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Note on UK agro industrial trade under a hard Brexit

Nogues, Julio (2018): Note on UK agro industrial trade under a hard Brexit.


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For the United Kingdom and the European Union, the costs from the Brexit policy depends crucially on the ensuing structure of bilateral trade protection that they finally come to agree upon. For the rest of the world, Brexit will open new opportunities and create new challenges. The focus of this note is on the opportunities that would emerge for efficient agro industrial exporters in the UK market in the event of a hard Brexit. This scenario would mark the first time since 1973 that third countries face a level playing field vis a vis the EU as potential suppliers to the UK market. Partial equilibrium estimates indicate that a hard Brexit would reduce UK agro industrial imports from the EU by around 61% (from USD 45,915 million imported in 2015). Because of the relatively high protection provided to these products, this percentage is more than double the number that has been estimated for trade in all goods. The increase in food prices that would accompany adoption Brexit would likely push the UK government to liberalize imports unilaterally and/or to sign FTA’s with efficient agro industrial exporters. Apparently, this will occur within a framework of a radical shift in UK agricultural policy away from the Common Agricultural Policy that targets farm income, towards market based incentives.

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