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20 November 2020

Michael Gasiorek is Professor of Economics at the University of Sussex and Director of the UKTPO.

Discussions and evaluations on the future UK-EU relationship have been on-going since the referendum of June 2016, and we are close to another milestone – by the end of the year, we will either have a free trade agreement (FTA) with the EU or no-deal. Note this is a milestone and not the endgame. Whether or not there is an agreement there will still be considerable practicalities to resolve, and no doubt some areas will be open to future negotiation. There is a lot of talk in the press about sticking points (fisheries, state aid and level playing field provisions, dispute settlement) but how good the deal is for the UK will depend on the scope and the depth of what is agreed, and whether some areas are only notionally covered and need to be sorted out in future negotiations. (more…)

November 20th, 2020

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29 October 2020

Yohannes Ayele is Research Fellow in the Economics of Brexit at the University of Sussex and Fellow of the UKTPO.

Update 30 October 2020: This is a slightly revised version of the blog we released yesterday. Sorry for any confusion we may have caused. Essentially, we tripped over the fact that the first year of the UK-Japan CEPA trade liberalisation schedule lasts for only one month, in order to bring it into line with that of the EU-Japan EPA.

Having left the EU and with the conclusion of the transition period at the end of 2020, the signing of new free trade agreements with countries that cover 80% of the UK trade by 2022 has been an integral part of government plans. On 23 October 2020, the UK signed its first post-Brexit free trade agreement  – with Japan, the UK-Japan Comprehensive Economic Partnership Agreement (CEPA). This blog provides an analysis of the extent of the trade liberalisation in this new deal. (more…)

October 29th, 2020

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2 October 2020

The UKTPO held its third annual conference on Tuesday 15 and Wednesday 16 September. The conference, under the theme ‘World Trade Policy: Back to the Future?’, addressed two of the most important issues in trade policy today.

Three presentations explored aspects of the as yet unknown UK trading regime after the end of the transition period, including the impact of uncertainty, the effect of tariff reversals, and the political economy of protection, respectively. Secondly, trade in the 21st century is ever more intertwined with other areas of public policy and, this year, two sessions explored the links between trade and the environment. Lastly, the conference concluded with a Roundtable discussion on trade and economic cohesion in the UK after Brexit. (more…)

October 2nd, 2020

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28 July 2020

Peter Holmes is a Reader in Economics at the University of Sussex and Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory.

The Department for International Trade (DIT) Freeports consultation document states duty inversion as one of the four core benefits of a Freeport: “If the duty on a finished product is lower than that on the component parts, a company could benefit by importing components duty free, manufacture the final product in the Freeport, and then pay the duty at the rate of the finished product when it enters the UK’s domestic market.” (more…)

July 28th, 2020

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21 May 2020

Michael Gasiorek is Professor of Economics at the University of Sussex and Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory.

Let’s start at the very beginning…

Suppose a country was (more or less) starting from scratch with its trade policy, and anticipated wanting to sign future trade agreements with other countries. What might you want from that country’s tariff structure? At the end of the day it is important to remember that tariffs are discriminatory taxes (i.e. they discriminate against foreign suppliers) which reduce competition, distort markets and lower national welfare. So, aiming to get to low (zero) tariffs is a good objective. But there may also be some other considerations. Here are some guidelines: (more…)

May 21st, 2020

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Image of Alan Winters20 May 2020

L. Alan Winters CB is Professor of Economics and Director of the Observatory, Michael Gasiorek is Professor of Economics at the University of Sussex and Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory. 

On Tuesday 19th May the UK’s ‘Global Tariff’ was published. These are the tariffs that will apply on any products that the UK imports on a Most Favoured Nation (MFN) basis from the end of the transition period when the UK is no longer bound by the EU’s Common External Tariff. The published tariffs come after a public consultation on the subject was held in February this year.

This note summarises how the new tariff compares to the UK’s current MFN tariffs (which are also the rates that the UK has bound in the WTO for after the transition period) and outlines what has changed since the tariff consultation. (more…)

May 20th, 2020

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7 May 2020

Dr Anna Jerzewska is an independent customs and trade consultant, and Associate Fellow of the UKTPO.

While the world battles the Covid-19 pandemic, the UK Government’s decision not to request an extension to the transition period means that the UK and the EU have only eight months until 31st December 2020 to complete the talks on the future trading relationship. If a trade deal is not agreed by 1 January 2021 the Northern Ireland Protocol will take effect. The Protocol, which forms part of the Withdrawal Agreement, determines how the Irish border will work in the absence of agreement at the end of the transition period. A Joint Committee, a body established within the Withdrawal Agreement, is charged with, amongst other things, deciding how the Protocol will be implemented. The deadline for making these decisions is therefore fast approaching. (more…)

May 7th, 2020

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31 March 2020

Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex and Fellow of the UK Trade Policy Observatory. 

On Wednesday 18 March, the UKTPO published a Briefing Paper in response to the UK Government’s consultation on the UK’s future applied Most Favoured Nation tariff.

In lieu of a public launch event, which had to be cancelled due to coronavirus, this blog outlines some excellent feedback we have already received and aims to open up the issue for further discussion. (more…)

March 31st, 2020

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14 January 2020

Dr Anna Jerzewska is a independent customs and trade consultant, an independent advisor with the UN International Trade Centre and also a trade policy and customs consultant for the British Chambers of Commerce.

The UK is due to leave the EU on the 31st January 2020. A new stage of the Brexit process is set to begin – the transition period and negotiations of the future relationship with the EU. At the same time, work on the Northern Irish border arrangements is far from over. A newly established Joint Committee will negotiate the practicalities of implementing the Withdrawal Agreement.

Under the Withdrawal Agreement (“WA”), Northern Ireland would stay in the UK’s customs territory but would at the same time continue applying EU’s customs legislation, tariffs, quotas and, partially, EU Single Market rules. This will avoid a border on the island of Ireland but will mean a de facto customs and regulatory border in the Irish Sea. As a result of this dual status, goods shipped from Great Britain (“GB”) to Northern Ireland (“NI”) will be subject to EU tariffs if they are “at risk of subsequently being moved into the Union, whether by itself or forming part of another good following processing”[1]. What that means has not been fully defined within the text of the Agreement. Article 5(2) clarifies that all goods will be considered to be “at risk”, and thus subject to EU tariffs unless it is established that they will not be subject to commercial processing in Northern Ireland or they are otherwise exempt. This is one of the areas where the Joint Committee will need to introduce practical ways of implementing the agreement. (more…)

January 14th, 2020

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Image of Alan Winters9 December 2019

L. Alan Winters CB is Professor of Economics and Director of the Observatory.

Our analysis finds that under the UK-EU Protocol on Northern Ireland, about 75% of Northern Ireland’s imports of goods from other locations, including Great Britain, would be subject to EU tariffs on their arrival in Northern Ireland. This is not easily reconciled with the government’s assertion that Northern Ireland remains within the UK customs territory.

Under the Brexit Withdrawal Agreement’s Protocol on Ireland/Northern Ireland, Northern Ireland’s imports from the EU, including the Republic of Ireland, would face no tariffs. Among imports from elsewhere, the Protocol requires that any goods deemed at risk of moving to the European Union should be subject to the tariffs of the EU rather than those of the UK.

Relying on a a range of statistical data and informed assumptions, the analysis breaks Northern Ireland’s imports down according to the risk criteria in the Protocol and finds that about 82% of Northern Ireland’s imports from non-EU countries and approximately 64% of imports from Great Britain would face EU tariffs. Summing the contributions to Northern Ireland’s imports from the EU (25% of the total), the rest of the world (12%) and Great Britain (63%) suggests that, overall, around 75% of all Northern Irish imports will pay the EU tariff on entering the province.

While goods that are proved to have been sold to final buyers in Northern Ireland can have any EU tariff they have paid rebated, those rebates are likely to be difficult for the private sector to claim and are therefore unlikely to refund much tariff revenue.

Further, since Northern Ireland’s imports from the EU would not face any change under the Protocol but a large share of imports from Great Britain may newly face tariffs, it seems likely that, over time, Great Britain may lose market share in Northern Ireland, both to domestic supply and to increasing imports from the EU.

Further, a Free Trade Agreement between the UK and the EU would not completely avoid the problem. While goods produced in Great Britain exported to Northern Ireland and transiting on to the Republic of Ireland would face no tariffs, they would still need to satisfy rules of origin to prove that they had been produced in Great Britain. Hence there would still be administrative hurdles for such exports to jump.

The analysis was commissioned by the Good Law Project, who explain its context and also provide a link to the evidence.

Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

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The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.

December 9th, 2019

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