Single Market

New economic partnership between the UK and Japan – Does rolling over the EU-Japan EPA make sense?

06 July 2018 Dr. Minako Morita-Jaeger is is an international trade policy consultant and a Visiting Fellow of the UK Trade Policy Observatory Exactly a year ago today, the EU and Japan agreed the EU-Japan Economic Partnership Agreement (EPA) in principle. Subsequently, at the end of August that year, the UK Prime Minister Theresa May and the Japanese Prime Minister Shinzo Abe agreed to work quickly to establish a new bilateral economic partnership based on the final terms of the EU-Japan EPA when the UK exits the EU. The UK Government currently wishes to roll over existing EU trade agreements, including the EU-Japan EPA. But does rolling over make sense? From the UK point of view, it is obvious that rolling over the Agreement reflects neither Brexit campaigners’ promise of building a ‘Global Britain’ nor UK sovereignty of its own trade policy. From the Japanese perspective, rolling over the EU-Japan EPA does not make sense either because a symbolic arrangement cannot reflect economic realities. […]

By Nick Phipps|2018-07-06T13:47:46+01:006 July 2018|UK - Non EU|5 Comments

What about the remaining 80 percent – services? The ‘Customs Union’ and ‘Unilateral Free Trade’ share the same flaw

05 July 2018 L. Alan Winters CB is Professor of Economics and Director of the Observatory. Two years in and the Cabinet is still squabbling over the UK’s trade relationship with Europe. Among the options most discussed, if not most likely to occur, are The Jersey option – arrangements to provide conditions equivalent to the customs union and the Single Market in goods; Mrs May’s ‘third way’ customs partnership – where the UK collects EU-level tariffs at the border and rebates them only if UK tariffs are lower and firms can prove that the goods did not leave the UK. Until the UK can convince the EU that the technology to do the latter will actually prevent the leakage of lower-taxed goods into the EU, this is effectively the ‘customs union’; and Unilateral free trade – ‘no deal’ followed by the immediate abolition of all UK tariffs. This blog does not assess the relative merits of these arrangements, but notes that they share a common flaw: they ignore 80 percent of the British economy! The more successful 80 percent, in fact – the services sectors, in which the UK has a manifest comparative advantage (see below). The advocates of these [...]

By Nick Phipps|2018-07-06T09:56:40+01:006 July 2018|UK- EU|8 Comments

The return of the Norway option?

18 May 2018 Julia Magntorn is Research Officer in Economics at the UKTPO. While Theresa May and her cabinet are trying to agree on whether to back the maximum facilitation proposal or the customs partnership, another option, nicknamed the ‘Norway option’ which would see the UK remaining a member of the European Economic Area (EEA), has made a comeback in the Brexit debate. […]

By Nick Phipps|2018-05-18T12:00:22+01:0018 May 2018|UK- EU|3 Comments

Why the Customs Partnership is problematic

17 May 2018 Dr Michael Gasiorek is Senior Lecturer in Economics and Dr Peter Holmes is Reader in Economics at the University of Sussex. They are both Fellows of the UKTPO and Managing Director and Director of InterAnalysis respectively. The government’s two preferred options for post-Brexit trade with the EU are “Maximum Facilitation” whereby technological solutions are used to simplify trade procedures, and a so-called “New Customs Partnership”. This blog discusses the implications of the New Customs Partnership (NCP) scheme. It must be borne in mind that the EU has so far rejected both and that in fact the degree of detail currently provided by the Government on either is so slight that we cannot be sure what is proposed. It is also arguable that they are not alternatives since under any scenario the government is keen to ensure the maximum simplification of procedures in order for trade to be ‘as frictionless as possible’. Even if they were viable, both the NCP and the Max Fac proposals involve significant trade-offs – namely that they involve firms in expensive set-up costs in order to be able to reduce transactions costs. […]

By Nick Phipps|2018-05-17T13:41:05+01:0017 May 2018|UK- EU|2 Comments

A Customs Union with the EU: A giant step politically but a small step for the economy

1 May 2018 Ilona Serwicka is Research Fellow in the economics of Brexit and Charlotte Humma is the Business Manager at the UKTPO. As the European Union (EU) Withdrawal Bill and the Trade Bill progress through parliament, forming a customs union with the EU has become a key issue. On 18 April 2018, the House of Lords voted to keep open the option of staying in a Customs Union after Brexit, promptly followed by the UK Government reaffirming its intention neither to remain in the EU Customs Union nor to seek to form a new one. So where does this leave us? […]

By Nick Phipps|2018-05-01T08:43:32+01:001 May 2018|UK- EU|8 Comments

What can the UK learn from existing customs unions?

29 March 2018 Dr Ingo Borchert is Senior Lecturer in Economics and a fellow of the UK Trade Policy Observatory and Julia Magntorn is Research Assistant in Economics at the Observatory. With one year to go until the UK will leave the European Union (EU), sorting out Britain’s trade relation with the EU is the most important task. Yet the design of the future UK-EU agreement has implications for trade policy towards non-EU countries. On account of this, the British Prime Minister in her Mansion House speech ruled out forming a new customs union with the EU because this “would not be compatible with a meaningful independent trade policy.” Indeed, having sovereignty over its external trade policy post-Brexit has been at the forefront of the UK’s negotiation agenda, and consequently, the provision in the current draft Withdrawal Agreement that the UK may commence Free Trade Agreement (FTA) negotiations with other countries during the transition period was perceived as an important concession won. […]

By Nick Phipps|2018-03-29T10:20:25+01:0029 March 2018|UK - Non EU, UK- EU|3 Comments

EU likely to reject bespoke Canada trade deal for UK

22 March 2018 Julia Magntorn is Research Assistant in Economics at the UKTPO and L. Alan Winters CB is Professor of Economics and Director of the Observatory. The European Union is likely to reject a significantly enhanced version of its Canada trade deal for the UK after Brexit. Our in-depth analysis of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada concludes that the EU’s commitment to the Single Market is so deeply ingrained that a substantial loosening of the rules for the UK would be politically impossible. The EU may agree to some exceptions but these would fall far short of a bespoke deal and would be a poor substitute for the Single Market, say the report’s authors Julia Magntorn and L. Alan Winters. […]

By Nick Phipps|2018-03-22T08:13:10+00:0022 March 2018|UK - Non EU, UK- EU|0 Comments

The irreconcilability of the UK Government’s objectives for Brexit

2 March 2018 Dr Michael Gasiorek is Senior Lecturer in Economics at the University of Sussex and Director and Managing Director of InterAnalysis respectively. He is a Fellow of the UKTPO. There is much talk about the UK not being able to “cherry-pick” and “have its cake and eat it” with regards to post-Brexit trade policy with the EU. There are a couple of issues here. First, all EU agreements are different and hence by definition bespoke. Cherries are picked by both sides. This will also be true of a future UK-EU agreement. The question, therefore, really is to do with the extent to which the EU will grant the UK a bespoke deal in serious and substantive ways. The second issue is that it is far from clear that the UK government currently knows what all the ingredients are and what the recipe is for the cake it is hoping to share with the EU. […]

By Nick Phipps|2018-03-02T11:38:29+00:002 March 2018|UK- EU|0 Comments

Leave-voting regions are “most exposed” to Brexit services shock

11 January 2018 Dr Ingo Borchert is Lecturer in Economics and a fellow of the UK Trade Policy Observatory. Nicolo Tamberi is a Research Assistant in Economics for the Observatory The North East and West Midlands are the most reliant on the European market, sending around half of their services exports to the EU. Sources: Office for National Statistics (2017a); and authors’ calculations. Two of the biggest Brexit-voting regions would be hit hardest by a potential fall in services exports upon leaving the EU, new analysis suggests. […]

By Nick Phipps|2018-01-11T08:00:03+00:0011 January 2018|UK - Non EU, UK- EU|4 Comments

Magic realists and economic realists

15 December 2017 Alasdair Smith is an Emeritus Professor of Economics at the University of Sussex, and is a member of the UK Trade Policy Observatory. The deal done on Friday December 8 in the Brexit negotiations has already been subject to conflicting interpretations. The UK has committed to having no hard border in Ireland, and committed in terms which seem to admit no rowing back. […]

By Nick Phipps|2017-12-15T17:46:28+00:0015 December 2017|UK- EU|8 Comments