The UK’s post-Brexit trade relationship with the EU: Through a glass, darkly

L Alan Winters 18 December 2018

Number 10/flickr

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First posted on: 

UK Trade Policy Observatory, 10 December 2018

The Brexit Withdrawal Agreement and the Political Declaration are being presented as a means to end the uncertainty about the UK’s future relationship with Europe. But in an explainer for the ESRC’s UK in a Changing Europe, I argue that this is not the case. Uncertainty will continue regardless of what happens to the Withdrawal Agreement.

Briefly, I argue that, if the Withdrawal Agreement is approved by Parliament and the EU:

  • The backstop it mandates requires a customs union between the UK and the EU and that most EU regulations for goods will apply in Northern Ireland. However, there is no regulatory alignment between the rest of the UK and the EU and so, if the backstop came into operation, there would be border formalities both in the Irish Sea and as UK goods entered the EU via any other route.
  • Negotiating a trade agreement with the EU will take a lot longer than the 21 months allowed for it in the Withdrawal Agreement, not least because every EU member state has a veto over trade agreements.
  • The Political Declaration that defines the parameters for that negotiation is imprecise in critical places and is, anyway, non-binding.

However, neither would rejecting the Withdrawal Agreement resolve the uncertainty. There is a wide range of possible outcomes all but one of which impose serious economic harm and/or require further negotiation. The option that involves least uncertainty and cost would be to remain within the EU; however, trying to achieve that outcome involves both significant political risks and the risk of ‘no deal’ if the attempt failed.

Through a glass, darkly’ is biblical – 1 Corinthians 13:12 – and is interpreted as meaning that we can see only imprecisely and via a mirror, but that, in the end, all will become clear. Seems about the best we can hope for.

Read the full article, "What are the options for the UK’s trading relationship with the EU after Brexit?", here.

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Topics:  Europe's nations and regions International trade

Tags:  Brexit, trade, EU, UK

Professor of Economics at the University of Sussex and CEPR Research Fellow

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