tag:blogger.com,1999:blog-8156972773801079896.post8545460273079446290..comments2023-10-23T14:20:52.192-07:00Comments on My10MinuteBlog: A Brexit Turkey (part 3) - Customs Union is not a Brexit solutionPaul Reynoldshttp://www.blogger.com/profile/04991999984214758071noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8156972773801079896.post-76405193479548119862018-07-06T05:31:38.487-07:002018-07-06T05:31:38.487-07:00Paul you should read, and tweet, this
https://bri...Paul you should read, and tweet, this<br /><br />https://briefingsforbrexit.com/ten-economic-propositions-made-by-remain/Potwalloperhttps://www.blogger.com/profile/17441000187089728787noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-62433999149460261412018-04-03T03:38:40.844-07:002018-04-03T03:38:40.844-07:00Paul indeed- and you'll note UK carmakers also...Paul indeed- and you'll note UK carmakers also do this. Sorry re. the FT; try this instead<br /><br />https://www.brookings.edu/opinions/value-added-trade-and-its-implications-for-international-trade-policy/<br /><br />‘ the U.S., Canada and Mexico are economically very integrated with goods and services often crossing their borders many times in order to produce a final product.’<br />Potwalloperhttps://www.blogger.com/profile/17441000187089728787noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-85491000301654115682018-04-02T12:44:11.140-07:002018-04-02T12:44:11.140-07:00Unfortunately, I can't see that article behind...Unfortunately, I can't see that article behind the FT paywall. I'll have to wait for my next free pass. Talking of USA, it is of course interesting to note that German car manufacturers already make use of USA in some of their supply chains. http://www.autoguide.com/auto-news/2014/09/10-german-vehicles-built-germany.htmlPaul Reynoldshttps://www.blogger.com/profile/04991999984214758071noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-11610636746620443382018-04-02T08:25:04.582-07:002018-04-02T08:25:04.582-07:00Interesting Paul, and I agree this really shouldn&...Interesting Paul, and I agree this really shouldn't be a problem. You might also note that some of the recent literature about NAFTA renegotiations has a strangely familiar ring to it, notably comments along the line that NAFTA has allowed the creation of an integrated North American auto industry where 'components sometimes cross borders many times'...(see link below)<br /><br />Yet of course NAFTA is only an FTA, not a customs union and not a single market. <br /><br />https://www.ft.com/content/0cd09860-814c-11e7-a4ce-15b2513cb3ffPotwalloperhttps://www.blogger.com/profile/17441000187089728787noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-52579505862639372982018-04-02T07:26:44.615-07:002018-04-02T07:26:44.615-07:00I've looked at lots of reports over last few y...I've looked at lots of reports over last few years trying to understand car industry position on Brexit, including this recent one one: http://www.acea.be/uploads/publications/ACEA_Position_Paper-Brexit_2018.pdf.<br /><br />The ACEA's main concern RE customs union appears to be speed through customs processing and impact on JIT supply chains. But they also recognise that via customs facilitation (including self-assessment, electronic information exchange between customs authorities, expansion of AEO scheme etc) "the existing invisible border between the EU and the UK can be maintained". This chimes with Japan's letter to HMG, which mentioned RoO only in the context of concerns over delays at customs (i.e. checking of paperwork at customs border including RoO paperwork) and called for continuation of the AEO scheme post-Brexit to continue fast processing through customs.<br /><br />The only mention of RoO in the recent ACEA report is in context of local content threshold in third country trade via FTAs (which would not be resolved via a Turkey-style Customs Union with the EU). <br /><br />The ACEA report also majors on regulatory issues, notably whole car vehicle approval, an issue which will of course cut both ways (EU car sales to UK) and is of course unrelated to the customs union question. I hope (probably forlornly) that ACEA & the UK car industry realises regulatory issues are based primarily on UNECE WP.29 - where automatic component type approval already covers much of the EU car approval scheme & UNECE are working towards an international whole car approval system (at behest of the EU). The EU's own interests RE their own car industry and their regulatory initiatives at UNECE should be basis for agreement.Paul Reynoldshttps://www.blogger.com/profile/04991999984214758071noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-60858490201713345572018-04-01T10:35:29.973-07:002018-04-01T10:35:29.973-07:00Paul - yes I am puzzled by that too. Based on my c...Paul - yes I am puzzled by that too. Based on my calculations it's hard to believe that any of the major producers would have a problem with the content thresholds under an FTA. At least for exports to the EU. Conceivably there could be a problem with exports beyond the EU but I wonder what share of these is even covered by preferential FTAs where RoO would apply.<br /><br />Not a lot I think - looking at the detailed data, of UK car exports of $42bn in 2016, $16bn were to China, Japan, Australia and the US. That is already the bulk of the non-EU total. RoO would not apply in any of these cases.Potwalloperhttps://www.blogger.com/profile/17441000187089728787noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-22735812520205691262018-04-01T03:19:30.220-07:002018-04-01T03:19:30.220-07:00At the turn of the century, the car industry were ...At the turn of the century, the car industry were strong backers of joining the euro, on the basis that UK car industry would be decimated due to extra burden of currency transactions compared with european competitors. Since then, UK car industry has thrived and UK content in UK cars has increased from low 30's% to mid 40's%. <br /><br />It's not clear why the car industry would believe a Turkey solution is essential compared with an FTA with bi-lateral cumulation and continued customs co-operation / AEO scheme (as per Japanese letter to HMG). As you say, RoO costs are lower than has been historically supposed, car companies have advantage of scale to minimise RoO costs and do have small (but growing) sales via preferential FTAs (~3% to Turkey, ~1.7% to South Korea, ~1.2% to Israel - see https://www.statista.com/statistics/298970/destination-of-cars-exported-from-the-united-kingdom/).<br /><br />A Turkey style Customs Union with the EU does not help with third country FTAs and meeting local content threshold. I suspect what car companies really want is to remain in "the" EU's customs union and continue to benefit from EU's FTAs and count EU content as local (aka EU membership). The obvious answer is that the UK needs to boost the current program of increasing UK car content in UK cars, and here UK government could/should help with investment in UK supply chains.<br /><br />Alternatively the UFT approach at least provides car companies lowest input prices on world market. If US did succeed in pressuring Eu to lower its imports tariffs of 10% on finished cars, that would make UFT option very viable for UK exports to EU.Paul Reynoldshttps://www.blogger.com/profile/04991999984214758071noreply@blogger.comtag:blogger.com,1999:blog-8156972773801079896.post-79756617997325205432018-03-31T08:34:08.582-07:002018-03-31T08:34:08.582-07:00Paul - the IoD are being misleading as we have dis...Paul - the IoD are being misleading as we have discussed before. Their proposal would do very little to solve the Irish border issue; it is single market membership that is the main reason for the open goods border.<br /><br />On rules of origin - the literature on this is thin and inconclusive but more recent papers have tended to suggest they are rather less of a barrier than previously thought and preference utilisation higher. One reason for this may be that FTAs have other elements(on customs, regulatory coop) that make them useful.<br /><br />Final point - a lot of this customs union push is from the car industry. With EU MFN tariffs at 10% there is an issue here. But what happens if these get slashed as a result of pressure from Trump (eg to the US level of 2.5%). Possibly a bit of game changer.Potwalloperhttps://www.blogger.com/profile/17441000187089728787noreply@blogger.com