pound remains weak, then even with tariffs, UK exports to the EU could be cheaper than they were pre-Brexit, no concessions needed. I concede to greater minds than mine, but those minds are estimating something in the range of a 2-3% impact in the long term, nothing drastic. I'm unclear about the reasoning behind the doom-and-gloom.
- jonknee 10y ago> I concede to greater minds than mine, but those minds are estimating something in the range of a 2-3% impact in the long term, nothing drastic. I'm unclear about the reasoning behind the doom-and-gloom. To be fair, a 2-3% impact is huge in the scheme of things. Especially in the current slow-growth environment. As a comparison, in the US February 2008 to February 2010 there was a 5.1% GDP contraction and that event will be in history books for centuries.
- dnautics 10y agothe UK will have to renegotiate a trade agreement with the US, but part of the brexit argument is that the UK will be able to separately pursue a trade agreement with India, which has been held up for a decade or so in the EU. The EU is notoriously slow and has relatively few trade agreements (compared to other 'developed' entities) so, outside of the eurocentric perspective, i.e. looking toward the broader world like china, japan, india, africa, south america, being out of the EU is potentially a better choice for the UK. One can imagine having favorable trade and immigration deals with India could be really great for IT in the UK.
- peletiah 10y agoMichael Dougan argues it will be very difficult for the UK to arrange trade agreements within a short time period, as they hardly have enough competent negotiators: https://www.youtube.com/watch?v=USTypBKEd8Y https://www.youtube.com/watch?v=USTypBKEd8Y
- dnautics 10y agothe EU sets the bar very low for rate of executing trade agreements.