What Would a WTO Brexit Look Like?

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.

Written by John Brian Shannon | Reposted from LetterToBritain.com

‘No-Deal’ Brexit scenario would cost both UK and EU billions

Reposted from Letter to Britain | by John Brian Shannon

A new report by a prestigious polling firm says that a so-called ‘No-Deal’ WTO-style Brexit will cost one EU country €5.5 billion over the next two years, as opposed to a Brexit with a trade agreement where losses for that country would likely total €1.5 billion over the next two years.

That country is the Republic of Ireland.

“A hard Brexit could cost the Irish economy more than €5.5 billion over the next two years, a government-commissioned report has said.

A “soft” Brexit including a transition arrangement would cost less than €1.5 billion over the period, highlighting the importance to Ireland of the UK’s withdrawal talks with the EU.

The study by Copenhagen Economics, which examined four possible scenarios, also warns that the UK will probably take at least five years to implement new trade agreements, complicating Irish efforts at contingency planning.

[Ireland’s ‘Taoiseach’ which is the official title of the Irish Prime Minister] Leo Varadkar said last night that a comprehensive free-trade deal with the UK would be the best way to avoid a hard border. After a meeting with Theresa May, the UK prime minister, he said: “We both prefer [the option] by which we can avoid a hard border in Ireland, and that is through a comprehensive free trade and customs arrangement.

“That is the best way we can avoid any new barriers — north and south, and also east and west.”” — The Times


Other EU Nations Take a Hit in the ‘No-Deal’ Scenario

We can extrapolate that other EU countries would also take an economic hit in a ‘No-Deal’ scenario, but due to their much larger economies when compared to Ireland, such losses would amount to tens or even hundreds of billions over the same two-year period. Just think of all those German cars that wouldn’t be sold in the UK due to the higher tariffs that would automatically be imposed on EU countries in a ‘No-Deal’ Brexit!

Almost every country in the world uses WTO rules as the foundation of their trading relationship with other countries (but important to note) those same countries also diligently pursue bilateral trade deals with their important trading partners that allow both sides to legally sidestep the more costly WTO tariff ruleset in favour of something that works better for both partners. (And that trading relationship/tariff structure can be anything the two sides want in regards to any trade that happens between them)

So if country A and country B decide they want to trade, they’re completely free to build a better tariff structure than the comparatively expensive WTO ruleset, and that agreement will thenceforth supercede the WTO tariff structure. However, it only applies on trade between those two countries — the rest of their trade with the world would still be conducted under the auspices of the WTO.


It’s a pretty basic thing. Countries that do anything more than a smattering of trade between them negotiate bilateral free trade agreements to bypass the more onerous WTO trade rules and tariff regime.


Still Time to Negotiate a Trade Deal with the EU

How many days until Brexit?
How many days until Brexit? Image courtesy of HowManyDaysStill.com

As of this writing there are 409 days remaining until Brexit and either we will have a trade agreement with the EU, or we won’t. If not, it will be costly for both sides, but more costly for the EU by one order of magnitude!

However, saying that there are 409 days remaining ’til Brexit — isn’t the same as saying there are 409 days left to negotiate a free trade agreement. Far from it!

The two sides have 258 days to arrange a free trade agreement. Let’s hope our politicians (and theirs) are up to the job (and if not, why are we paying them?) otherwise almost everything that citizens and businesses purchase will become much more expensive on both sides of the English Channel in the post-Brexit timeframe.

UK Prime Minister Theresa May has said repeatedly that October 29, 2018 is the latest both sides can agree a trade and customs deal before they must begin to get ready to implement WTO trade rules. And on that point both sides agree. In fact, even a preparation time of five months (during the period from October 29, 2018 to March 29, 2019) would barely suffice to put in place the necessary measures and standards to allow industry to prepare for life after Brexit.

Both UK and EU voters should remember who did, and who didn’t, get a free trade agreement signed when they head to the polling booth at the next election.


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