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

The United Kingdom has historically been one of the main recipients of inward foreign direct investment (FDI), attracting more greenfield investment than other large European economies. However, the Brexit vote has introduced considerable uncertainty over the future growth potential of the UK market, and the ease of cross-border flow of goods and services. Following a peak of inward investment activity in early 2015, the number of FDI project announcements for the UK and the UK’s share of the European market for FDI have been falling. In this Briefing Paper, we provide an analysis of inward FDI to the UK before and after the EU referendum, looking at the main foreign investors, which sectors they invest in and how trends in inward FDI have evolved over time. Our work suggests that following the Brexit vote, inward investment has been 16-20 per cent lower than it would have been if the UK had voted to remain a member of the EU, but that this impact differs depending on the sector. Read Briefing Paper 23 – NOT BACKING BRITAIN: FDI INFLOWS SINCE THE BREXIT REFERENDUM

The UK is one of the most services-oriented economies in the world, both in terms of production and exports.  Services inputs embodied in manufacturing exports constitute an important but under-appreciated kind of services exports, so-called mode 5 services trade.  This Briefing Paper provides the first estimates of mode 5 services trade disaggregated by UK region and industry, respectively, and over time.  UK manufacturing exports entailed over £70 billion worth of domestic services inputs in 2017, which play an integral role in the competitiveness of UK manufacturing exports.  Since these services are produced locally, changes in the trading environment for manufactures have direct implications for domestic employment in services sectors. Read Briefing Paper 22 – THE ENGAGEMENT OF UK REGIONS IN MODE 5 SERVICES EXPORTS

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?

As the UK contemplates new trade agreements, it needs to develop mechanisms to ensure that these uphold its commitment to environmental protection and high labour standards.  This paper examines approaches to integrating sustainable development objectives into the negotiating process and reflecting these objectives through trade agreements. The UK’s ability to take leadership in this area will hinge on its ability to develop a robust framework to ensure that the negotiation process is transparent and allows for public consultation, and that the impact of new trade agreements – including on the environment and vulnerable populations – are assessed and addressed. In this respect, the UK can draw from, and improve upon, the EU’s experience with Sustainability Impact Assessment.  The paper also highlights implications of the UK’s inheritance of the EU’s ‘cooperative approach’ to trade and sustainable development through the continuation of its trade agreements. Read Briefing Paper 19 – Integrating sustainable development objectives into UK trade policy

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?

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

Rules of Origin (RoOs) are used by importing Customs authorities in the international trading system to determine if a product is considered as sufficiently linked to the exporting country to count as originating there, in order apply preferential or MFN (Most Favoured Nation) rates of tariff to the goods, and to check for quota, anti-dumping and related compliance. The importance of RoOs is due to the fact that duties and restrictions in many cases depend upon the source of imports. Proving origin will be a far bigger issue than it is now for UK business exporting to the EU after Brexit. With all businesses likely to have to rethink their compliance with Rules of Origin post-Brexit, this paper, based on a study carried out with the support of the British Chambers of Commerce, outlines the current Certificates of Origin regime and the options for change after Brexit. Read Briefing Paper 15- CERTIFICATES AND RULES OF ORIGIN: THE EXPERIENCE OF UK FIRMS and the Online Appendix