26 September 2018
L. Alan Winters CB is Professor of Economics and Director of the UK Trade Policy Observatory and Nicolo Tamberi is a Research Assistant in Economics for the Observatory
The brusque dismissal of elements of Mrs May’s Chequers plan at the informal meeting in Salzburg last week has stimulated feverish attempts to revive the case for a deep and special UK-EU Free Trade Agreement (FTA), under the title of a CETA-plus agreement. This effort received substantial reinforcement from the Institute for Economic Affairs’ paper of 24 September 2018. None of the discussion, however, has dealt seriously with the fact that an FTA will require the introduction of border formalities on UK-EU trade and that these will both violate the commitment to the absence of a border in Ireland and create serious congestion at those ports dealing with UK-EU flows, which will increase trading costs and cut trade with the EU. (more…)
Charlotte Humma September 26th, 2018
Posted In: UK- EU
Tags: Canada Plus, Chequers Agreement, Customs Union, Irish border, Rules of Origin, Single Market, Trade agreements
19 September 2018
Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory.
In its Chequers White Paper, the UK government has proposed that, in order to facilitate a frictionless border, it will operate a dual customs regime known as a Facilitated Customs Arrangement (‘FCA’). By replacing rules of origin checks at the EU-UK border with internal monitoring, the FCA requires firms to establish ‘robustly’ the destination of their products to ensure that correct duties have been applied, and then, if they wish, to seek rebates if they have been overcharged. Past UKTPO blogs have addressed logistical challenges and strategic downsides of this ‘Fantastically Complicated Alternative’ (see also Does the Chequers Agreement provide any steps to Brexit heaven?)
But would it be compatible with the rules of the World Trade Organization? The precise details of the FCA’s operation remain unclear. Barring a dispute, it’s not possible to settle the question definitively, but the FCA does prima facie pose a risk of WTO non-compliance. We presume that the UK government has undertaken some analysis of this, and that it covers (at least) the following issues. (more…)
Charlotte Humma September 19th, 2018
Posted In: UK- EU
Tags: Brexit, Chequers Agreement, Customs Union, Free Trade Agreement, Irish border, Rules of Origin, Single Market, WTO
23 July 2018
L. Alan Winters CB is Professor of Economics and Director of the Observatory and Julia Magntorn is Research Officer in Economics at the UKTPO.
There is much to digest in the White Paper on The future relationship between the United Kingdom and the European Union and much to clarify. This blog is devoted entirely to trying to understand the Facilitated Customs Arrangement (FCA) that aims to deliver frictionless trade in goods between the UK and the EU after Brexit.
The FCA matters because trade that is ‘as frictionless as possible’ with the EU is now accepted by nearly everyone as desirable and has been characterised by much of business as essential. It also matters in the short term, however, because it is the UK government’s offer to the EU on how to ensure that there is no border between Northern Ireland and the Republic. Without a solution to this latter problem there will be no Withdrawal Agreement and no transition. (more…)
Charlotte Humma July 23rd, 2018
Posted In: UK - Non EU
Tags: Exports, Facilitated Customs Arrangement, Free Trade Agreement, Imports, Irish border, Rules of Origin, tariffs, Trade agreements, White Paper
11 June 2018
Alasdair Smith is an Emeritus Professor of Economics and Dr Peter Holmes is Reader in Economics at the University of Sussex. They are both Fellows of the UK Trade Policy Observatory.
On June 7, after prolonged internal discussion, the UK government published its paper proposing the extension to the whole UK of the ‘backstop’ provision in the EU draft withdrawal agreement to incorporate Northern Ireland (NI) into the EU’s customs territory until another solution can be found for the problem of the Irish border. The UK is unenthusiastic about the backstop and hopes it will not be needed, but wants any backstop to cover the whole UK, so as to avoid the need for border inspections of trade between NI and the rest of the UK (GB). Perhaps surprisingly, the government paper does not address the fact that the EU’s proposal is for NI to be included in a ‘common regulatory area’ as well as in a de facto customs union: any backstop needs to deal with regulation as well as customs. (more…)
Charlotte Humma June 11th, 2018
Posted In: UK- EU
Tags: common regulatory area, Customs, Irish border, Northern Ireland, regulation, Uk-wide backstop, withdrawal agreement
22 May 2018
Alasdair Smith is an Emeritus Professor of Economics at the University of Sussex and is a member of the UK Trade Policy Observatory.
Not before time, the UK government is giving attention to the ‘backstop’ provision which will be written into the Withdrawal Agreement for Brexit to avoid a hard border in Ireland. But rather than focussing on how to sell this politically in the UK, the government needs to address the more pressing question of whether the European Union (EU) will agree to the UK’s preferred version of the backstop. (more…)
Charlotte Humma May 22nd, 2018
Posted In: UK- EU
Tags: Customs Union, Europe Union, freedom of movement, Goods only single market, Irish border, Northern Ireland, regulatory alignment, Uk-wide backstop, withdrawal agreement
18 May 2018
Julia Magntorn is Research Officer in Economics at the UKTPO.
While Theresa May and her cabinet are trying to agree on whether to back the maximum facilitation proposal or the customs partnership, another option, nicknamed the ‘Norway option’ which would see the UK remaining a member of the European Economic Area (EEA), has made a comeback in the Brexit debate. (more…)
Charlotte Humma May 18th, 2018
Posted In: UK- EU
Tags: Customs Union, EEA, Financial Services, freedom of movement, Irish border, Single Market, Trade agreements
17 May 2018
Dr Michael Gasiorek is Senior Lecturer in Economics and Dr Peter Holmes is Reader in Economics at the University of Sussex. They are both Fellows of the UKTPO and Managing Director and Director of InterAnalysis respectively.
The government’s two preferred options for post-Brexit trade with the EU are “Maximum Facilitation” whereby technological solutions are used to simplify trade procedures, and a so-called “New Customs Partnership”.
This blog discusses the implications of the New Customs Partnership (NCP) scheme. It must be borne in mind that the EU has so far rejected both and that in fact the degree of detail currently provided by the Government on either is so slight that we cannot be sure what is proposed. It is also arguable that they are not alternatives since under any scenario the government is keen to ensure the maximum simplification of procedures in order for trade to be ‘as frictionless as possible’. Even if they were viable, both the NCP and the Max Fac proposals involve significant trade-offs – namely that they involve firms in expensive set-up costs in order to be able to reduce transactions costs. (more…)
Charlotte Humma May 17th, 2018
Posted In: UK- EU
Tags: Customs Union, Free Trade Agreement, Irish border, New Customs Partnership, Rules of Origin, Single Market, tariffs
1 May 2018
Ilona Serwicka is Research Fellow in the economics of Brexit and Charlotte Humma is the Business Manager at the UKTPO.
As the European Union (EU) Withdrawal Bill and the Trade Bill progress through parliament, forming a customs union with the EU has become a key issue. On 18 April 2018, the House of Lords voted to keep open the option of staying in a Customs Union after Brexit, promptly followed by the UK Government reaffirming its intention neither to remain in the EU Customs Union nor to seek to form a new one.
So where does this leave us? (more…)
Charlotte Humma May 1st, 2018
Posted In: UK- EU
Tags: Customs Union, Free Trade Agreement, Frictionless trade, Irish border, Rules of Origin, Single Market, tariffs, Trade agreements
29 March 2018
Dr Ingo Borchert is Senior Lecturer in Economics and a fellow of the UK Trade Policy Observatory and Julia Magntorn is Research Assistant in Economics at the Observatory.
With one year to go until the UK will leave the European Union (EU), sorting out Britain’s trade relation with the EU is the most important task. Yet the design of the future UK-EU agreement has implications for trade policy towards non-EU countries. On account of this, the British Prime Minister in her Mansion House speech ruled out forming a new customs union with the EU because this “would not be compatible with a meaningful independent trade policy.” Indeed, having sovereignty over its external trade policy post-Brexit has been at the forefront of the UK’s negotiation agenda, and consequently, the provision in the current draft Withdrawal Agreement that the UK may commence Free Trade Agreement (FTA) negotiations with other countries during the transition period was perceived as an important concession won. (more…)
Charlotte Humma March 29th, 2018
Posted In: UK - Non EU, UK- EU
Tags: Common external tariff, Customs Union, Free Trade Agreement, Imports, Irish border, Single Market, tariffs
2 March 2018
Alasdair Smith is an Emeritus Professor of Economics at the University of Sussex, and is a member of the UK Trade Policy Observatory.
The European Commission has this week published its controversial draft of the withdrawal treaty for the UK’s exit from the EU. The draft includes the EU’s proposal for dealing with the issue of the border in Ireland – Northern Ireland to remain in a customs union with the EU and to retain all the elements of the Single Market that support free movement of goods. (more…)
Charlotte Humma March 2nd, 2018
Posted In: UK- EU
Tags: agriculture, Customs Union, European Commission, freedom of movement, Irish border, Jersey option, manufacturing, tariffs
