Share this content
0
603

Brexit and the potential cost/benefit of WTO rules

Brexit and the potential cost or benefit of trading on WTO - does anyone have the numbers (facts)

Didn't find your answer?

Search AccountingWEB

Much is made of the proposition that if there was a second referendum now people would have the facts.
However I’m struggling even to find some basic facts to help determine the impact of a no deal Brexit.
Specifically how much would the UK have to pay out in extra duties and tariffs per annum if we left the EU with no deal on WTO rules on the initial assumption that the level and distribution of imports remained the same as now and using the duty and tariff rates currently applicable to those imports?
Without actually knowing this figure how can we start to assess the impact of no deal and therefore make a balanced judgement.
At the moment my understanding is that our net contribution to the EU is approx 9 billion pa.
So if the estimated extra tariffs and duties from a no deal Brexit under WTO were less than 9 billion it seems to me we start to be better off.
Without those numbers how can we even begin to decide. 
Can anyone throw any light on this?

Of course there are many other factors to consider with Brexit and its pointless having a Brexit debate here but I was just interested to find some basic numbers in this particular area

 

Replies (36)

Please login or register to join the discussion.

avatar
By GoldLeader
28th Mar 2019 14:26

I have, I'm afraid, no idea of the numbers on this - I was running some calculations based on HMG's Planning Notice for No Deal for one of our larger importers/exporters - they import finished leather goods from China, and export across Europe. Based on the reduced tariff schedule for Import duty, but adding in the increased costs of exporting to Europe and facing the Common External Tariff, they'd be marginally better off (by around 1% of total turnover)

Of course this varies across different industries.

Thanks (0)
ram
By Retired Dave
28th Mar 2019 14:27

It doesn't matter as Brexit will never happen. Once again the great British public have been well and truly shafted by 650 liars who only care what voters think when they need electing, and then only tell you what they think will get them votes, not what they actually intend to do.
The squeaker (intentional typo) is determined to deny a 3rd meaningful vote, and the rest of the EU think we are a joke.
Where is Guy Fawkes a when we need him?

Thanks (3)
Replying to Retired Dave:
avatar
By andy.partridge
28th Mar 2019 14:30

You may have already heard that Dominic Cummings is about to make a comeback into the political arena, so hang on to your hats.

Thanks (0)
Replying to andy.partridge:
ram
By Retired Dave
28th Mar 2019 14:42

I'm waiting for Nigel Farage to form UKIP Mk2.
I would put a bet on that I will be dead before we leave the EU but it's difficult to collect your winnings from beyond the grave :)

Thanks (1)
Replying to Retired Dave:
avatar
By andy.partridge
28th Mar 2019 17:32

Farage can only take a proportion of Leavers with him. Creates a good fuss, but too divisive to get anything over the line. It needs the subtlety, reasonableness and agreeableness of debate that Cummings can offer.

Thanks (1)
Replying to andy.partridge:
ram
By Retired Dave
28th Mar 2019 19:22

I still think Guy Fawkes is the only answer.

Thanks (0)
By ireallyshouldknowthisbut
28th Mar 2019 14:32

Facts? In Brexit? Its about opinions.

Thanks (0)
By Red Leader
28th Mar 2019 14:57

@OP sorry I don't have the answer. However, there's probably more to it than simply whether tariffs under WTO would bring in at least the same as we pay the EU. What about the effect - positive or negative - on GDP of the switch?

I find Richard North's blog contains quite a lot of well argued and fact-based info. Thanks to DJKL for pointing it out some time ago.
http://www.eureferendum.com/

Thanks (0)
RLI
By lionofludesch
28th Mar 2019 15:04

I don't care any more.

Three years of Brexit is already far too long.

Thanks (0)
By Duggimon
28th Mar 2019 16:00

I think we can all agree that neither membership of the EU, nor the hypothetical disaster scenarios touted about by people who don't really understand what they're saying, can be worse than Brexit just trundling on interminably. day after day, week after week, month after month, with all the MPs saying they don't like any of the options at all but unable to even begin to suggest what they do like.

Surely some sort of vague arrangement whereby we more or less leave but are still friends-but-not-sleepover-friends with the EU can drag itself through parliament, with everyone agreeing it's not what they want but by god we have to do something or we'll never do anything else.

Or, I suppose, call the whole thing off. After all, most of the Brexit campaign slogans turned out to be lies whereas the Remain ones have turned out to be more or less the horrible inevitable truth, albeit in extremely slow motion.

Thanks (1)
Replying to Duggimon:
Hallerud at Easter
By DJKL
28th Mar 2019 16:42

Too late to call it off, I wish it were not so but imho some form of Brexit is needed unless and until some form of referendum reverses the last one, and frankly I do not think that would even be a satisfactory ending as still too many unanswered questions.

I , as a remainer, would fudge something akin to Norway but appreciate that does not appear to have the legs. I am frankly fascinated that all the obsession at the UK end has been re goods (WTO versus CU) when services (SM) make up a vastly larger part of our economy and even a large part of our goods sales will have interesting services aspects- e.g.sell asset with service contract.

Re the OP, imho tariffs are really not the big issue, they are merely a figure business can accommodate within its pricing re the tariff and the compliance costs or cannot (if there are enough forwarders/agents to handle the volume), it is alignment on product regulation and testing processes re same that will likely have the bigger financial impact, these will likely be the factors that reduce overall trade far more than tariffs accordingly getting any meaningful numbers re impact will be hard as there will not be discrete isolated costs but spread costs e.g business in a JIT production chain goes abroad, paye/NI lost, CT lost, spend in local economy lost, increased state benefits paid etc

It is very difficult to isolate costs re the OPs question but it is very simple to know that there will be costs to the economy if a business closes or downsizes, any of us who lived through the 1980s have seen this impact at first hand.

The other cost that is hard to measure is the business uncertainty cost. As an example we are siting on, for us, reasonable cash (>£400k) in case Brexit impacts adversely out tenants; after 2007/2008 am not going to get caught short of liquidity. I suspect other business entities are similar, this absence of spending- we could develop more lettable commercial space within existing portfolio- will be dragging on the economy, certainly the phone has been quieter the last few years re enquiries from small business looking for space in Edinburgh, it is a slack market.

The key is to try to forecast impacts right down supply chains and local area impacts, this is not straightforward or objectively capable of prediction, so we fall back on basic economic thought, which posits that placing barriers to trade tends to reduce trade and tends, apart from odd cases (Infant Industry / Key Defence (inc food) Industry Protection ideas, say), to reduce overall wealth and standards of living.

Still- I could miss all the fun, I will be abroad at our house in Sweden on the 12th (see picture) and already have my International Driving Permit and just need to sort my Green Card- if you do not hear from me after the 12th it will be because I am staying there as we already have person numbers in Sweden (though no right to reside)

Thanks (1)
Replying to DJKL:
RLI
By lionofludesch
28th Mar 2019 17:05

DJKL wrote:

I , as a remainer, would fudge something akin to Norway but appreciate that does not appear to have the legs. I am frankly fascinated that all the obsession at the UK end has been re goods (WTO versus CU) when services (SM) make up a vastly larger part of our economy and even a large part of our goods sales will have interesting services aspects- e.g.sell asset with service contract.

Is it something to do with big trucks crossing the Irish border ?

Services don't need a lot of Customs checks.

Thanks (0)
Replying to lionofludesch:
Hallerud at Easter
By DJKL
28th Mar 2019 18:19

Ireland was always going to be a difficult issue, frankly I see little answer to GFA beyond a CU but imho we did not gallop down the quasi CU route because of Ireland we galloped down because that was where the jockey led her horse re her red lines and Ireland happened to be there; frankly Ireland was initially more of an after though to the political classes in 2016 and rose more when May threw away her majority in 2017, however I suspect it would always have become an issue but our politicians really had not looked far enough ahead to recognise this fact.

Her decisions were far more political than economic as SM likely brings freedom of movement;- our approach , in strictly economic terms, is perverse.

And whilst services do not need customs checks they do need significant conformity and regulatory checks and these are also going to be an issue re sales of goods with service elements, thus local presence in markets will be required and if re cost local presence can only be in one market, which gets chosen; tends to be the larger market.

Thanks (0)
Replying to DJKL:
ram
By Retired Dave
28th Mar 2019 19:30

DJKL wrote:

Ireland was always going to be a difficult issue, .

Ireland's been a "difficult issue" for centuries. Of course we could always get rid of the problem by removing the border and reuniting Ireland as Northern Ireland is more trouble than it's worth.

Thanks (1)
Replying to Retired Dave:
RLI
By lionofludesch
28th Mar 2019 22:03

Retired Dave wrote:

Ireland's been a "difficult issue" for centuries. Of course we could always get rid of the problem by removing the border and reuniting Ireland as Northern Ireland is more trouble than it's worth.

And will this be a unilateral decision ?

Thanks (0)
Replying to lionofludesch:
ram
By Retired Dave
29th Mar 2019 10:13

Yes - why not?

Thanks (0)
Replying to Retired Dave:
RLI
By lionofludesch
29th Mar 2019 10:49

Retired Dave wrote:

Yes - why not?

So you're going to tell Leo Varadkar that he's now in charge of Northern Ireland ? Whether he likes it or not.

You're an idiot, Dave.

Nobody wants to be in charge of Northern Ireland. Even the Northern Ireland assembly won't meet.

Thanks (2)
Replying to Retired Dave:
By Duggimon
29th Mar 2019 09:35

I'm not sure you've fully grasped the crux of the issues in Ireland over the last hundred years or more.

A large part of NI would be glad to go forward with what you propose and unite with the Republic, a large part would be horrified at the idea of leaving the UK.

The sensible move is for the UK to annex the ROI, then Ireland can be united AND part of the UK and everyone will be happy.

Thanks (1)
Replying to Duggimon:
RLI
By lionofludesch
29th Mar 2019 10:44

Duggimon wrote:

The sensible move is for the UK to annex the ROI, then Ireland can be united AND part of the UK and everyone will be happy.

Yeah - I think we've tried that and it didn't work.

Thanks (0)
Replying to Retired Dave:
avatar
By Jdopus
29th Mar 2019 09:58

There's something deeply disgusting about the type of people who decry Sinn Fein for wanting a united Ireland but are only too happy to insist on kicking out people who regard themselves as longstanding British citizens for hundreds of years as soon as they become politically inconvenient.

Scumbag.

Thanks (3)
Replying to Jdopus:
RLI
By lionofludesch
29th Mar 2019 11:02

Jdopus wrote:

There's something deeply disgusting about the type of people who decry Sinn Fein for wanting a united Ireland but are only too happy to insist on kicking out people who regard themselves as longstanding British citizens for hundreds of years as soon as they become politically inconvenient.

Scumbag.

Well said.

Thanks (1)
Replying to Jdopus:
avatar
By Tax Dragon
29th Mar 2019 13:20

Jdopus wrote:

There's something deeply disgusting about the type of people who decry Sinn Fein for wanting a united Ireland but are only too happy to insist on kicking out people who regard themselves as longstanding British citizens for hundreds of years as soon as they become politically inconvenient.

Scumbag.

Surely they're no worse than people who voted to leave the EU to give power back to the UK parliament, while believing said parliament to be staffed "by 650 liars who only care what voters think when they need electing" and that "Guy Fawkes is the only answer"?

Thanks (2)
Replying to Duggimon:
RLI
By lionofludesch
28th Mar 2019 17:01

Duggimon wrote:

Surely some sort of vague arrangement whereby we more or less leave but are still friends-but-not-sleepover-friends .....

Well, Facebook friends, maybe.

Thanks (0)
avatar
By Tax Dragon
28th Mar 2019 17:08

I normally steer well clear of these discussions – at least, in terms of contributing to them. My knowledge and understanding of the issues is off the bottom of the scale, as I will now demonstrate, and I try to stick to the know-your-limitations motto that I espouse in this forum. (My vote was cast in knowing ignorance, with no real conviction.)

But since I'm here.... I find it remarkable that (based on my limited exposure e.g. to coverage in news channels and the like), prior to this week, all the talk was of “deal, no deal, remain”. Within a few hours of “Parliament seizing control of Brexit” (if I recall the headline correctly), the talk was of Norway+, Canada++, CU, modified CU, EFTA… all sorts of (supposed) options. Of course, these are to do with where we might end up, not the Brexit “event” (or now “process”, per JRM). But, or so it seems to me to my little mind, those are the very options that the UK and EU SHOULD HAVE BEEN talking about for the past 3 years. They haven’t even started those talks, as far as I know. (The “deal” is to buy – literally – two years of EU negotiating time. We could already have had nearly three.)

Whatever Parliament says, where we are now genuinely is deal, no deal or remain. Remain is ruled out by the referendum result. So isn’t it a matter of deal or no deal? What am I missing?

Thanks (0)
Replying to Tax Dragon:
RLI
By lionofludesch
28th Mar 2019 17:22

Tax Dragon wrote:

Whatever Parliament says, where we are now genuinely is deal, no deal or remain. Remain is ruled out by the referendum result. So isn’t it a matter of deal or no deal? What am I missing?

Noel Edmonds, probably.

Thanks (0)
Replying to Tax Dragon:
Hallerud at Easter
By DJKL
28th Mar 2019 18:30

Mrs May of course ruled most of these out with her red lines but of course cannot carry the H of C with what she has brokered. Of course the form of Brexit is in the Political Declaration to the WA, so if I was a betting man I would suspect to see the WA go through with a different PD, catch will be the PD is as woolly as can be so her successor might start bending any new PD to his/her will and of course the H of C knows this.

So- and it is daft to make predictions- my prediction- Existing WA steamrolled through with new PD but to give political clout to the PD it will be subject to a confirmatory referendum re its intent which the H of C will hope is enough to bind the hands of any successive administration led by whoever. (And there are plenty of runners and riders re the job-not so fast Boris)

Right, having looked into my crystal ball anyone with any sense will place their bets the other way as apart from football bets I do not have a good record at the bookies.

Thanks (0)
Replying to DJKL:
avatar
By Tax Dragon
28th Mar 2019 22:01

DJKL wrote:

Of course the form of Brexit is in the Political Declaration to the WA

You say "of course" but I for one have only just twigged this.

I guess part of my mistake (part of the reason for my ignorance) is that I listen to politicians. So (this is just an example, I'm not being partisan) when the deal was voted down in round 1, and the PM came back with the same WA and a modified PD, Keir Starmer said changing the PD meant nothing. Now they're voting on the WA with no PD, he's saying that's ridiculous, all the important stuff (except the backstop - though, presumably, he's happy with the backstop) is in the PD.

Which is what you confirm.

Thanks (0)
Replying to Tax Dragon:
Hallerud at Easter
By DJKL
29th Mar 2019 01:35

But there is actually nothing binding in the PD, is is nice woolly talk about how things might be, the sort of "friendship" we want to have but no real teeth that it will actually turn out that way, hence the EU insistence on the backstop as I suspect they believe the end beast may well be different from the PD and they need to cover their backs re Ireland etc.

Thanks (0)
Replying to Tax Dragon:
avatar
By Tax Dragon
13th Apr 2019 00:55

Tax Dragon wrote:

But, or so it seems to me to my little mind, those are the very options that the UK and EU SHOULD HAVE BEEN talking about for the past 3 years. They haven’t even started those talks, as far as I know.

Apparently it would be "illegal" to start those talks before we leave.

Thanks (0)
Replying to Tax Dragon:
avatar
By johnhemming
13th Apr 2019 12:31

Tax Dragon wrote:

Apparently it would be "illegal" to start those talks before we leave.


I don't know where you get this from. Some trade talks have gone on.

WTO and tariffs are only part of the issue of no deal. Delays at the border and rules of origin are both important issues as well as services passporting and the like.

Thanks (0)
Replying to johnhemming:
avatar
By Tax Dragon
13th Apr 2019 13:02

BBC TV news, Katya Adler.

johnhemming wrote:

Some trade talks have gone on.

What's your source?

Thanks (0)
By Paul D Utherone
28th Mar 2019 17:38
Thanks (0)
avatar
By mumpin
29th Mar 2019 09:13

Mervyn King was just on the Today prog saying that WTO terms shouldn't damage the economy and that should not be a criteria anyhow.
He said Europe has gone to hell in a handcart and sounded quite convincing!

Thanks (0)
avatar
By Jdopus
29th Mar 2019 10:04

In the spirit of sharing some useful information in this thread as opposed to the opinions of ignorant bores, I have links to the presentations run by a recent Invest NI conference on potential changes in a no deal Brexit scenario. Hopefully these links work:

Customs and Tarriffs
https://secure.investni.com/static/library-cms/invest-ni/2fc1a270-ae3b-4...

Movement of People and Immigration
https://secure.investni.com/static/library-cms/invest-ni/01250795-eb2d-4...

Transport and Logistics
https://secure.investni.com/static/library-cms/invest-ni/42ea597d-246d-4...

Thanks (0)
Replying to Jdopus:
avatar
By Tax Dragon
29th Mar 2019 13:33

I think you have identified the problem.

Finding out the truth is just too difficult - too much hard work - for any sane citizen. So most of us (and I am guilty as charged) rely on either our own prejudice(s) or (and this is me) we listen to the debates in which other people make statements skewed to support their prejudice(s).

I feel more aware now than I did 3 years ago. I don't feel better informed. (Admittedly, it's my job to inform myself - but I have other things to do/am too lazy.)

Thanks (0)
Replying to Tax Dragon:
avatar
By Jdopus
29th Mar 2019 15:56

Unfortunately, that's politics for you. Although I can't help but feel that until the last few years institutions like the media, the BBC etc were held to a higher standard of honesty. I may just be imagining it though.

And in fairness, there is no rock solid truth on how exactly Hard Brexit is going to affect things because the rules are not set in stone yet and the government has not announced how they intend to enforce many of these matters.

Thanks (0)
Share this content