Swati Dhingra, Rebecca Freeman, Eleonora Mavroeidi, 30 March 2018

After Brexit, the UK will have to negotiate which provisions to include in its new arrangements, and a fundamental question is which provisions are most important in reducing non-tariff barriers to trade. This column uses a gravity model to show that trade agreements with deep provisions have the largest impact on domestic value added. The UK’s entry into a deep trade agreement with either the US or China/India that encompasses non-tariff liberalisation of services, investment, and competition can increase economic activity in industries that are key to its innovative activity.

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