The consequences of the Trade and Cooperation Agreement for the UK’s international trade

Abstract

We analyse the likely trade effects of the Trade and Cooperation Agreement (TCA), which defines the post-Brexit trading environment between the United Kingdom (UK) and the European Union (EU). We apply a computable general equilibrium model and focus on trade in value added rather than just the gross values of exports and imports. We describe the TCA and estimate its effects on the costs of conducting UK–EU trade, including various non-tariff barriers in both goods and services. We suggest that the TCA will reduce UK trade significantly: total exports by around 7 per cent and imports by around 14 per cent. In terms of value added (i.e. incomes generated), textiles and vehicles, both of which trade extensively with the EU, suffer heavily, as do services which trade significantly with the EU, face large increases in trade barriers, and experience declining demand from other sectors as those sectors’ exports fall. Such inter-industry linkages spread the losses from Brexit widely through the economy.

The Indirect Effects of Brexit on African, Caribbean, and Pacific Trade with the UK and EU

“…To simulate the effects of TCA implementation relative to the 2019 baseline, 12 we follow Fusacchia et al (2022) and introduce trade frictions due to Brexit, reflecting border formalities, rules of origin, and other non-tariff measures, all pertaining to goods, and non-tariff measures on services 13 Table 4. summarizes the simulated scenario: the average increase of bilateral trade costs for both goods and services is roughly 14% 14…”

“…2 However, TCA precludes diagonal cumulation. This means that some existing UK-EU trade will now face tariffs and that related imports of inputs may quite possibly disappear as firms reconfigure their supply chains (Fusacchia et al, 2022), in addition to documentary compliance and border delays (Byrne and Rice, 2018;Bennett and Vines, 2022).…”

“… 3 Fusacchia et al (2022) simulate these indirect effects and show they are substantial. However, they do not focus on low-income countries and do not provide a careful analysis of ACP value chain integration with both the UK and the EU.…”

Trade-Offs: Understanding Future Trade Options for Scotland

“…This literature assessed the economic impact of the UK's exit from the EU under a range of different scenarios that were proposed (see e.g. Hantzsche et al (2019), and again once a deal was ultimately reached (Fusacchia et al, 2022). For Scotland, Figus et al (2018) estimate the longer-term economic consequences of Brexit under a range of hypothetical trade arrangements between the UK and EU.…”

Foreign Investment, Infrastructure, and Public-Private Partnership in ASIA

“…PPP can be defined as a form of contract between the public and private sector, which requires financial, technological, and expert knowledge from the private partner, where the management of the main risks of the project is transferred to the private sector, and the public sector pays the private partner for the provision of services to the public that has traditionally been provided by the public sector itself. A public-private partnership is a method of cooperation established by law between a state or municipal agency and a private entity, in which the state or municipal agency transfers the activities assigned to its functions to a private entity, and the private entity invests in these activities and the necessary property, for which he receives the reward prescribed by law (Fusacchia, Salvatici, & Winters, 2022). Contractual PPP relationships share many of the characteristics of public procurement, but instead of buying fixed assets and paying full price up front, PPP mechanisms allow the public sector to create independent businesses that are financed and managed by the private sector (Liu, Clegg, & Pollack, 2022).…”