Briefing Paper 63 – POST-BREXIT: TRADE IN GOODS AND SERVICES (II)
Since the UK-EU Trade and Cooperation Agreement (TCA) came into force, firms trading with the EU have faced new costs as they learn to trade under new regulations and comply with customs formalities that were otherwise not present. In this Briefing Paper, we provide an analysis of UK monthly trade data to assess how UK goods trade has performed in the period January-July 2021. We also expand our analysis on preference utilization rates (PURs), which depict the extent to which UK exports to the EU have benefited from the tariff-free treatment agreed in the TCA as well as examining the impact of the TCA on trade in services in the first two quarters of 2021. Our analysis shows that the introduction of the TCA reduced trade between the UK and the EU, but this is not homogenous across sectors, although, whilst exports took a knock in January and have since recovered, the impact on imports has persisted. Furthermore, despite the zero-tariff, zero-quota trade agreement of the TCA, firms end up paying tariffs to avoid the bureaucratic costs of claiming zero tariff. The foregone duty saving amounts to £534.6 million.
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A sprat over nothing?
29 October 2021
Michael Gasiorek is Professor of Economics and Director of the UK Trade Policy Observatory at the University of Sussex.
The impounding of a UK fishing boat by the French authorities on Thursday is symptomatic of the tensions in the wider political relationship between the UK and France, which goes beyond the implementation of the fisheries part of the Trade and Cooperation Agreement (TCA) with the EU. It is also symptomatic of the political importance of the fisheries sector on both sides of the Channel. Brexit was about ‘taking back control’, and with regard to fishing, for the UK Government, that meant taking back control of UK waters. The actual agreement, however, fell far short of what the fisheries industry had hoped for. […]
The economics and politics of China’s accession to the CPTPP
7 October 2021
Minako Morita-Jaeger is a Policy Research Fellow of the UK Trade Policy Observatory and a Senior Research Fellow of the University of Sussex Business School. Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex and Fellow of the UKTPO.
Complex geopolitical landscape
Trade policy concerns, national security and defence are increasingly intertwined in the Indo-Pacific region. This is partly driven by geo-political strategic interests and Sino-US rivalry in the Asia-Pacific region, and partly by the shifting economic balance of power towards the region. China formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 16 September, one day after Australia, UK and the US announced the creation of the new security partnership: Australia-UK-US (AUKUS). This should also be seen in the context of the Biden administration’s China containment strategy and an absence of US leadership in trade policy since the Trump era due to a greater focus on domestic priorities. China is thus trying to use the CPTPP as a tool in the geo-political power game in the Asia-Pacific region. By joining the […]
Briefing Paper 62 – THE IMPACT OF A NEW CUSTOMS AND REGULATORY BORDER WITH THE EU FOR UK COMPANIES TRADING GOODS
Leaving the EU has led to the creation of a new customs and regulatory border between the UK and the EU making it more difficult and more expensive to trade with the EU. However, the impact of Brexit on UK importers and exporters is not homogenous. This Briefing Paper identifies the factors and considerations that determine which companies are impacted, and thus why some might choose to cease to trade, while others experience no change in their trade with the EU. As more border formalities and checks are introduced, UK importers are yet to feel the full scale of the impact. As a result, issues are only going to become more widespread and deepen and new ways of responding and dealing with them are still to emerge.
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The UK Regional Trade in Goods Statistics (RTS)
29 July 2021
Yohannes Ayele is Research Fellow in the Economics of Brexit at the University of Sussex and Fellow of the UKTPO.
Since 1 January 2021, the UK’s trading relationship with its biggest and closest trading partner—the EU—has been governed by the Trade and Cooperation Agreement (TCA). Although the TCA is a zero-tariff and quota-free trade deal, several reports indicate that it is having a negative impact on the UK’s trade with the EU (see, 1, 2, and 3). While looking at the aggregate effect of the TCA on the UK trade is important, such analysis also misses the substantial differential impact of the TCA across the UK’s devolved administrations and regions.
Regions in the same country can be affected differently by new trade barriers because of the difference in industrial production structure and, second, the differential exposure of industries to trade policy changes. In this blog, we provide a brief report on how the UK’s regional trade with the EU fared in the first quarter since the introduction of the TCA. […]
Tariff-free trade with the EU: not so PUR and simple
29 July 2021
Yohannes Ayele is Research Fellow in the Economics of Brexit at the University of Sussex and Fellow of the UKTPO.
Since 1 January 2021, the UK’s trading relationship with its biggest and closest trading partner—the EU—has been governed by the Trade and Cooperation Agreement (TCA). Under the TCA, UK exports to the EU face zero-tariff and zero-quota. However, to claim zero tariffs, exporters must meet the rules of origin requirements and be able to provide proof of origin. Where exporters do not meet the requirements they end up paying the tariff. Even those exporters that can meet the rules of origin requirement, because of the cost of the paperwork and requirements for proof of origin needed to claim the zero tariff, they may instead choose to pay the tariff. The latter is more likely where the tariff preference margin (i.e., the difference between MFN non-zero tariff and the zero-tariff under TCA) is very low. These problems— the rules of origin requirements and costs associated to claim zero-tariff—could be particularly challenging for smaller companies. Therefore, in practice, firms may end up paying tariffs despite the zero-tariff and zero-quota deal under the TCA. […]
UK-EU trade and the TCA update: results up to April 2021
23 July 2021
Nicolo Tamberi is Research Officer in Economics at the University of Sussex and a fellow of the UKTPO.
We have updated our estimates of the effects of the introduction of the Trade and Cooperation Agreement (TCA) on UK-EU trade in 2021 through to April. The methodology used was described in the UKTPO briefing paper 57 (see the appendix for details). We find that over the period January-April 2021, the TCA reduced UK exports to the EU by 18.7% and imports from the EU by 25.8% compared to the scenario in which the UK did not leave the EU. […]
Honesty is such a lonely word…
22 July 2021
Michael Gasiorek is Professor of Economics and Director of the UK Trade Policy Observatory (UKTPO) at the University of Sussex. L. Alan Winters is Professor of Economics and Founding Director of the UKTPO.
The UK Government’s command paper on Northern Ireland published yesterday (21 July 2021) is significant in four regards.
First, because it explicitly recognises – at length – that the Protocol is not working (at least not for the UK) and needs to be modified in form or in implementation. This is almost certainly correct. […]
Safeguard tariff rate quotas on steel imports: The Computor says ‘no’, but the Government says ‘yes’
8 July 2021
L. Alan Winters is Professor of Economics and Founding Director of the UKTPO. Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex and Fellow of the UKTPO.
On 1st June 2021, as part of its post-Brexit trade architecture, the UK Government launched the Trade Remedies Authority (TRA). On 11th June the TRA recommended the extension of only some of the quotas and tariffs on steel imports that the UK had inherited from the EU. On 30th June, one day before these measures were due to expire, the Government rejected the TRA’s recommendation and extended the policies on several categories of steel for which the TRA had recommended the revocation. It also announced a review to check whether the TRA was ‘fit for purpose’. What was going on? And does it matter?
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Briefing Paper 61 – ACCESSING CPTPP WITHOUT A NATIONAL DIGITAL REGULATORY STRATEGY? HARD POLICY CHALLENGES FOR THE UK
The UK’s accession negotiation to the Asia-Pacific Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) trade deal was formally launched in June. This Briefing Paper aims to examine the implications that joining the CPTPP would have for the UK’s regulatory strategy and what kind of impact it could have for future trade negotiations. To examine these issues, we look at the digital trade provisions in recent trade agreements between the UK and the EU, Japan and Australia.
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