This article will try to discern how Brexit will affect the UK's trade structure. The article will start with a description of the current UK trade partners. This section will describe the main UK's trade partners and kinds of goods and services exported and imported by the UK. As part of this work, it also seemed important to us to describe the possible outcomes of Brexit trade negotiations. After this we proceed to project possible effects on the UK's trade structure.
We find that the trade structure will inevitably change. Trade with the EU will decrease, and the resulting trade loss will only partially be compensated by increased trade with other countries outside of the EU. We also find that some very important sectors for the UK's economy, like the financial sector or the chemical industry, will be particularly affected.
[...] An FTA would not provide full access to the Single Market. An option that Britain has considered is to join, even temporarily, the European Free Trade Association (EFTA). The free mobility of goods inside the EFTA is subject to rules of origin. Tariff-free status inside the EFTA is only applied to products that are produced in this Free Trade Area. A product is eligible to be tariff-free only if at least 60% of its components are locally produced. This specific scenario is however unlikely. [...]
[...] How much the terms of trade will be deteriorated depends on the price elasticity of the products exported. If the Brexit deals will entail Britain's exclusion from the current EU preferential trade agreements, as it most likely would, it would affect trade with countries outside of the EU too. It is estimated that the UK will lose $ 12.2 billion worth of exports from just its 4 main non-EU PTA partners. These are Switzerland, South Africa, Turkey and Norway, which account for 11% of total UK's exports. [...]
[...] retrieved on 21/03/2018 -HM Revenue & Customs (2017) "UK regional trade statistics release" https://www.uktradeinfo.com/Statistics/RTS/Pages/default.aspx retrieved 23/03/2018 - Holmes, P., Rollo, J., & Winters, L. (2016). Negotiating the UK's Post- Brexit Trade Arrangements. National Institute for Economic Review R22-R30. -House of Commons Exiting the European Union (2018) "the EU exit Analysis Cross Whitehall Briefing" https://www.parliament.uk/documents/commons- committees/Exiting-the-European-Union/17-19/Cross-Whitehall-briefing/EU- Exit-Analysis-Cross-Whitehall-Briefing.pdf retrieved 23/03/2018 - Morgenroth, Edgar (2016) "The Product and Sector-Level Impact of a Hard Brexit across the EU WP550" - Mulabdic A., Osnago A., Ruta M. [...]
[...] A report on the state of the world's oceans” pg.2 https://worldoceanreview.com/en/wor- 1/transport/global-shipping/2/ retrieved 19/03/2018 Appendix Table1 UN Comtrade data https://comtrade.un.org Mulabdic A., Osnago A., Ruta M. (2017) "Deep Integration and the UK–EU Trade Relations" "UK regional trade statistics release" HM Revenue & Customs (2017) What is the difference between a "hard" and "soft" Brexit? : The Economist explains, London, Oct Holmes, P., Rollo, J., & Winters, L. (2016). Negotiating the UK's Post- Brexit Trade Arrangements. European Economic Area (EEA)/Relations with the EU, http://www.efta.int/eea/eea-agreement Dhingra, S., Ottaviano, G., & Sampson, T. [...]
[...] While this was present in the EU, it would likely be harder to achieve outside of it. Effect of new trade barriers on products and services under different Brexit scenarios Effects on trade of Brexit in WTO and Customs union scenario A joint study from consultancy firm Oliver Wyman and law firm Clifford Chance estimates that the annual direct cost of tariff and non-tariff barriers would amount to about €30 million for UK firms and €35 million for EU firms. [...]
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