Nissan proves the case for Brexit

in #leofinance4 years ago

Yesterday Nissan made an important announcement about the restructuring of it's operations in Europe. It decided to close it's plant in Barcelona, Spain, with the loss of 3000 jobs directly and some 20,000 jobs lost in the supply chain.

At the same time it announced it was keeping and expanding it's factory in Sunderland, UK.

This came as a huge shock to the many Remainers who have spent the last three years proclaiming that Brexit would cost jobs. Nissan's plant in Sunderland had somehow become the totem of the remainer case: they predicted that the plant would be closed and operations transfered to Europe. They also spent much time sneering at the people in Sunderland for voting for Brexit. They were apparently stupid people who were going to pay for their stupidity with the loss of their jobs.

Now we know the Brexiteers were right. So what did the remainers miss - why did they not realise that it would be the plant in the EU that would close rather than the plant in the UK?

People tend to pay attention only to information that impacts them - so the academics and media people in London, who are the mainstay of the Remainiacs, were not paying attention to the EU-Japan trade deal.

But the workers of the Nissan plant in Sunderland were. The only reason the plant opened in the first place, in the 1980's, was because the EU applied tariffs to cars imported from Japan, so Nissan decided to make the cars in the EU, choosing to open a plant in the UK.

Now the EU-Japan trade deal planned to get rid of those tariffs. With no tariffs it would be easier for Nissan to export directly to the EU from Japan.

The arcane details of the trade deal were only important to the few thousand people who work in the car industry for Japanese companies. Everyone else overlooked it.

Sunderland voted for Brexit in 2016 as did 52% of all Brits. Britain then took the attitude that it was not going to interfere in future EU trade deals whilst negotiating it's exit. Thus the EU-Japan trade deal finally came into force in February 2019.

Nissan immediately announced that future models would be made in Japan and both the Sunderland and Barcelona plants would eventually wind down.

But Britain finally got it's act together, defeated the remainers who were blocking exit, and officially left the EU on 31st January 2020. And at the start of May, the UK government announced it's WTO tariffs - they said they'd put a 10% tariff on imported cars.

This changed things for Nissan. Any cars coming into Britain from Japan would be subject to a tariff now the UK was outside of the EU. But cars going to the EU from Japan would not be subject to tariffs. Thus while it was safe for Nissan to close it's Barcelona plant, it wasn't safe for them to close the UK plant, which will now make Nissans, Renaults and Mitsubishis for the UK market.

As Theresa May used to say, a bad deal is worse than no deal. The EU-Japan trade deal was bad for Spain. The question arises, why did the Spanish not veto it?

It turns out that the voters in Sunderland were much shrewder about protecting their interests.

When they write the history books they will find that Brexit was largely about self-interest, and it was voters who understood Britain's self-interets better than the elites did.