Fears are growing that a messy Brexit dissolution of the United Kingdom’s union with Europe could lead to open trade hostilities between the two parties. So great is the fear that Minister of Trade, David Parker, warned the United Kingdom and European Union against commencing trade hostilities.
Trade hostilities do no country any favours. They are the war like equivalent of two countries vying for some sort of supremacy or other advantage, except that tariffs take the place of bullets with exporters and importers being the casualties in the front line. And behind the front line, you and myself, the regular civilian consumers who can only make the best of the market conditions of the day as they can try, are the real losers. With increased costs passed on by importers, they will be more selective as to when they get out the EFTPOS card or the credit card or hard earned money that they will want to know is well spent.
The increasingly messy dissolution of the union between the U.K. and Europe as a result of the 2016 referendum has alarmed many. It stems from the desire of the two parties to divide up tariff rate quotas on agricultural products, The concerns are that this would have a negative impact on how New Zealand meat, butter and cheese gets into the E.U.
In a world with a slowing economy being buffeted by increasingly stormy conditions that exporters and importers have little say over what looks like an increasingly worrisome storm. The combination of E.U. discontent, high petrol prices due to increasing angst over the Iran deal and the desire of the U.S. and Israel to possibly launch military action against the Islamic Republic, to say nothing of a failure to address the causes of the last economic crisis all point to a potentially messy divorce.
In a part of the world where freedom of movement is celebrated by way of the Schengen free zone, people living in member nations can move freely within 27 separate countries.Would the Schengen free zone still exist in an economic sense when the issue is resolved? Would any dissolution of the zone or damage caused by tariffs affect non-European nations ability to conduct trade issues of the day?
None of this can be good for the global economy any more than it could be good for the New Zealand economy. This is shown by the number and range of countries that are opposed to the plan for tariffs. Alongside New Zealand are Canada, United States, Thailand, Uruguay and others.
Two years after that shocking June 2016 announcement that the United Kingdom would seek divorce from the European Union, the real economic costs are only now just starting to come out. And as they do, the criticism of the result whose implications probably not that many voterrs understood is only going to get louder and more diverse.
Was Brexit in a purely economic sense such a great idea now?