Home » Posts tagged 'Free Trade'
Tag Archives: Free Trade
Welcome to London, 2020. You’re in the former Battersea Power Station where the British International Motor Show is being held this week!
Apple Inc’s new UK & Commonwealth HQ is full of Alan Turing-esqe brilliant people glad to be hosting the show in their auric new building — and for the first time anywhere, iDrive (Apple’s shiny new hydrogen powered car) is on public display.
Aside from its obviously stunning design, the best thing about this car is that it can’t be stolen because unless the owner of the car is within a few feet of the car with his/her iPhone on and logged-in to the iDrive app, it is just a piece of aluminum, glass and plastic that can’t go anywhere. There’s no computer or operating system to allow the car do anything at all, save for the iDrive app in your iPhone or iPad.
No iPhone or iPad? Then you’re not the owner of the car. Because a matching serial number iPhone & iPad is provided with each Apple Car, with thumbprint security and as many passwords or login captchas as you want. It’s up to you.
Even if someone steals your iPhone and manages to locate your car, you can always “Log out of all devices and apps” remotely from any computer or smart phone on the planet — including the app that drives your beautiful new Apple Car. (Stolen car coasts to side of road, wholly inactive)
Now, that’s what I call a user-friendly car ownership experience.
And Brexit, You Ask? Pshaw!
Brexit came and went a long time ago. Neither Project Fear or the extreme Brexiteers were right; The UK coasted through 2019, Brexiting on March 29 as scheduled and other than a temporary blip in the markets things continued as normal. Yes, even the Sun rose in the sky the next day. Astonishing!
But not really. For all the hype, compared to other events taking place in the world Brexit turned out to be a sideshow. Only hyperventilating European politicians on both sides of the English Channel noticed Brexit.
After dipping to 1.2% GDP growth in 2019, the UK recovered and is now looking at 2% growth for 2021 — not due to Brexit — but due to the fact that Remainers are no longer sabotaging the UK economy hoping for it to fail so they could get their way.
Since the summer of 2019, the UK joined the USMCA (the new NAFTA agreement) and the CPTPP, and the new Commonwealth of Nations Free Trade Accord (CNFTA). In 2020, the UK has signed trade agreements with countries that have a combined population of 5 billion+ people.
A free trade deal with the EU (based on the excellent CETA agreement the EU has with Canada) is expected to be signed by the end of 2020 and go into effect on January 1, 2021.
Food shortages, rioting, family strife, civil war? Not a bit of it.
Every politician who tried to make a career out of Brexit is gone. Whether extreme Brexiteer, extreme Remainer, whether continental European or Briton; Every politician who held an extreme Brexit position was invited by their respective parties (and voters, hehehe) to leave politics.
Enjoy the day Britons, legal migrants to the UK, and visitors! You’ve earned it.
Oh, and the UK and the EU signed a modified Withdrawal Agreement on the 11th-hour of March 28th, 2019. But you knew that.
Think about it for a second. The thing we call Brexit is being held-up by a tiny item called tariffs. It’s ridiculous. (OK, there are some other things too, but for today let’s talk tariffs)
At the moment, the UK is still a dues-paying member of the European Union and is therefore obligated to charge the same tariffs as any other EU country, and such broad agreement on external tariffs, combined with low or no tariffs between members, or even standardized tariffs between members, is part of what makes up what’s commonly called a Customs Union.
When the UK exits the European Union it’s right to assume that the UK will no longer charge the same tariffs as the EU.
In fact, that difference is part of the problem between the EU and the UK in the post-Brexit timeframe, and businesses near the Republic of Ireland and Northern Ireland border may find themselves affected by this change-up.
How Would a Zero-Tariff UK Economy Work vis-à-vis the European Union post-Brexit?
What if the UK decides to embrace an economy where no tariffs are charged?
There would, of course, be people who complain (on the UK side) about a loss of tariff revenue for UK government budgets, while on the Republic of Ireland (RoI) side, businesses located near the border might worry their customers will drive to Northern Ireland (NI) to save 6.5% worth of tariff value on their purchases.
Which are immensely easy problems to solve!
How to Solve a Disparity in Consumer Prices (Due to Tariffs) Across an Uncontrolled Border
- Offer a rebate to Republic of Ireland businesses located within, say, 100 miles (160 kilometres) of the Irish border and such rebates would be equal to the (tariff portion of the) savings RoI consumers would enjoy by shopping in Northern Ireland. In this way, RoI shoppers won’t bother travelling to NI to save (usually about 6.5%) on the price of imported goods and consequently, RoI businesses won’t lose sales to the (then) zero-tariff regime north of the Irish border. We’re talking about small amounts of money on each transaction — but over the course of a year, especially for small ‘Mom and Pop’ businesses in RoI, it could add up and potentially at least, represent a hardship for those business owners. Who will cover the cost of the rebates? The UK, of course. Why would the UK government want to do that? It’s just one more irritation that the UK government can remove from the negotiating table to simplify Brexit. Such rebates might cost the UK government as little as £1 million per year. Of course, it might cost as much as £20 million per year. But, with so much to gain (a quicker and less hairy Brexit) the UK government could afford to pay the Republic of Ireland those rebates a full 10-years in advance at the beginning of each decade.
- For businesses in the EU that import from other countries and are required to charge tariffs on behalf of their government — all they need to do after March 29, 2019 is add the UK to the list of countries they must charge tariffs.
- For companies that export from the UK in the case where those goods are shipped to the EU or other countries — there’s no hassle with a UK zero-tariff regime because there are no UK tariffs to add to the final price — no matter where those goods land in the EU or wherever in the world they go after that.
- The same is true for goods that originate in America (for example) but are shipped through the UK before being shipped on to the EU. Whatever the price of the item from America + zero tariffs added by the UK = landing in the EU with only the taxes or tariffs that originated in America. The UK adds nothing in the way of tariffs, nor takes anything away from those tariffs. The term for that is revenue-neutral tariffs.
It’s so easy when you know how!
How Could the UK Recover Lost Tariff Revenue and Pay the Proposed Irish Tariff Rebates?
There would be two costs for the Chancellor of the Exchequer to cover:
One would be the loss of tariff revenue which would represent a large annual cost — and the other would be the relatively small cost of rebates to RoI businesses located within 100 miles (for example) of the Irish border.
a. For as long as the UK has been in the EU Customs Union, consumers have unknowingly paid the cost of tariffs on goods imported from outside the EU. In some cases the tariffs involved are quite low, but in other cases EU countries are required to charge up to 18% tariffs on certain goods coming into the EU28. All EU consumers pay an average of 6.5% more for goods imported from outside the EU due to those EU tariffs. But as soon as the UK leaves the EU Customs Union it would no longer charge EU tariffs and the cost of imported goods in the UK would fall by an average of 6.5%. Which is a good thing, except that the Chancellor of the Exchequer would need to cut spending by that total sterling amount or, add 1% (or less) to the national sales tax to make-up for that lost revenue. Most Britons won’t even see the difference. But if you’re a Briton who buys a lot of imported goods you’ll be slightly better off.
b. If you’re a UK business, it’s one less piece of paperwork you have to deal with and one less revenue stream you must collect on behalf of HM government.
c. If you’re the Chancellor of the Exchequer, you’ll lose millions in tariff revenue, but you’ll gain even more from the (less than) 1% addition to the national sales tax. But even more important, you’ll save millions of pounds in spending to oversee, police, and navigate all that tariff collection. Those tariffs don’t get collected by themselves! Nor does every business remember to forward those tariff revenues to the government on time, etc. Nor will the Chancellor be required to keep abreast of competitor nation tariff structures and constantly adjust tariffs for the UK to remain tariff competitive, nor will the Chancellor be required to notify the WTO about tariff changes. Because, no tariffs!
A Word About the WTO
The World Trade Organization (WTO) is a great organization that was created to ensure countries play fair with each other, especially on tariffs and on the dumping of goods at outrageously low prices, thereby harming the country importing their goods. And if you’re a developing country, you definitely want to be a WTO member as the WTO will protect you from larger, more aggressive countries and their powerful transnational corporations.
However, it makes rules in accordance with its membership wishes and some of those rules may surprise you.
WTO rules do not apply to trading partners that charge tariffs lower than the WTO tariff schedule (which was recently increased to an average of 6.55% on a long list of goods) therefore, trade deals can be done more quickly without WTO tariff regulations to complicate things.
The WTO won’t arbitrate between non-WTO members, nor will it intervene where countries charge tariffs that are lower than the WTO tariff schedule. Nor will it involve itself where two countries have a dispute within a free trade agreement previously agreed by both sides — unless requested by one or both parties to mediate disagreements within that free trade agreement.
In short, countries that don’t charge tariffs have no dealings with the WTO, they owe it nothing, and they have no tariff disputes. (Because they have no tariffs to argue about)
Many things come together beautifully for the UK were the government to decide to operate a tariff-free economy.
Not only would Brexit be streamlined, the Irish border situation becomes simpler to settle, relatively small rebates can offset any hardships for RoI businesses located close to the Irish border, CEO’s from other countries would appreciate the ease of doing business in the UK, any losses in tariff revenue for HM government can be offset by a (less than) 1% increase in the national sales tax, and free trade agreements become simpler to negotiate.
The UK wouldn’t need to re-apply to become a WTO member, nor would it fall under WTO jurisdiction in trade matters, nor would the UK need to pay annual dues to the WTO.
And imported goods in the UK would become cheaper by an average of 5.5% roughly speaking (dropping the 6.5% average tariff on imported goods + 1% national sales tax increase on all goods = 5.5% cheaper on imported goods) which can help consumers in regards to their discretionary spending.
The government would save millions of pounds sterling annually because it wouldn’t need thousands of workers to work in the Treasury’s tariff section, adjusting tariffs, comparing tariffs, ensuring tariffs are properly implemented, ensuring that tariff revenue is properly submitted to the government by UK business, dealing with the WTO, and handling lawsuits caused by disagreements over which tariff schedule must be applied on a given product. And many more miles of red tape than that, that the UK government could forget about forever.
Just another list of the benefits of Brexit, my friends! Happy weekend!
International summits are wonderful events. Heads of state, cabinet officers and their staffs, CEO’s, various think tanks and special guest speakers get together to discuss policies and innovative solutions to common problems faced by their group. Yet, in over two-hundred years of the modern political era, Anglosphere nations have never held a summit dedicated to Anglo nations. Inexplicable!
It’s time for the leaders of the United Kingdom and the United States to reach out to all English-speaking nations such as Canada, Australia, New Zealand and other primarily English-speaking nations to invite them to an Anglosphere Summit this year. (Yes! THIS year!)
Announcing the First Annual Anglosphere Summit: Anglosphere Summit 1.0 (Synergy)
A simple three-day format could be employed for the first annual Anglosphere Summit where the first day (1/3 of the programme) could help broaden the understanding of what the Anglosphere as a whole has contributed in the 20th-century (and more to the point, what it has accomplished in the 21st-century) via gigantic video projections and guest speakers on each topic, the second day (1/3 of the programme) could be devoted to present-day challenges for Anglosphere nations, while the final day could suggest conventional and innovative solutions to problems faced by Anglosphere nations, complete with photo opportunities, signing ceremonies, along with an award for the most-improved Anglo economy over the previous year.
And finally, the greatest strengths of Anglo nations have always been their respective economies, their combined economic power, and their per capita economic power, backed by their always-loyal military institutions. A deep commitment to international trade and a powerful but well-disciplined military are a world-beating combination that can’t ever be taken for granted by Anglo political leaders. That’s what made us who we are.
Each year, one Anglosphere nation could offer to host the Anglosphere Summit and tailor the experience so that each attendee can learn about the host country’s successes and failures in governance, policies, social structures, and industry, allowing attendees to take home that knowledge and build a better country.
Such luminaries as Bill Gates (computing) Bill Ford Jr. (automotive industry) Richard Branson (airlines, tourism) Jim Rogers (energy) Arnold Schwarzenegger (governance, movie industry, renewable energy) Elon Musk (TESLA, Space-X, SolarCity, PayPal, Ebay) and other entrepreneurs could deliver compelling presentations to participants, bringing them up-to-the-minute information on their fields of expertise.
Such resources the Anglosphere has available to them(!!!) but the experience and reach of these stellar people are criminally underutilized by Anglosphere politicians and policymakers. Unforgivable!
After the summit concludes, everything could remain in place for two weeks to allow the public to hear the recorded speeches and see the exhibits at the venue, and to watch the same informational videos in the same setting as Anglosphere leaders.
Leaders of Anglosphere countries need to lead. They need to synergize their efforts to compete in the global marketplace. And they need the support of all English-speaking countries to confront common domestic and international problems. There has never been a better time to work together!
- La Francophonie website — La Francophonie is a great organization dedicated to the betterment of all people living in French-speaking nations and it does incredible development work around the globe, much of it focused on poverty-stricken and up-and-coming French-speaking nations. Je salue la Francophonie!
- The Commonwealth of Nations website — an organization dedicated to the United Kingdom and its historical colonies that are now full-fledged nations, and some new member countries. (Some are English-speaking nations, while others aren’t) “The Commonwealth is an association of sovereign nations which support each other and work together towards international goals. With their common heritage in language, culture, law, education and democratic traditions, among other things, Commonwealth countries are able to work together in an atmosphere of greater trust and understanding than generally prevails among nations.”
- The CANZUK nations website — a group dedicated to increased cooperation between the ‘CANZUK’ countries — Canada, Australia, New Zealand and the United Kingdom (hence the abbreviation, CANZUK) that extends its membership to other like-minded nations. “CANZUK International (CI) is the leading group advocating closer ties between Canada, Australia, New Zealand and the United Kingdom, known amongst diplomats at the United Nations as the ‘CANZUK Group’. These four countries have shared commercial ties, geopolitical aspirations and a venerable constitutional tradition over centuries. Amongst CI’s aims is freedom of movement within the CANZUK Group for the citizens of Canada, Australia, New Zealand and the United Kingdom. In addition, it regards loyalty to the same monarch as an essential symbol of a common heritage and the cornerstone of constitutional democracy. More specifically, it is envisaged that the CANZUK Group would collaborate in the following areas: – Free Trade – Foreign Policy – Constitutional Affairs. The four leading Commonwealth realms could build upon existing economic, diplomatic and institutional ties to forge a cohesive alliance of nation-states with a truly global outlook.”
- Trump says he is working on ‘very big and exciting’ trade deal with UK (Sky News)