1 April 2019
Dr Ingo Borchert is Senior Lecturer in Economics and Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex. Both are fellows of the UK Trade Policy Observatory.
During the first round of the indicative voting process at Parliament, the motion that proposes a permanent customs union attracted the second highest number of Ayes and was rejected by the slimmest margin of all eight motions. This result shows the prevailing preoccupation with trade in merchandise goods. Amongst other things, a customs union alone does nothing for services trade. In this blog, we set out why the continued neglect of services trade is a major concern for the UK economy.[1] A twin-jet aircraft with just one engine on would ordinarily be bound for an emergency landing rather than for a smooth journey ahead. (more…)
Charlotte Humma April 1st, 2019
Posted In: UK - Non EU, UK- EU
Tags: Customs Union, Exports, Services, Single Market
17 January 2019
Dr Peter Holmes, Reader in Economics at the University of Sussex, Director of Interanalysis and Fellow of the UK Trade Policy Observatory
Since the Government’s defeat in the House of Commons, there has been a flurry of comments, notably from Steve Baker arguing that Mrs May’s deal can be replaced by some form of Free Trade Agreement.
One must immediately point out that the treaty basis of the Withdrawal Agreement does not include a long-term trade agreement. This can only be negotiated after Brexit. But even if it could be negotiated now, it would not solve the problem of the Irish Border. The UK and the EU in both the Good Friday Agreement and the Dec 2017 joint statement committed themselves not merely to barrier-free trade in goods with no hard border in Ireland, but to the preservation of an All-Island Economy. (more…)
Charlotte Humma January 17th, 2019
Posted In: UK- EU
Tags: border checks, customs checks, Customs Union, Free Trade Agreement, Irish border, Single Market, withdrawal agreement
16 November 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 UK Cabinet has signed off the draft EU Withdrawal Agreement (WA) and the Political Declaration (PD) about the future UK-EU trade relationship. The WA has had such a rocky reception in the Conservative Party that the future path of decision-making is a bit uncertain, but it is likely that these documents will also be agreed by the EU summit later this month. The decision-making then passes one way or another to the UK Parliament. Politics has dominated this week’s debates, but decisions need to be informed by economic assessment. Let’s consider the economic costs and benefits of the choices which Parliament will have to make.
Charlotte Humma November 16th, 2018
Posted In: UK- EU
Tags: Customs, customs arrangements, EEA+CU, Free Trade Agreement, Mrs May's Deal, No deal, Single Market, withdrawal agreement
01 October 2018
Dr Ingo Borchert is Senior Lecturer in Economics, and Dr Peter Holmes is a Reader in Economics, both are fellows of the UK Trade Policy Observatory.
The UK Government is currently proposing to the EU, broadly speaking, to adopt a common rulebook for goods. By contrast, not much if anything is sought in the realm of services, let alone movement of people or other areas of the Single Market. Part of the EU’s response has been that goods and services are so interlinked that one cannot have a goods only single market. Is this response just posturing as part of the negotiations process, or are there real issues with separating goods and services? (more…)
Charlotte Humma October 1st, 2018
Posted In: UK- EU
Tags: Chequers Agreement, goods, Irish border, Northern Ireland, Services, Single Market
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
7 August 2018
Nicolo Tamberi is a Research Officer in Economics for the UK Trade Policy Observatory.
In a recent post on Brexit Central , Michael Burrage examines the growth of different countries’ exports to the EU12 over 1993-2015 and asks:
‘How can trading with the EU under WTO rules be the worst possible option when the exports to the EU of 15 countries which have been doing just that over 23 years of the Single Market have grown four times as much as those of the UK, despite all the tariff and non-tariff barriers they have faced?’
The answer is ‘easily’!
Tina Perrett August 7th, 2018
Posted In: UK- EU
Tags: Brexit, China, export, growth rates, Single Market, USA, WTO rules
9 July 2018
Dr Michael Gasiorek is Senior Lecturer in Economics at the University of Sussex and Managing Director of InterAnalysis. He is a Fellow of the UKTPO.
In good part, the answer depends on the extent to which this agreement moves on from the Government’s previous position, is feasible, is credible, and is acceptable to the EU. It also depends on whether it will be acceptable to the Conservative party, which the resignations of David Davis and Boris Johnson throw into serious doubt.
In this blog, I focus on one aspect of this – the extent to which the “facilitated customs arrangement” (FCA), which is central to the agreement notionally reached at Chequers, is substantively different from the previous idea of a “New Customs Partnership” (NCP). (more…)
Charlotte Humma July 10th, 2018
Posted In: UK- EU
Tags: Chequers Agreement, Customs Union, Free Trade Agreement, Northern Ireland, Rules of Origin, Single Market, tariffs
06 July 2018
Dr. Minako Morita-Jaeger is is an international trade policy consultant and a Visiting Fellow of the UK Trade Policy Observatory
Exactly a year ago today, the EU and Japan agreed the EU-Japan Economic Partnership Agreement (EPA) in principle. Subsequently, at the end of August that year, the UK Prime Minister Theresa May and the Japanese Prime Minister Shinzo Abe agreed to work quickly to establish a new bilateral economic partnership based on the final terms of the EU-Japan EPA when the UK exits the EU. The UK Government currently wishes to roll over existing EU trade agreements, including the EU-Japan EPA. But does rolling over make sense? From the UK point of view, it is obvious that rolling over the Agreement reflects neither Brexit campaigners’ promise of building a ‘Global Britain’ nor UK sovereignty of its own trade policy. From the Japanese perspective, rolling over the EU-Japan EPA does not make sense either because a symbolic arrangement cannot reflect economic realities. (more…)
Charlotte Humma July 6th, 2018
Posted In: UK - Non EU
Tags: Economic Partnership Agreement, Free Trade Agreement, FTA, Japan, Negotiations, Services, Single Market
05 July 2018
L. Alan Winters CB is Professor of Economics and Director of the Observatory.
Two years in and the Cabinet is still squabbling over the UK’s trade relationship with Europe. Among the options most discussed, if not most likely to occur, are
This blog does not assess the relative merits of these arrangements, but notes that they share a common flaw: they ignore 80 percent of the British economy! The more successful 80 percent, in fact – the services sectors, in which the UK has a manifest comparative advantage (see below). The advocates of these plans gloss over this difficulty by claiming that the UK can negotiate services trade agreements both with the EU and with other countries. But this is easier said than done. (more…)
Charlotte Humma July 6th, 2018
Posted In: UK- EU
Tags: Customs Union, Free Trade Agreement, Services, Single Market, White Paper
