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Friday, 13 January 2017

A lesson on negotiating for Theresa May.


One of the most important parts of negotiating is to do thorough research before you sit down at the table.

Second, but equally important, is that you keep your plans to yourself right up to the last moment before briefing your team, unless you trust them!

Although I distrust Theresa May – after all (a) she is a politician and (b) she was a remainer, and possibly still is – she is absolutely right not to discuss her final tactics in Parliament – after all, they are also MPs, and not to be trusted!

It is my considered view that Mrs May should start the talks by saying she is considering scrapping membership of the single market, and relying on World Trade Organisation tariffs. We don't want that, but it will wake them up in a panic.

This would hit German car imports into Britain as, of all new cars sold in this country, 30% are German. This has been estimated as costing Germany a loss of between 3m and 5m jobs. Of course it would hit our own export of motor cars but this is just one company, Jaguar, and we could reimburse their 10% rise of import tariffs from the 10% we collect on German Cars. But this may not be necessary now that our pound has returned to its natural level.

Considering the above, it would wrong-foot the EU negotiators from the start, and enable her to negotiate from strength.

Total trade exports for November 2016 were £29.3 billion. This was an increase of £2.5 billion (9.4 per cent) compared with last month, and an increase of £4.5 billion (18 per cent) compared with November 2015.
Total trade imports for November 2016 were £42.5 billion. This was an increase of £2.9 billion (7.4 per cent) compared with last month, and an increase of £7.6 billion (22 per cent) compared with November 2015.

The UK was a net importer this month, with imports exceeding exports by £13.2 billion.

In an analysis published in 2013, the UK Office for National Statistics reported that if all goods trade with the Netherlands is counted as EU trade, then 50.5% of UK exports go to the EU and 54.5% of imports are from the EU. If, to take an extreme assumption, all trade with the Netherlands is excluded from the EU total, these figures fall to 42.5% for exports and 46.7% for imports. If 50% of trade with the Netherlands is excluded, the figures are 46.5% for exports and 50.6% for imports.

I have printed their conclusion below for those who are happy just with the bottom line.

Conclusion
Combined, the two distortions for exports have grown from an estimated £4 billion in 2004 to just over £10 billion in 2010. Both have very large margins of error as a result of the sweeping assumptions therein. The most likely inaccuracy is an overestimate in the Rotterdam-Antwerp effect, resulting from exports to the Netherlands that are not subject to the same rates of transhipment as fuels or containerized cargo. As a proportion of UK exports of £5-600 billion, the overall distortion is not great. The two distortions are an illustration that patterns of trade are not uniform. Particular commodities, such as oil and fuel, can have very specific markets. Particular accounting arrangements, such as in Luxembourg, can create a focus for international investment.Relations with one country can have implications beyond the purely bilateral.

An interesting article, but one which doesn't seem to have taken into consideration:

German motor imports toBritain [see appendix]
Almost one in three cars, or 810,000 cars sold in Britain, come from Germany, making the British island the biggest export destination for German car producers. It is around a fifth of the total number the industry exports worldwide, according to the German car association, VDA. Britain reached a new market high of 2.6 million car registrations in 2015 – 86 percent of which were not produced in the UK.

French cars amounted to 253,297 which is approximately one car in 10. American cars, Ford and Vauxhall, are the largest importers and their total is 570,309 per annum.

This could well mean some of our motor importers could well consider opening up more factories in Britain to avoid the swinging tariffs.

The following equation should be borne in mind

Exports mean more manufacturing, which in turn means more jobs
If we sell more worldwide with a weaker pound, we will have to make more.

Imports mean more manufacturing, which in turn means more jobs
If imports cost more from the EU, we can then afford to make our own goods.

If you spot any weaknesses, please comment below.

Ampers.


Appendix

UK Car Sales 2014/2015

Rank Manufacturer Sales 2014 % Share % Change Sales 2013

Total 2,476,435
9.35 2,264,737
1 Ford 326,643 13.2 5.08 310,865
2 Vauxhall 269,177 10.9 3.75 259,444
3 Volkswagen 214,828 8.7 10.69 194,085
4 Audi 158,987 6.4 11.93 142,040
5 BMW 148,878 6.0 9.81 135,583
6 Nissan 138,338 5.6 17.27 117,967
7 Mercedes-Benz 124,419 5.0 13.67 109,456
8 Peugeot 103,566 4.2 -1.77 105,435
9 Toyota 94,012 3.8 6.05 88,648
10 Citroen 83,397 3.4 6.43 78,358
11 Hyundai 81,986 3.3 6.59 76,918
12 Kia 77,525 3.1 7.54 72,090
13 Skoda 75,488 3.1 14.24 66,081
14 Fiat 67,162 2.7 11.57 60,198
15 Renault 66,334 2.7 43.66 46,173
16 Land Rover 56,200 2.3 2.74 54,699
17 MINI 53,661 2.2 3.33 51,933
18 Honda 53,544 2.2 -3.8 55,660
19 SEAT 53,512 2.2 18.1 45,312
20 Volvo 41,066 1.7 25.71 32,666
21 Mazda 37,784 1.5 20.99 31,228
22 Suzuki 37,395 1.5 13.02 33,088
23 Dacia 23,862 1.0 39.17 17,146
24 Jaguar 18,401 0.7 13.52 16,210
25 Mitsubishi 15,805 0.6 74.76 9,044
26 Lexus 11,572 0.5 28.38 9,014
27 Porsche 9,160 0.4 10.9 8,260
28 Alfa Romeo 5,523 0.2 -2.88 5,687
29 smart 4,342 0.2 -18.29 5,314
30 Jeep 3,909 0.2 75.37 2,229


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