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 

In this paper, the authors update their previous analysis of Brexit to reflect the presumed Free Trade Agreement (FTA). They assess the costs of Brexit with such an FTA and ask how much benefit the FTA will deliver relative to ‘No Deal’.  This paper improves on previous analyses by including more detailed modelling of the costs of doing trade and of the barriers to services trade that the exit from the Single Market will introduce.  Even with a deal, Brexit increases UK-EU trade costs, reduces trade between the two partners, and requires resources for form-filling, queuing, etc. The net effect is that the UK’s GDP will be 4.4% lower than in the absence of Brexit, compared with 5.5% lower if there had been no deal. Read Briefing Paper 51: The Costs of Brexit

The UK-Japan Comprehensive Economic Partnership Agreement has been presented by the UK Government as the first Free Trade Agreement (FTA) for the UK as an independent trading nation. This Briefing Paper provides an analysis of this new agreement in relation to the Japan-EU EPA and draws two major lessons for the UK’s future free trade agreements.  First, the authors find that it mostly replicates the Japan-EU EPA, with the UK failing to break new ground after independence from the EU trade regime. Second, they argue that substantive and inclusive policy discussions with a range of stakeholders need to take place to enable public scrutiny and discussion of the implications of policy positions, before negotiating with trade partners. Read Briefing Paper 50: The UK-Japan Comprehensive Economic Partnership Agreement: Lessons for the UK’s future trade agreements

The House of Lords are currently debating the controversial Internal Market Bill. In so doing, they are highlighting the ways in which the Bill threatens to undermine the devolution settlement. In this Briefing Paper, Emily Lydgate and Chloe Anthony spell out the issues that the Internal Market Bill raises for the relationship between England, Scotland and Wales in the critical area of food standards. The authors conclude that the overriding outcome is the consolidation of power in the central UK Government, raising significant – and still unresolved – constitutional and trade questions. Read Briefing Paper 49: MAINTAINING THE UK INTERNAL MARKET FOR FOOD STANDARDS: FRAGMENTATION, COOPERATION OR CONTROL?

This Briefing Paper considers how Brexit will impinge on the African, Caribbean and Pacific (ACP) countries currently governed by the Economic Partnership Agreements (EPAs) negotiated by the EU. The authors explore whether the new Brexit-induced frictions on UK-EU trade will reduce the demand for ACP inputs – such as Cocoa products – into the goods that the UK and EU trade with each other. They conclude that the economic effects of even a ‘No Deal’ Brexit on ACP countries’ trade will be tiny in aggregate, because ACP countries supply only small amounts of inputs into the products involved in UK-EU trade. Read Briefing Paper 48: THE “BEARABLE LIGHTNESS” OF BREXIT ON THE ACP COUNTRIES’ TRADE: GLOBAL VALUE CHAINS AND RULES OF ORIGIN

The UK is the first major economy to commit to a net-zero emissions by 2050 climate target, and it also has ambitious trade policy goals of providing multilateral leadership and concluding major new trade agreements. This Briefing Paper examines the coherence of UK trade and climate goals in regards to whether the UK Government has set out a clear strategy for integrating trade and climate policy, is acting on areas of mutual supportiveness, and is addressing areas of potential conflict. The authors find room for improvement in relation to all three areas. They identify a lack of cross-cutting strategy in UK climate legislation and in its approach to free trade agreements,  and suggest the UK reforms its approach to fossil fuel subsidies and builds on its efforts in regard to environmental goods. Finally, the authors underscore the need for ambition and transparency for green subsidies and carbon pricing. Read Briefing Paper 47: CAN THE UK GOVERNMENT BE ‘WORLD-LEADING’ IN BOTH TRADE AND CLIMATE POLICY

This Briefing Paper examines the underlying issues related to the Japan-UK Free Trade Agreement negotiation. The author argues that there are two significant challenges underlying the Japan-UK FTA negotiation: the EU-UK FTA and the timeframe. The paper then discusses what should be prioritised to make the Japan-UK FTA ambitious, taking into account the unprecedented short negotiating timeframe, and proposes a possible mechanism to cope with unfinished business in order to make the agreement truly valuable in the long-term. Read Briefing Paper 46: THE JAPAN-UK FREE TRADE AGREEMENT – CONTINUITY OR NO CONTINUITY? HOW CAN IT STILL BE AMBITIOUS?

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, Dr Ayele and Professor Winters look at whether the immediate effect of the result of the Brexit referendum –  the depreciation of sterling relative to all major currencies and the failure to increase UK exports after 2016  – could have been foreseen. They provide a brief description of recent UK trade history, followed by a review of different studies of the effect of exchange rate changes on trade prices, consumer prices and trade quantities. Finally, they explore the apparent effect of the sterling depreciation in June 2016 on UK trade and price behaviour.  The authors show that the pass-through of exchange rate changes to trade and consumer prices and thence to trade quantities is rather complex, and hence difficult to predict with any confidence. They conclude that the failure of UK exports to boom was in part due to the dramatic increase in trade-policy uncertainty that the Brexit result heralded. Read Briefing Paper 44: SHOULD THE BREXIT STERLING DEPRECIATION HAVE BOOSTED EXPORTS? HOW EXCHANGE RATES AFFECT TRADE AND PRICES

The UK’s draft text for the Free Trade Agreement with the EU indicates a vision of where the Government wishes to take the UK’s trade relationship with the EU. In some areas, the UK is unwilling to agree such deep integration as the Political Declaration foresaw and which the EU is seeking. However, in other areas, the UK is asking for more integration than the EU ordinarily offers partners in simple FTAs. This paper discusses four of these extensions in detail and provides further analysis of the implications for the negotiation process and future UK-EU trade. Read Briefing Paper 43: UK-EU FREE TRADE AGREEMENT: PLEASE, SIR, I WANT SOME MORE