The Trade and Cooperation Agreement (TCA) between the UK and the EU came into force on the 1st January 2021. This Briefing Paper focusses on the provisions on trade in goods. It provides an analysis of the changes in tariffs; customs and trade facilitation; rules of origin; mutual recognition of testing and certification and takes a close look at one sector – fisheries – that was so contentious during the negotiations. The TCA is highly unusual in that it is an agreement which raises barriers to trade, and whilst it offers complete elimination of tariffs and quotas many other costs relating to trade have not been successfully minimized. Read Briefing Paper 52: TAKING STOCK OF THE UK-EU TRADE AND COOPERATION AGREEMENT:  TRADE IN GOODS 

The UK’s negotiation of a Free Trade Agreement with the EU will necessarily involve defining rules of origin, and before long negotiations with countries such as the US, Japan, and Australia will face the same task. In this Briefing Paper, the authors outline what rules of origin are, why they are needed, why they are complex, and which sectors in the UK may be most vulnerable to more restrictive rules of origin. They also discuss why the EU is highly unlikely to agree to the UK’s proposal on cumulation in rules of origin and argue that the obvious solution to this is for the UK to agree to the EU’s Pan Euro-Mediterranean Rules of Origin (PEM) which are the basis of the EU’s cumulation arrangements with a wide range of its neighbours. Any other outcome is likely to reduce the UK’s take up of trade preferences in its FTA with the EU. Read Briefing Paper 45: WE’RE GOING TO MAKE THEM AN OFFER THEY CAN REFUSE: RULES OF ORIGIN AND THE UK-EU FREE TRADE AGREEMENT

In this Briefing Paper, Michael Gasiorek and Anna Jerzewska provide an analysis of the UK’s recently published Command Paper. They argue that it highlights significant differences between the UK and the EU and does not fully address the challenges which come from the special situation around the border in the Irish Sea.  As a result, they warn that businesses should expect more paperwork, bureaucracy and additional costs on trade between Northern Ireland and Great Britain when the transition period ends in seven months’ time. Among the key stumbling blocks between the UK Government and EU that the Command Paper fails to resolve are the criteria for determining when a good is not at risk of moving into the EU market and would therefore not be subject to tariffs. Furthermore, permitting goods from Northern Ireland to freely enter Great Britain, could impact on the UK’s trade relations with third countries and even lead to WTO disputes. Read Briefing Paper 41: THE UNRESOLVED DIFFICULTIES OF THE NORTHERN IRELAND PROTOCOL

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  

Economists have long argued, and with good justification, that international trade brings overall benefits to economies. However, increasing trade is likely to create losers as well as winners. As the UK prepares to leave the EU and have an independent trade policy it is important to understand how future trade agreements, or policy changes, may affect economic outcomes such as prices, productivity and output, and through these, individuals and regions. In this Briefing Paper, the authors provide a conceptual background of how trade changes may result in winners and losers – be these consumers, workers, regions, or industries, and give an overview of what the empirical evidence tells us about how developed economies have adjusted to changes in trade. They also consider potential policy responses that could help losers from international trade adjust, and ensure that the winners can take advantage of the new opportunities created by trade liberalisation. Read Briefing Paper 33 – WINNERS AND LOSERS FROM INTERNATIONAL TRADE: WHAT DO WE KNOW AND WHAT ARE THE IMPLICATIONS FOR POLICY? Launch and Panel Discussion at British Academy, 18 July 2019

This paper assesses the possible consequences of the Government’s proposed No Deal tariff regime. While there have been numerous previous assessments of the economic impact of a ‘No Deal’, the tariff proposal by the UK Government provides a new set of tariffs which have not been assessed in the existing empirical literature. In this briefing paper, the authors explain carefully the Government’s proposals and identify how much of UK trade would be affected by the changes in tariffs in a ‘No Deal’ scenario and provide an empirical assessment of the scale of the economic challenge which could face UK industries in the event of ‘No Deal’. They find that a ‘No Deal’ Brexit will pose a significant challenge to the UK economy with a negative impact on output, exports and imports driven largely by the increased cost of trading with the EU. The results highlight that in the event of ‘No Deal’ the Government’s room for policy manoeuvre is somewhat limited. Read Briefing Paper 29 – Deal or ‘No Deal’? The economic consequences of the UK’s ‘No Deal’ tariffs

Leaving the EU will involve some possible combination of changes in tariffs, non-tariff measures, and also the amount of fish quotas that can be caught by the UK and the EU. The aim of the Briefing Paper is to detail the policy environment, and the policy considerations facing the UK government in the Brexit negotiations. Secondly, it provides an empirical assessment of what the impact on leaving the EU might be on the seafood industry. As the nature of the UK’s future trade relations with the EU are still uncertain, this paper explores several simulations which aim, broadly speaking, to capture the key variants of Brexit that appear to be under discussion. Read Briefing Paper 21 – Fishing in deep waters

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?

There is much discussion about what the UK government wants in terms of the post-transition relations between the UK and the EU, and the Labour party has now also provided a little bit more clarity on its position. However, to what extent are the different UK-EU Brexit options achievable? Dr Michael Gasiorek explores two key concerns. The first concerns the issue of the compatibility or not of the different UK-EU Brexit options, with the issue of the border between the Republic of Ireland and Northern Ireland. The second issue concerns the subtleties of the difference between being in “the” EU Customs Union, in comparison to being in “a” customs union with the EU. While it might appear a small difference, in practices the differences may be substantial.The aim of this briefing paper is to consider what difference these developments make, to examine under what circumstances might the UK governments current position on future arrangements with the EU be possible (or not), and to offer some recommendations and reflections for the way forward. Read Briefing Paper 17 – UK–EU trade relations post Brexit: binding constraints and impossible solutions

Trade in manufactures constitutes 65% of the UK’s trade with the EU and nearly 50% of the UK’s exports of manufactures go to the EU. In this new Briefing Paper, we look at the possible effects of Brexit on UK manufacturing in much greater sectoral detail than has been done before. For 122 manufacturing sectors, we estimate the exposure of these sectors to different versions of Brexit. Our projections depend on whether we assume the UK leaves the Customs Union and the Single Market, and on whether the UK makes a free trade agreement with the EU and is able to carry over existing free trade agreements with non-EU countries. In all cases, we find that introducing tariff and non-tariff barriers raises the prices that UK consumers and producers will face, and leads to reduced UK exports; but for some sectors, the increase in protection leads to higher UK output. The impact of Brexit is likely to be significantly different between high-tech and lower-tech sectors. Read Briefing Paper 16: Which Manufacturing Sectors Are Most Vulnerable to Brexit? Read the online Appendix and Appendix 2 – Simulation Results