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EU and the G20

by Politicker

To coincide with the recent G20 meeting held in Hamburg on the 7-8 July, the EU published a document to promote the European Union entitled, Facts and Figures about the European Union and the G20

https://ec.europa.eu/commission/sites/beta-political/files/g20-brochure-hamburg-2017_en.pdf

Its interesting to note that this document includes the contribution of the UK to the EU in contrast to other occasions when the EU seems to prefer omitting the UK. Nonetheless, its useful to see a comparison of facts relating to the positioning of the combination of countries in the EU, in relation to the rest of the world. (In this particular case it would also be interesting to see how the numbers change when the UK is treated separately e.g. the population figures quoted for the EU will be reduced by approximately 13% after the UK leaves the EU).

The EU has a seat at the G20 because the combination of its member countries creates one of the largest economic areas in the world. 4 countries in the EU France, Germany, Italy and the UK have their own seats at meetings.

The EU declared its objectives for the meetings in an earlier letter from Jean-Claude Junker and Donald Tusk published on 3 July 2017.

https://ec.europa.eu/commission/sites/beta-political/files/joint-letter-g20-hamburg.pdf

References:

Countries in the EU by population (2017)

https://www.worldometers.info/population/countries-in-the-eu-by-population/

The EU’s trade policy, Trade for all – Towards a more responsible trade and investment policy

https://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf

EU Negotiating Documents – Update 1

A number of papers outlining the position of the EU negotiating team, regarding a number of different specific matters, have recently been added to list of documents published by the EU. These papers have also been transmitted to the EU27 countries.

https://ec.europa.eu/commission/brexit-negotiations/negotiating-documents-article-50-negotiations-united-kingdom_en

A list of the new documents is included here for convenience

EU Position Papers update, 23 June 2017

Nuclear materials and safeguard equipment (Euratom)

EU Position Papers update, 29 June 2017

Issues relating to the Functioning of the Union Institutions, Agencies and Bodies
Ongoing Police and Judicial Cooperation in Criminal matters
Ongoing Union Judicial and Administrative Procedures
Judicial Cooperation in Civil and Commercial Matters
Goods placed on the Market under Union law before the withdrawal date
Governance

Potential tariff costs for EU-UK trade post-Brexit

Many organisations have undertaken research investigating the potential impact of the effects resulting from the UK leaving the EU without a Free Trade agreement in place.

The optimum outcome of the negotiations (for both the UK and EU member countries) would be for the EU to agree tariff free access to the EU market by the UK and for the UK to agree tariff free access to the UK market by the EU.

A report was published by Civitas in October 2016 which explores the potential tariff implications for the trade in goods between the UK and EU member countries, if a free trade deal is not reached by the time the UK exits the EU. It is based on data from 2015 and does not take into account trade in services between the UK and the EU.

Civitas Press Release 24 October 2016

and a copy of the report can be obtained from

http://www.civitas.org.uk/content/files/potentialpostbrexittariffcostsforeuuktrade.pdf

The following table, extracted from the report, shows an estimate of annual tariffs that could be payable on UK-EU Imports by EU Partner Country based on data from comtrade (http://comtrade.un.org/data/) if trade between the UK and EU was conducted under WTO Most Favoured Nations (MFN) terms.

From the data provided, it can be seen that Germany could have faced potential tariffs costing around £3.4 billion on exports to the UK with France and Ireland seeing tariffs of £1.4 billion and £1.3 billion respectively. This stands in comparison to UK exporters who would see tariffs of £0.9 billon on exports to Germany, and £0.7 billion and £0.8 billion on exports to France and Ireland, respectively.

The total amount paid in tariffs for goods by the UK to the EU would be £5.2 billion compared to the total paid by EU to the UK of £12.8 billion.

Most of the countries in the EU currently have a trade surplus in goods with the UK and all would be affected by the introduction of tariffs. The potential disruption of future trade between the UK and individual EU countries is greater for some than for others e.g. the trade between the UK and Germany in particular.

The report also explores the potential impact of tariffs by industry.

Who pays the tariffs ?

The report considers the trade in goods at a high level and shows there will be a cost to pay for both EU and UK exporters. The potential impact on imports could mean rising costs for retailers and consumers who may be the ones who end up paying import duties. The consumer will have the choice of buying the goods at a higher price, choose not to buy particular products or seek alternatives. Exporters may have to adjust their business models to take into account tariffs allowing them to continue to sell their products at competitive prices in the markets.

A fall in the value of sterling versus the EU has not been taken into account and how this would affect future trade inculding tariffs.

For exporters, WTO rules on state aid and subsidies regulate the provision of any possible compensation that the UK government might wish to give affected industries.

References

Civitas, the Institute for the Study of Civil Society was founded in 2000 as an independent think tank.

http://www.civitas.org.uk

UK trade options beyond 2019 inquiry

http://www.parliament.uk/business/committees/committees-a-z/commons-select/international-trade-committee/inquiries/parliament-2015/uk-trade-options-beyond-2019-16-17/

https://www.publications.parliament.uk/pa/cm201617/cmselect/cmintrade/817/81702.htm

https://www.publications.parliament.uk/pa/cm201617/cmselect/cmintrade/817/817.pdf

Commons Research Briefing paper: Statistics on UK-EU trade

https://politick.co.uk/wp-content/uploads/2017/07/Statistics-on-UK-EU-trade.pdf

Trade Data – Visualization tools

by Politicker

I recently noted a number of data visualization tools which can be useful when exploring and comparing worlwide Trade Data and I’ve found them useful when looking at data related to UK trade.

The Observatory of Economic Complexity is a tool for presenting interactive visualizations of international trade data, and was created as a result of a Masters Thesis in Media Arts and Sciences at the MIT Media Lab by Alexander Simoes.

Details of this tool can be found here:

http://atlas.media.mit.edu/en/

The observatory is published under a Creative Commons Attribution-Sharealike 3.0 Unported License.

The Atlas of Economic Complexity is an similar tool for visualizing international Trade Data and allows you to explore imports and exports based on individual products addressing numerous diverse questions such as “Who imported Apricots in 2015” (which, btw, appears to be a favourite in China!)

The Atlas can answer questions such as:

  • What does a country import and export?
  • How has its trade evolved over time?
  • What are the drivers of export growth?
  • Which new industries are likely to emerge in a given geography? Which are likely to disappear?
  • What are the GDP growth prospects of a given country in the next 5-10 years, based on its productive capabilities?

“The Atlas of Economic Complexity,” is from the Center for International Development at Harvard University,

http://www.atlas.cid.harvard.edu

The Atlas online is published under a Creative Commons Attribution-Sharealike 3.0 Unported License

Both tools use international trade data and includes data based on exports, not production data. The data also only includes goods, and not details about services. The tools are published as Open Source and can be found on github at

https://github.com/alexandersimoes/atlas_economic_complexity/network

https://github.com/cid-harvard/atlas-economic-complexity

Examination of Trade Data can be useful in understanding the relationship and interdependencies of trade between the UK and countries in Europe and the rest of the world. It may indicate that the EU may still have an interest in maintaining a good relationship with the UK in order to have tariff free access to the UK market just as much as the UK has an interest in retaining tariff free access to the EU single market.

Example using the Observatory of Economic Complexity

Based on the latest data available, from 2015, it is easy to quickly examine imports and exports between the UK and other countries, in an interactive way as follows:

e.g.

http://atlas.media.mit.edu/en/visualize/tree_map/sitc/export/gbr/show/all/2015/

The UK imported more goods (worth $592B) than it exported (worth $443B) resulting in a trade deficit in 2015.

UK Imports

The UK imported goods worth $592B in 2015.

The largest number of imports came from Germany worth $92.5B ( 16% of imports), then China $61.1B (10%), the USA $55.9B (9.4%), the Netherlands $43B (7.3%) and France $37.8B (6.4%)

From European countries as a whole, including Russia and other non-EU countries, the UK imported goods worth a total of $346B

UK Exports

The UK exported goods worth $443B in 2015.

The UK exported goods worth $66.3B (15% of exports) to the USA, then Germany $46B (10%), Switzerland $33.9B (7.7%) China $27.5B (6.2%) and France $26.4B (6.0%)

To European countries as a whole, including Russia and other non-EU countries, the UK exported goods worth a total of $239B (A trade deficit with Europe totalling $104B)

Example using the Atlas of Economic Complexity

The trade in Cars is often used as an example when analysing trade between the UK and the EU (and vice versa).

Using the data visualization tool, The ATLAS of Economic Complexity, my investigation into the trade in Cars, based on figures from 2015 shows:

Worldwide

The worldwide market in cars is worth $645 billion.

Who makes them ?

Germany exported the most cars worth $146B (or 23% of the market) followed by Japan at $84B (13% ), USA $52.6B (8%), Canada $44.4B (7%) then the UK $36B (6%) and Korea Rep. (6%)

Who buys them ?

Countries in Europe, not just the EU, imported cars worth a total $270B which is 42% of the total market.

The USA imported cars worth a total of $161B which is 25% of the market.

The UK imported cars worth a total of $48.7B (8%) closely followed by Germany spending $45.7B (7%), China ($37.3 6%) and France ($29.7 5%).

European Countries

The same data can be explored at a European level:

Cars exported from Euopean countries

Germany exports 43% of the cars exported from European countries, followed by the UK (10%), Spain (9%), Belgium (7%) and then France (5%)

Cars imported into European countries

The UK imports 18% of the cars imported into European countries, followed by Germany (17%), France (11%), Belgium (8%) and Italy (8%).

Fisheries and Brexit

by Politicker

The UK Government has announced it is withdrawing the UK from the 1964 London Convention on Fisheries in order to take control of its fishing policy and brings into focus issues surrounding Brexit and the Common Fisheries Policy.

The 1964 London Convention was signed by 13 European countries in order to establish and define a fisheries regime for their coastal waters and it allows vessels from other countries to fish in British waters if they had habitually fished in that same region between 1 January 1953 and 31 December 1962.

The Convention on Fisheries requires Member States to provide two years’ notice if they wish to withdraw and is one of the reasons why it is happening now.

The EU currently governs fisheries policy in the UK with the EU’s Common Fisheries Policy (CFP) which will continue to apply in the UK until the UK has legally ceased to be a member. After that, access to fishing grounds will be determined by international law rather than EU law and the UK will have sovereign control over the resources in its waters.

The future relationship regarding fisheries policy is subject to current and future negotiations between the UK and the EU, however, the EU has stated that

The agreement on a future relationship between the Union and the United Kingdom as such can only be concluded once the United Kingdom has become a third country

so it is unclear how negotiations over a future fisheries policy can be achieved prior to the UK leaving the EU.

The EU recently published an extensive document (164 pages) following a Workshop on “Common Fisheries Policy and BREXIT” of 21th June 2017, organised by the Committee on Fisheries (COMPECH) and the Policy Department B (PECH Research) of the European Parliament.
It examines the Common Fisheries Policy and the implications of Brexit in three parts

  • Legal framework for governance
  • Trade and economic related issues
  • Resources and fisheries

This document was produced on behalf of the European Parliament’s Committee on Fisheries. It provides an economic analysis of the expected consequences of Brexit and examines possible future EU-UK agreements on fisheries issues. The document covers a number of topics and shows figures detailing the amount of fishing performed by EU countries in UK waters, trade in products between the UK and EU and vice versa, possible tariffs on UK imports of fish and fish products from the EU and exports of UK fish and products to the EU etc.

http://www.europarl.europa.eu/RegData/etudes/STUD/2017/601981/IPOL_STU(2017)601981_EN.pdf

The Commons Library issued a briefing paper Brexit: What next for UK fisheries?
http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7669

A copy of the 1964 London Convention on Fisheries can be found on the Treaties website of the Foreign and Commonwealth Office at

http://treaties.fco.gov.uk/treaties/treatyrecord.htm?tid=2459

or the treaty document at
https://www.dfa.ie/media/dfa/alldfawebsitemedia/treatyseries/uploads/documents/treaties/docs/196601.pdf

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