Brexit- Getting Down to Brass Tacks!

There is currently much talk of ‘hard-Brexit’ verses ‘soft-Brexit’, and with the Conservatives not getting an overall Commons majority in the general election, the talk is all about: how Theresa May wanted a hard-Brexit; how the result of the general election signals that the British people don’t want a hard-Brexit; and how so many in the Tory camp will revolt if Theresa May sticks to her guns and tries to negotiate a hard-Brexit. The truth of the matter is however rather different from what the mass media would have us believe and the massive challenge facing Theresa May is whether or not she can convince the electorate that Brexit can only mean one thing, Brexit.

Were we in Britain to begin trading with a new trading block and one with which we had no prior special agreements, the terms of trade would be those of the World Trade Organisation (WTO) and WTO terms are therefore the default position, should our Brexit negotiations with the EU not reach a more mutually advantageous solution.

From a negotiating perspective, the advantage to us of this default position is that WTO terms would be far more damaging for the EU economy than they would be for the UK economy. The EU countries export far more to us than we export to them and so if trade becomes difficult or diminishes under WTO terms, the EU will be the biggest losers. Furthermore, while it is feared that we will none-the-less still lose out if the Brexit talks break down, but just not as badly as the EU, in fact WTO terms could actually be economically beneficial for us.

Let us say for example that the EU decide to impose a 10% tariff on all British made manufactured goods entering the EU and we respond in tit-for-tat fashion, imposing a 10% tariff on all EU manufactured goods entering the UK. The tariffs will act rather like a tax, the EU receiving a ‘tax’ to the value of 10% of the value of all UK manufactured goods entering the EU and vice versa. However, as the amount of manufactured goods entering the UK form the EU is considerably greater than the other way around, our government will have the benefit of 10% of a much larger amount. Our government and would therefore be able to use that ‘tax’ income to more than compensate British manufacturers who might otherwise lose out as a result of these new tariffs. Our exchequer and our manufacturing industry could be better off than at present.

This default position of WTO terms is therefore our trump card in the negotiations. Indeed, it is our only card, because without it we have no leverage over the EU whatsoever and we will be forced to take what little they offer us and pay whatever they demand. This default position of WTO terms is what people are describing as ‘hard’ Brexit, as though it is something difficult or uncomfortable that we should fear, but it is not. We should learn to love hard-Brexit because it is the key to successful negotiations with the EU.

Whoever enters the Brexit negotiations to represent the UK must have the possibility of walking away from those negotiations and of defaulting to WTO terms if they are to have any chance of success. In fact if anyone goes into those negotiations without the ability to threaten WTO terms, they will fail miserably and come home with a deal that will be worse, in which for every supposed advantage gained, a massively disproportionate price will have to be paid.

All of those people calling for our negotiating team to aim for soft-Brexit are in effect asking our negotiating team to offer the EU our unconditional surrender to whatever terms they wish to impose upon us. And all those people saying that they will on principle vote against hard-Brexit are similarly asking our negotiating team to surrender.

Soft-Brexit will mean that we will remain within the single market and the EU customs union, and that in order to do so, we will have to pay through the nose for that privilege. In stark terms we will be significantly worse off than we are now. Furthermore on the downside, while we currently have some small say in how the EU is run, under soft-Brexit we will have no say whatsoever. We will have no elected MEPs ostensibly representing us in the European Parliament, we will have no ministers providing any kind of representation for us in the Council of Europe, and we will have no commissioners supposedly representing our interests within the European Commission. We will, as I have already stated, be a subject people and our economy will be governed and regulated by a bloc of nations who will stand to gain immeasurably by pillaging our economy – and that they will do! We can be sure of it!

The only way of negotiating what people think of as a soft-Brexit, without that outcome being something we pay through the nose for, is by having hard-Brexit, i.e. WTO terms as a viable default position throughout the talks. It is the threat of hard-Brexit that we can use to negotiate a ‘softer’ deal, i.e. a mutually advantageous deal that is fair for both Britain and the EU.

By Max Musson © 2017

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3 thoughts on “Brexit- Getting Down to Brass Tacks!

  1. Frederick Dixon

    - Edit

    There’s a lot of noise coming from arch-remainers within the Conservative party – Soubry, Nicki Morgan, George Osborne, Ruth Davidson (the latest flavour of the month) and, we are told, several members of the present cabinet, to the effect that we must remain within the Single Market and prioritise “the interests of business over immigration control”. All of which made me rather depressed until I heard on the radio this morning (Sunday) that Jeremy Corbyn has said that Britain must leave the single market. That was followed Michael Howard – the former Tory leader – who told us that the Labour manifesto contains a pledge to take us out of the EU and the Single Market. So there perhaps is the answer to the problem – the two main parties put their differences aside and work together for this one supremely important objective, a real and complete Brexit, just as they put their differences aside when there was a war to fight. Can’t see it? No, me neither.

  2. I predict its going to be soft Brexit, only difference is not to vote in the 2019 European elections but stay in the single market. Iceland, Liechtenstein, Norway and Switzerland are not in the EU but they are part of the European single market, that’s how its going to be predicted.

    Personally, I don’t think Brexit is going to make any difference.

    1. Brexit won’t necessarily make much difference to us economically, but it makes a massive difference politically.
      .
      While we remain within the EU our national sovereignty will continue to be eroded, we will be further integrated within a monolithic political bloc that is undemocratic, totalitarian in outlook and which seeks to marginalise and race replace the peoples of Europe. Whereas outside of the EU we will still be a sovereign nation, able to protect and prioritise our own people and able to steer a different economic course which could be enormously beneficial to us in the future.
      .
      Now that we have triggered Article 50 there can be no going back to the position we have previously held. The Brexit negotiations will either yield hard-Brexit on WTO terms or they will yield newly negotiated terms which the EU states have already made clear they intend will be worse for us than the trading position we have ‘enjoyed’ to date.
      .
      Even if we decide now that we would like to remain within the EU, the Article 50 process cannot be halted and we will need to leave the EU and then negotiate our re-entry, and that will be on worse terms than we have ‘enjoyed’ to date, other EU leaders have said so.
      .
      Hard-Brexit must be our initial negotiating position. We must call their bluff and then offer the EU mutually advantageous trading terms as an alternative to hard-Brexit. When they realise their bluff has been called and we can’t be pushed around, they will settle for mutually advantageous trading terms.

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