Quizzes & Puzzles0 min ago
Lords' Vote On The May's Bill.
16 Answers
Anybody seen the BBC's coverage of the Lords' vote asking the Government to modify its stance on leaving the EU Customs Union?
In the debate ("Article 50") Kerr proposed a new economic law: "As distance doubles trade halves". (Find an appropriate name for it and this may go down in history along with "Gresham's Law" and "Morton's Fork" have?)
I don't know His Lordship's academic background, but he seems have latched on to one of Newton's laws of motion (but God knows which) and decided that this applies to the world of economics. (To be honest, physicists have an excellent record when it comes to successful prediction, but weather men, economists and peers of the realm less so. )
The BBC's balanced coverage explained the key point of the issue thus: "The customs union enables tariff-free trade amongst its member, thus making it cheaper and easier to trade amongst ourselves".
Absent from the analysis was the observation (an obvious corollary?) that "athis same customs union imposes tariffs against non-members, thus making it dearer and more difficult to trade with everybody else".
Antiques like me who voted against Heath when he was determined to join the Common Market (and for leave when Wilson was in government) (as was) knew something about the cost to be paid for this new free-trade agreement: we stuff our traditional suppliers of sugar, dairy produce and meat - Jamaica, Denmark, New Zealand-Danish and New Zealand.
In the debate ("Article 50") Kerr proposed a new economic law: "As distance doubles trade halves". (Find an appropriate name for it and this may go down in history along with "Gresham's Law" and "Morton's Fork" have?)
I don't know His Lordship's academic background, but he seems have latched on to one of Newton's laws of motion (but God knows which) and decided that this applies to the world of economics. (To be honest, physicists have an excellent record when it comes to successful prediction, but weather men, economists and peers of the realm less so. )
The BBC's balanced coverage explained the key point of the issue thus: "The customs union enables tariff-free trade amongst its member, thus making it cheaper and easier to trade amongst ourselves".
Absent from the analysis was the observation (an obvious corollary?) that "athis same customs union imposes tariffs against non-members, thus making it dearer and more difficult to trade with everybody else".
Antiques like me who voted against Heath when he was determined to join the Common Market (and for leave when Wilson was in government) (as was) knew something about the cost to be paid for this new free-trade agreement: we stuff our traditional suppliers of sugar, dairy produce and meat - Jamaica, Denmark, New Zealand-Danish and New Zealand.
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Some will remember the Commonwealth and EFTA and the useful trade and mutually beneficial trade we did with them.
The costs of joining the new club were massive to UK consumers, and massive to the UK's suppliers.
What surprised me then (though not today) is how few people who claimed to "care" actually gave a ckuf that poor people in England were now paying twice as much for sugar as the needed to, and that Caribbean farmers were being impoverished, or, in extreme cases, losing their livelihoods.
The costs of joining the new club were massive to UK consumers, and massive to the UK's suppliers.
What surprised me then (though not today) is how few people who claimed to "care" actually gave a ckuf that poor people in England were now paying twice as much for sugar as the needed to, and that Caribbean farmers were being impoverished, or, in extreme cases, losing their livelihoods.
Looks like Lord Kerr was citing a fairly robust economic theory:
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I didn't catch their coverage, but from your original post here it immediately occurred to me that the answer was to put together a a new trade agreement to replace the customs union; one that enabled tariff-free trade amongst its members, thus making it cheaper and easier to trade amongst ourselves without all the political impositions they want to add to it, and denial of being allowed to make separate agreements outside the member group, which makes it so unacceptable. Maybe it is rocket science after all.
From the Chaney paper cited by Zac's Master:
"The gravity equation in international trade is one of the most robust empirical finding in economics: bilateral trade between two countries is proportional to their respective sizes, measured by their GDP, and inversely proportional to the geographic distance between them."
If the gravity equation law is true, then Lord Kerr's evocation of it would imply that leaving the Customs Union will somehow widen the Channel. Or have I misunderstood something?
"The gravity equation in international trade is one of the most robust empirical finding in economics: bilateral trade between two countries is proportional to their respective sizes, measured by their GDP, and inversely proportional to the geographic distance between them."
If the gravity equation law is true, then Lord Kerr's evocation of it would imply that leaving the Customs Union will somehow widen the Channel. Or have I misunderstood something?
May be difficult to replace lost trade immediately. But that applies to both side of the table which is why the EU should be more cooperative to make this break work. But merchants seek out profit wherever it is.
Of course they'd prefer not to transport goods longer distances than necessary, which is why they'd go for close markets first and skew the figures to flatter nearby markets, but in time investment is made wherever it is profitable.
And in any case, one can't really say how much loss of trade comes from a higher tariff and more paperwork for the export process. Might be a lot less than rumoured.
Of course they'd prefer not to transport goods longer distances than necessary, which is why they'd go for close markets first and skew the figures to flatter nearby markets, but in time investment is made wherever it is profitable.
And in any case, one can't really say how much loss of trade comes from a higher tariff and more paperwork for the export process. Might be a lot less than rumoured.
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