Past Event

Brexit and trade: what EU and WTO rules imply

Bruegel in collaboration with Leuven Centre For Global Governance Studies organizes an event at which we will discuss the options for redesigning trade relations in the post-Brexit era.

Date: February 6, 2017, 12:00 pm Topic: European Macroeconomics & Governance

SUMMARY

Ahead of the UK triggering the Article 50 in the course of next month, it became crucial to assess the impact of Brexit on trade. Brexit will not only affect EU-UK’s trade policies, but it will also have an impact on global trade. The aim of that event was therefore to analyze what the Brexit will mean for the UK and the EU in terms of legislation and trade negotiations.

Andre Sapir launched the event with a short presentation mentioning what kind of problems would potentially arise from an EU perspective. According to him, the UK will leave the Customs Union (CU) which means that negotiations will turn around a Free-Trade Agreement (FTA). However, such an agreement requires customs controls due to the rules of origin and will therefore slow the overall flows of trade between UK and EU. UK and EU are likely not to adopt the same tariff schedules and will need border adjustments.

Petros Mavroidis discussed more in details the legal procedure implied by Brexit. There will be two rounds of trade negotiations: the UK will negotiate with the EU and then will negotiate with the rest of the world (within WTO). From an EU perspective, his proposal is the following: the EU-27 should adopt the EU-28’s tariff schedule and let the UK negotiates and deals with its own quotas at the WTO. He added that WTO cares only about FTAs and CUs, but not about the different scales of integration. It means that UK-EU can negotiate an agreement without worrying too much about WTO rules. From a UK perspective, real problems will come from the fact that by leaving the EU, it leaves an entity that has trade agreements with the rest of the world. The UK will therefore have to adjust the EU existing schedule and re-negotiate its own trade agreements which might lead to retaliation from third countries (even if the overall risk of retaliation is low).

Jan Wouters highlighted that Article 50 is not about trade, it’s all about a divorce. According to him, the process for the Withdrawal Agreement (WA) will take less than two years. However, negotiating a trade agreement will take much more time for two main reasons: first, starting discussions about a trade agreement while the WA has not even been agreed is almost illegal and second, examples such as CETA show that the standard procedure for trade negotiations takes much more than two years. Finally, as long as the UK is still a Member State, it is supposed not to be able to negotiate trade agreements with third countries. However it should be manageable and feasible to allow the UK to start having explanatory talks in order to future trade negotiations faster.

Hosuk Lee-Makiyama argued that the future of EU-UK relationships cannot be predicted based on previous negotiations like CETA since the divorce settlement is going to be based on the dynamics of status quo. He added that the only deadline that matters is the elections which will impact the future of the Tory party. He also stated that we cannot write off so quickly the possibility of a CU. First, the rules of origin do matter and the damages implied by breaking the regional supply chain will be considerable. Second, the other three freedoms barely exist and the services won’t experience true disruption after the Brexit. When the time for negotiations with third countries will come, he argued that UK and EU will have to sit on the same side of the table. When negotiating Tariff Rate Quotas (TRQs), third countries won’t be just satisfied by the UK and the EU splitting the quotas because they would lose flexibility. Finally, since previous negotiations were all about making associations, the EU faces now one big political challenge: defining what leaving the Union means.

The questions from Viktoria Dendrinou and the floor discussed further the CETA example and the implications of small countries trying to leverage their power through institutions on trade agreements, the threat of blocking from third countries regarding TRQs, the cases of Turkey and Ukraine as potential models for a future UK-EU agreement, the supremacy of EU-law model and the effectiveness of international law.

Notes by Justine Feliu

Video and audio recording


Event materials

Petros Mavroidis – Presentation

André Sapir – Presentation

Jan Wouters – Presentation

 

Schedule

Feb 6, 2017

12:00-12:30

Check in and lunch

12:30-13:15

Panel Discussion

Chair: Viktoria Dendrinou, Reporter, Bloomberg

Petros C. Mavroidis, Edwin B. Parker Professor of Foreign & Comparative Law, Columbia University

André Sapir, Senior Fellow

Prof. Jan Wouters, Director, Leuven Centre for Global Governance Studies - Institute for International Law, KU Leuven

13:15-13:30

Comments

Hosuk Lee-Makiyama, Director, ECIPE

13:30-14:00

Q&A

Chair: Viktoria Dendrinou, Reporter, Bloomberg

14:00

End

Speakers

Viktoria Dendrinou

Reporter, Bloomberg

Hosuk Lee-Makiyama

Director, ECIPE

Petros C. Mavroidis

Edwin B. Parker Professor of Foreign & Comparative Law, Columbia University

André Sapir

Senior Fellow

Prof. Jan Wouters

Director, Leuven Centre for Global Governance Studies - Institute for International Law, KU Leuven

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read about event More on this topic

Past Event

Past Event

State of transatlantic trade relations

A conversation on transatlantic relations with Michael Froman.

Speakers: Michael Froman, André Sapir and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 21, 2018
Read article Download PDF More on this topic More by this author

Working Paper

EU financial services policy since 2007: crisis, responses and prospects

This paper presents a holistic overview and assessment of the European Union (EU)’s financial services policy since the start of its financial crisis in mid-2007. Its emphasis is on public policy initiatives and developments at the European level, including those specific to the euro area.

By: Nicolas Véron Topic: Finance & Financial Regulation Date: June 21, 2018
Read about event More on this topic

Upcoming Event

Jun
26
08:30

EU-LAC Economic Forum 2018

The second edition of the EU-LAC Economic Forum, a high level gathering for in-depth research-based exchanges on economic issues between European, Latin American and Caribbean (LAC) policy makers and experts.

Speakers: Angel Badillo, Federico Bonaglia, Sylvie Durán, Emilio Lamo de Espinosa, Alicia García-Herrero, Elisa Grafulla, Gonzalo Gutiérrez, Bert Hoffmann, Juan Jung, Carlos Malamud, J. Scott Marcus, Neven Mimica, Fabio Nasarre de Letosa, Detlef Nolte, Guillermo Fernández de Soto, Anne Sperschneider and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic

Upcoming Event

Jun
28
12:30

Trade war trinity: analysis of global consequences

Analysis of the long-term impact of the trade war and its three key players: EU, US, and China.

Speakers: Alicia García-Herrero and Carl B Hamilton Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article Download PDF More on this topic

Working Paper

European and Chinese trade competition in third markets: the case of Latin America

While Europe continues to hold important trade powers, the rise of China in the global economy has significantly reshaped international trade and competition. In this paper, the authors show that the degree of competition between both powers in Latin America has risen in the past decade due to China's increased trade of high-quality products. They address whether China is an increasingly relevant competitor for Europe in Latin America and in which sectors China-EU competition is fiercer. These findings should be a wake-up call to Europe in its quest to remain competitive at the global level.

By: Alicia García-Herrero, Thibault Marbach and Jianwei Xu Topic: Global Economics & Governance Date: June 7, 2018
Read article More on this topic

Blog Post

Trade wars: Just how exposed are EU Member States and industries to the US market?

This blog focuses on how a more restricted access to US final demand could affect EU economies and sectors, by measuring their share of value-added absorbed in the US. The exposure of the EU as a whole in value-added terms is lower compared to that suggested by gross exports to GDP and, overall, gross exports misconstrue the picture of spill-overs through trade linkages. For individual countries, the degree to which gross exports overestimate or underestimate exposure is relatively small, with the important exception of Ireland. However, gross exports significantly overestimate the exposure of EU manufacturing to US final demand.

By: Francesco Chiacchio and Konstantinos Efstathiou Topic: Global Economics & Governance Date: June 1, 2018
Read about event

Past Event

Past Event

Financial services after Brexit - what path for the EU27 and the UK?

How will the European financial services industry develop after Brexit?

Speakers: Dashiell Caldwell, Richard Knox and Francesco Papadia Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 30, 2018
Read about event

Upcoming Event

Sep
3-4
08:30

Bruegel Annual Meetings 2018

The 2018 Annual Meetings will be held on 3-4 September and will feature sessions on European and global economic governance, as well as finance, energy and innovation.

Speakers: Maria Åsenius, Richard E. Baldwin, Maria Demertzis, Mariya Gabriel, Péter Kaderják, Joanne Kellermann, Jörg Kukies, Bruno Le Maire, Philippe Lespinard, Montserrat Mir Roca, Dominique Moïsi, Jean Pierre Mustier, Emma Navarro, Ana Palacio, Lucrezia Reichlin, André Sapir, Jean-Claude Trichet, Margrethe Vestager, Reinhilde Veugelers, Georg Zachmann and Guntram B. Wolff Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Brussels Comic Strip Museum, Rue des Sables 20, 1000 Brussels
Read article More on this topic More by this author

Opinion

La PAC n’est pas taboue

Dans cette chronique, l'auteur estime qu’une renationalisation graduelle de certaines politiques pourrait utilement contribuer à la nécessaire redéfinition du modèle agricole français..

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: May 28, 2018
Read about event More on this topic

Past Event

Past Event

Making trade work for all – the Danish case

This event discussed how we can make trade work for all, focusing on the example of Denmark.

Speakers: Maria Åsenius, Sofia Bournou, Brian Mikkelsen, André Sapir, Eva Rytter Sunesen, Guntram B. Wolff and Casper Arnsbo Poulsen Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 28, 2018
Read article

Parliamentary Testimony

European Parliament

Brexit and Energy Policy

Testimony before the European Parliament's Committee on Industry, Research and Energy

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Parliament, Testimonies Date: May 28, 2018
Read article More on this topic More by this author

Blog Post

China’s new role in the global economy

The changing role of China in the world economy has recently been highlighted by its registering of a first current account deficit in 17 years. We review the economists’ analyses of this new role and associated challenges.

By: Nicolas Moës Topic: Global Economics & Governance Date: May 28, 2018
Load more posts