This Briefing Paper sets out a new basis for reciprocity in what might be deemed essential goods, of which the medical kit and equipment associated with COVID-19 are examples. The authors propose a trade policy bargain that, although time-limited at first, could evolve into a multilateral or plurilateral deal. As governments of net exporting nations realise that export bans do little to end shortages of medical kit in a world of international supply chains, and do much to antagonise trading partners and to embolden economic nationalists at home and abroad, this proposal provides them with a rationale for embracing a more collaborative approach that generates a commercial edge for their exporters of medical supplies. For nations reliant on foreign deliveries of these goods, this proposal provides greater reassurance that supplies will be forthcoming when they are needed—thereby diminishing the case for devoting scarce resources to an import substitution drive on medical goods. The authors describe the underlying commercial logic of this bargain, its elements, and their WTO compatibility. The paper also discusses this proposal in relation to other recent joint trade policy initiatives in this critical area of world trade. Read Briefing Paper 40: PREPARING FOR A SECOND WAVE OF COVID-19: [...]

The UK left the European Union on January 31, 2020. As the UK Government begins to develop the UK’s independent trade policy for the post-transition period, one part of the preparations is to establish the UK’s independent tariff schedule that will apply to goods imported into the UK. In February 2020, the Department for International Trade launched a public consultation concerning the UK’s applied Most Favoured Nation tariffs. This briefing paper outlines the proposals under consideration, discusses their potential implications, and provides our recommendations on the issues that we believe are important for the UK Government to consider when formulating the UK’s trade policy going forward. We explore the structure of the UK’s MFN tariff as a member of the EU and then analyse the potential impact of simplifying the tariff structure for firms, households, the environment and domestic policy objectives. Read Briefing Paper 39: RECOMMENDATIONS ON THE UK GOVERNMENT’S GLOBAL TARIFF PROPOSALS  

A great deal of attention has been devoted to the consequences of different forms of post-Brexit trade policy for UK exports. But focusing on the gross value of UK exports – e.g. the decline in exports of completed cars as the cost of exporting to the EU rises – is only part of the story because it misses the effects on the sectors and other countries that supply inputs into UK goods. In this Briefing Paper, the authors unpack value chains to identify which sectors and countries create the value that is embodied in UK flows of exports and imports, and hence to identify how the changes in trade induced by a ‘No deal’ Brexit will affect the value contributed (i.e. the incomes generated) by different sectors and countries. Studying only the effects of ‘No deal’ on the costs of conducting goods trade, but following them throughout the British economy, the authors find that ‘No deal’ could reduce UK GDP by 4% relative to remain. Moreover, because of the decline in incomes and the fact that services are key inputs into manufactured exports, the incomes generated in services sectors would also be around 4% smaller. Read Briefing Paper 35 – BREXIT AND [...]

Within days of Mr Johnson becoming Prime Minister, President Trump announced that talks about a “very substantial” trade deal with the UK are under way. In this joint Briefing Paper with colleagues from Georgetown University and UKTPO fellows, we consider the effects that Brexit uncertainty is likely to have on the capacity of the UK to agree a deal with the US and ask whether a deal is politically even possible in the UK.  We investigate key issues in negotiating a bilateral agreement: the backstop and the problems posed by the EU and US standards regimes. The paper also explores the prospects and pitfalls of the US Government guidelines for negotiations between the US and the UK; the US’s potential strategic position on services and the declining importance of the UK and Europe as traditional places of spending for US multinational corporations especially in the areas of information technology soft- and hardware. Overall we conclude that while the governments involved see obvious political attractions in a UK-US free trade agreement, a quick and economically significant conclusion to the talks seems unlikely. Read Briefing Paper 34 – THE FUTURE OF UK-US TRADE: AN UPDATE

In the case that the UK manages an orderly Brexit and has a transition period until the end of 2020, rather than just rolling over the existing agreements, what would be the possible options for future Free Trade Agreements? In the case of a future UK-Korea deal, the UK could potentially negotiate a new FTA built on the Korea-EU FTA (KorEU) or negotiate a completely new FTA modelled on the Korea-US FTA (KORUS). Our comparative analysis of KorEU and KORUS in services reveals that the two agreements took very different approaches for services trade liberalisation. Both achieved “GATS-plus” liberalisation commitments from Korea. KORUS seems to have achieved slightly more than KorEU. However, KORUS is more complicated and less transparent than KorEU. It also contains more WTO-inconsistent features. The KORUS option would enable the UK to better pursue its own specific needs since it would not be directly bound by KorEU. On the other hand, the WTO-inconsistent aspects of KORUS would need to be avoided, based on a clear vision of UK’s contribution towards the future multilateral trading system. Either way, the UK would face two stumbling blocks: the UK’s lack of negotiating power and the Most Favoured Nation (MFN) clauses [...]

This study focuses on the economic shocks that a ‘no deal’ Brexit would entail across the constituencies of Hampshire and Sussex. We take estimates of the effects of a ‘no deal’ Brexit on output and employment in different sectors of the UK economy and using the composition of employment in each constituency, estimate how each constituency will be affected. The novel feature of our analysis is that we allow for commuting and so convert the Brexit shock from referring to workers in a constituency to referring to residents in the constituency. With the South East region the most heavily engaged in cross-border trade, after allowing for the fact that people often live and work in different places, we estimate that the shock to residents of Hampshire and Sussex could be equivalent to the loss of about 43,000 jobs. Given that Brexit decisions will ultimately be taken on the floor of the House of Commons, this Briefing Paper provides a base from which Hampshire and Sussex MPs can start to assess the impact of Brexit on their constituents. Read Briefing Paper 26 – THE BREXIT BURDEN: A CONSTITUENCY LEVEL ANALYSIS FOR HAMPSHIRE AND SUSSEX See also: Online Appendix and subsequent work repeating the exercise for the full list of 632 [...]

The UK government has high expectations about future services trade deals with non-EU countries. Yet, in practice, Free Trade Agreements (FTAs) typically only provide greater legal certainty about current applied policies rather than bringing about actual trade liberalization in services.This Briefing Paper looks at why it is so difficult to achieve actual liberalization in service negotiations and what FTAs, in practice, can offer. The authors argue that based on other countries’ experiences, the UK government will face several significant challenges and complexities in negotiating services FTAs with non-EU countries. To make progress on FTAs, the UK government will need to encourage many bodies across government. Read Briefing Paper 24 – THE UK’S FUTURE SERVICES TRADE DEALS WITH NON-EU COUNTRIES: A REALITY CHECK

Both US President Donald Trump and UK Prime Minister Theresa May have stated their keenness to negotiate and agree the groundwork for a bilateral trade agreement after Brexit. This briefing paper looks at what the key issues are likely to be and what a transatlantic agreement may, or may not, comprise. First, we explore the extent to which a trade agreement between the US and the UK would have popular support at a time when debate about trade on both sides of the Atlantic is contested. Second, we consider what the benefits of such an agreement might be by considering the aggregate economic case. Finally, we probe where problems and tensions may lie, focusing primarily on the regulatory aspects of a transatlantic commercial tie-up. Read Briefing Paper 20 – The Future of US-UK Trade: What case for a bilateral trade agreement?

In the search for a framework for a future UK-EU trade relationship, the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA) has come under the spotlight. To inform the debate surrounding a potential ‘Canada plus’ model for the UK post-Brexit, this briefing paper provides an overview of the extent to which the EU restricts imports of services from Canada under CETA. The authors identify areas where ‘pluses’ may help to preserve existing levels of services trade between the UK and the EU post-Brexit, and discusses whether these are achievable. Further, the extent to which the EU’s commitments in CETA improve on pre-existing regimes is evaluated by comparing the degree of liberalisation in CETA with the EU’s prior commitments in the GATS. Read Briefing Paper 18 – Can CETA-plus solve the UK’s services problem?

The EU Customs Union and Single Market created a significant volume of trade between the UK and the EU and stimulated the development of European value chains.The UK government has stated its intention to leave the Single Market and Customs Union and this remains the position of the leadership of both main political parties. Yet both enable a degree of integration far exceeding that attainable through any simple tariff-free Free Trade Area (FTA). In this briefing paper we examine the possibilities for maintaining some of these benefits in key sectors. WTO rules are drafted and applied in such a way that the UK and the EU27 could design a WTO-consistent trade agreement that goes some way towards preserving current trading conditions in a subset of sectors. We discuss how this might be achieved and also some of the limitations that such an approach entails. Read Briefing Paper 10 – AN A UK-EU FREE TRADE AREA PRESERVE THE BENEFITS OF THE SINGLE MARKET AND THE CUSTOMS UNION IN SOME SECTORS?