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What Would a WTO Brexit Look Like?

by John Brian Shannon

Assuming European politicians can’t get their act together enough to craft a reasonable Brexit deal that works for both sides by March 29, 2019 Europe will be faced with Brexit on WTO terms which is known colloquially as a ‘Hard Brexit’ where the UK would leave the European Single Market and Common Market mechanisms and other EU agreements and institutions without any subsequent deal in place.

Without further ado, and without boring you with statistics, let’s look at how a Hard Brexit would play-out in the months and years following a WTO-style Brexit.


Will There Be Famine in the Land?

Of all of the dubious claims by the Project Fear campaigners (and they’ve made many!) this must rank in first place.

No. There won’t be famine in the UK on account of Hard Brexit. However, you may notice your favorite brand of cheese may be unavailable for a time and you may find your prescription medications come from UK pharmaceutical companies or American pharmas instead of from continental Europe.

Saying the following words out loud will do you good, dear Britons — so repeat after me;

“The United States of America has come to Britain’s rescue in times past and will do so again in its hour of need.”

Regarding agriculture; The United States agricultural belt is unimaginably massive and its farmers and ranchers are just waiting to fulfill the UK’s orders. There are fields of crops in the United States larger than the entire United Kingdom. It takes 3-hours to overfly them in a jet aircraft flying at 500 miles per hour.

Regarding ranching; There are 93.5 million cattle in the United States (2017) and that number continues to rise at a little better than 1% per year, and significant capacity exists to raise it over a relatively short period of time.

Similar agricultural capacity is available in Canada for grains, corn, soybean, and other crops, and Canada boasts 4.6 million cattle at present (2018) and Canada has more arable land than the United States allowing it to exceed even the mighty U.S. in this regard if sufficient firm orders were placed.

To answer the question: “Where’s the beef?” It’s in the United States and Canada… Just pick up the phone and call us! North American farmers and ranchers would love to take your money — instead of the EU taking your money.

Britons might find their food costs plummet as the huge economies of scale that typify North American food production and the favorable growing conditions combine to produce bumper-crop after bumper-crop which lead inevitably to lower food prices.

Countries of origin for UK food consumption

Image courtesy of gov.uk | Figure 1: Origins of food consumed in the UK in 2016 — Department for Environment, Food and Rural Affairs, Agriculture in the United Kingdom data sets, Chapter 14 – the food chain (2017)


Aren’t All American Crops GMO?

Genetically Modified Organisms or GMO crops are grown on every continent, including Europe, which has about the same number of GMO crops as America.

Some Europeans fear that all crops grown in the United States are GMO crops, but except in the case of corn that isn’t true. All corn, no matter where it is grown in the world is GMO and that’s been true for a few decades now. Corn (and maize, which is a type of rough corn that is fed to cattle over the winter months) aren’t commercially viable crops unless the GMO component is added.

Some crops like ‘Yukon Gold’ potatoes, Canola (a seed grain) and every apple sold on the planet have been GMO for many decades.

To alleviate concerns about GMO foods being sold in the UK, Theresa May’s government could simply legislate that any produce or meat that *isn’t* GMO must be identified as non-GMO for UK consumers.

Explainer: Forcing producers to put GMO labels on their produce (if theirs is indeed a GMO variant) is seen as a negative by GMO food producers. But giving non-GMO farmers the right to advertise “Non-GMO produce” or “Non-GMO meat” on their labels would be seen as a positive for their non-GMO produce and meat.

See how easy it is?

Not only won’t there be famine in the land, UK consumers will enjoy a completely new supply chain from which to choose and sufficient labelling for them to make the best choices for their families.


What if the EU Decides to Punish the UK for Leaving?

If the EU wanted to drive the UK directly into America’s arms… the EU would ensure a Hard Brexit and not allow EU goods or produce to be shipped to the UK following Brexit, nor would it allow UK goods or produce to be sold into the EU following Brexit.

If that’s the EU plan, bring it on! Because that plan has a 100% chance of success should the EU choose to make it happen.

And Americans and Canadians are just waiting… “Please, oh God, please, cause the EU to drive the UK into our ever-loving arms!” said every North American farmer, rancher and manufacturer.

To say nothing about the even more fervent prayers being said by North American auto manufacturers in Detroit, U.S.A. and in Windsor, Canada.

For Britain, a WTO Brexit simply means changing suppliers — with a zero-tariff trade deal in effect with North America — combined with the opportunity to sell UK goods into the vast North American market.

The ball, as they say… is in your court, European Union!


Bonus Video

View the video where HM North American Trade Commissioner is interviewed by Bloomberg Television on March 26, 2018.

Clicking on the image takes you direct to the relevant Bloomberg webpage.

Brexit on WTO rules

Antony Phillipson, HM Trade Commissioner for North America on Bloomberg TV.

 

As Brexit Negotiations Drag On: Are Europeans Missing Opportunities as Big as the Sky?

by John Brian Shannon

Countdown to Brexit

Countdown to Brexit. As of August 5, 2018 there are 237 days until the official Brexit date of March 29, 2019.

 

Only 237 days to go until the official Brexit date of March 29, 2019, and only microscopic progress has been made on crafting a ‘Win-Win’ divorce deal.

Such is the state of affairs that exists (1) within the UK, (2) within the EU, and (3) between the two countries. It is to weep.

But whether the United Kingdom or the European Union are ready for Brexit or not, the Brexit baby will be born — therefore, it’s imperative that both sides stop posturing and get on with creating a deal that works for citizens and industry on both sides of the English Channel.


What Else Is There Besides Brexit?

Although it may be difficult for Europeans to see, there are bigger issues in the world than Brexit which is why a deal needs to get done properly and quickly as there are other, more pressing, and more important matters for European politicians to attend to.

If we liken the geopolitical world to an auto race (a Formula One race) while all the other teams are busy prepping for the race and getting to their startup positions, the UK and the EU have found a muddy part of the infield and are playing ‘bumper cars’ with each other like a couple of overly-exuberant teenagers — getting mud all over their sponsor’s brand names and on their respective drivers’ goggles, they’re damaging the tires and composite body of their race cars, and they’re burning up precious fuel reserved for racing against the ‘big boy teams’ of America, China, Japan, India, Brazil and others.

Either the UK and the EU governments already have a deal and just haven’t announced it to the public, or they don’t realize that other more important geopolitical matters will soon bypass the ‘tempest in a teapot’ happening in Europe.

New and important things sometimes start small. Don’t believe it?

The first streetlights were installed in Cleveland, Ohio in 1879 when electric lights (Brush arc lamps) were placed along major roadways. Thomas Edison (who spent most of his day napping in his workshop only to become extremely productive afterward) was a person who toiled away for years inventing and designing a reliable light bulb, manufacturing one bulb at a time. Yet, the lighting industry in its entirety is a multi-trillion dollar business in our day.

George Eastman, right under everyone’s noses created a company in 1888 (Kodak) that eventually made so much money they weren’t always able to count it. New machines had to be built (computers) to keep track of the astronomical number of transactions happening all over the world, every minute of every day. Over the decades Kodak contributed more than a trillion dollars to the global economy and made the company and its shareholders unbelievably wealthy. Kodak’s patents and knowledge are still with us today.

The Wright Brothers ultralight aircraft first flew on December 17, 1903 near Kitty Hawk, North Carolina. At that time, the two men were thought of as odd, even eccentric people with fantastical ideas wasting precious days that could’ve been better spent. Yet, look at what their great invention has created — a multi-trillion dollar civilian airline industry and military aircraft industry.

From tiny beginnings, the first Model T automobile rolled off the assembly line on October 1, 1908 and see the changes the auto industry has brought to the world. Henry Ford is widely credited with the creation of the American middle class, something that propelled America far ahead of its competitors. Today, the world’s auto industry is also a multi-trillion dollar business, yet everyone thought old Henry was a bit of a dreamer.

King George VI united the modern Commonwealth of Nations under the banner, “Leaders agree that Commonwealth members are free and equal members of the Commonwealth of Nations, freely co-operating in the pursuit of peace, liberty and progress.” The Commonwealth now have 53 members with a total population of over 2.5 billion citizens and ranks near the United States, China, or Japan in GDP and PPP.

Steve Jobs created a company that in relatively few years became a trillion-dollar company, designing a computer operating system that was ahead of his competitors, and designed an astonishing number of world-class products, services and apps that allowed users capabilities they’d never imagined.

All of these great advances slipped completely under the radar at the time of their creation. Governments, industry, and citizens were completely oblivious as to what would follow.

The first flight at Kitty Hawk was seen as a sort of carnival ride item that made you wish you’d live long enough to see it come to your hometown, while Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” Yes, Henry was that far ahead of his contemporaries.

The point is, all these advances and others haven’t stopped at any time during the 20th century — technological advances are happening right now, right under our noses, just as in the time of Henry Ford — and the next Steve Jobs or Henry Ford aren’t going to stop and wait a few years for the UK and the EU to get their Brexit act together.

For all we know, the next trillion-dollar company or multi-trillion dollar industry might be deciding (this week!) where to set-up their ground-breaking operation and such entrepreneurs are likely to avoid regions of the world where economic instability appears or where regulations aren’t finalized. Dragging-out Brexit = European instability.

It’s not against the UK or the EU… it’s against both.

Both will suffer if a stabilized economy and a finalized regulatory environment are seen to be ‘aspirational’ — which is a word entrepreneurs sometimes encounter in developing nations.


Missed Opportunities?

UK and EU leaders should rethink their negotiating ‘strategy’ and factor-in the potential for losing the next start-up, disruptive technology, or multi-trillion dollar industry to a different region of the world, whenever they next meet to discuss Brexit.

Imagine if Europe would’ve ‘had it’s act together’ in previous decades… perhaps Thomas Edison, George Eastman, Orville and Wilbur Wright, Henry Ford or Steve Jobs would’ve started their businesses in Europe instead of America.

Put that in your pipe and smoke it, negotiators.

With financing and instant communications available almost everywhere, the global playing field has levelled since the 19th century, so ‘ease of doing business’ and ‘a transparent regulatory environment’ can make all the difference when today’s entrepreneurs meet to choose a location for the next trillion-dollar business.

We’ll soon know if any of this registers with British and European leaders…

 

Theresa May Spurned in Austria After Making Sweetest Brexit Offer Yet

by John Brian Shannon

By now, we all know Theresa May, Britain’s Prime Minister since July of 2016.

‘Articulate deal-seeker who vocalizes well-written speeches on behalf of the UK and a Prime Minister offering the sweetest divorce deal in history.’

And yet in Austria on Friday among the friendliest of European allies, Theresa May couldn’t buy a friend.

It seems the European Union just doesn’t want a Brexit deal with the United Kingdom. (Which is their right, of course)

We should question the logic of such a stance, however. Surely there must be something to negotiate in the way of a Brexit deal so that politicians on both sides of the English Channel aren’t eaten alive by their own corporations after March 29, 2019 for not paving a way forward for industry.

In the absence of a timely Brexit deal, the day after the official Brexit date is likely to result in very heated exchanges with CEO’s landing in European capitals to vent their fury at their own political class. The UK won’t be exempt from this anger, either.

Perhaps this is one reason why Theresa May has gone far out of her way to offer the EU a sweetheart deal (complete with £40 billion to sweeten the pot and to salve hurt feelings) and trekking all over Europe for the past two years so that powerful corporate CEO’s will appreciate all her hard work in this regard and not take their frustrations out on her.

That’s thinking ahead, Theresa! Because in the event of a no-deal Brexit… it will hit the fan like, well, few times in the postwar era.

As usual, Britain will be on the right side of history. And we’ll all thank Theresa May for her monumental efforts to reach a deal before the cutoff date — even as continental CEO’s are pounding their fists on the desks of EU politicians for not accepting that sweetheart deal.

If so, I hope Theresa May is found having a wonderful luncheon in the White House on March 30, 2019 after formalizing a trend-setting trade deal with President Donald Trump! Because the EU politicians certainly won’t be enjoying their day. To put it mildly.


All is Not Lost

One of the smartest and most experienced politicians on the planet is thinking ahead.

German Chancellor Angela Merkel has called for a meeting with Theresa May at the beginning of September that could kick-start stalled Brexit negotiations into high gear — which until now have been relegated to the British Prime Minister making polite speeches throughout Europe, receiving polite but tepid applause, and hearing the same message countless times, ‘That’s just not something we can do, Theresa.’

The rest of the Prime Minister’s summer seems to be about walking in the Swiss Alps sprinkled with some minor appearances throughout Europe to promote her super-diplomatic, uber-polite and overly soft Brexit proposal based on the Chequers document, that will no doubt continue to be rebuffed by the EU leaders and negotiators she meets. (A disheartening summer for Ms. May)

By September she may be ready for high level meetings with the continent’s most capable and most experienced politician. Let’s hope for Britain’s sake that Theresa May doesn’t feel too ‘beaten down’ on account of her many discouraging summer meetings, or it’s going to go all the EU’s way.


A Desultory Summer for Theresa May, Then a Restive Conservative Party Caucus, Followed by Meetings With Europe’s Most Experienced Leader

What could possibly go wrong?


Whatever your summer plans: Enjoy the summer!

And do take the time to thank God, your parents, your favorite high school teacher or whomever is important or profound to you, that you aren’t Theresa May forced to shuttle around Europe all summer only to be told, ‘No, no, no, and more no’ at each stop for offering the most generous and overly soft divorce settlement in history — one that is practically dripping with Rote Grütze and honey — without receiving a single encouraging word from her hosts all summer, and then having to return to a fractious party ready to toss her overboard on account of her overly generous Brexit proposals.

“Curiouser and curiouser!” cried Alice.