J., Julio (2019): Brexit trade impacts' and Mercosur's negotiations with Europe. Published in: Journal of World Trade , Vol. Vol 53, No. Issue 3 (2019): pp. 343-372.
PDF
MPRA_paper_94885.pdf Download (664kB) |
Abstract
We estimate that a hard Brexit (HB) would reduce UK agro-industrial-imports from the EU by around 50%. Following the dismantling of the Common Agricultural Policy (CAP) the UK Government has proposed to shift towards market-oriented agricultural policies and negotiating free trade agreements (FTAs) with interested countries. Assuming that the UK restores the previous level of agro industrial products, the paper estimates the net export gains that Mercosur could achieve in the UK market for different agro-industrial products. In the event of a Hard Brexit, and assuming that the Mercosur-EU negotiations are not completed before, Mercosur would then face two negotiations in Europe: with the EU27 and with the UK. We argue that failing Mercosur to give priority to talks with the UK, other countries are more than likely sign trade agreements and fill its import gap thus creating additional trade diversion effects against the Mercosur. We offer back-of-the-envelope estimates indicating that under such an FTA, Mercosur could double its agro-industrial exports to the UK. These significant export gains are concentrated in a group of products that are now highly protected by the CAP.
Item Type: | MPRA Paper |
---|---|
Original Title: | Brexit trade impacts' and Mercosur's negotiations with Europe |
Language: | English |
Keywords: | Brexit, Mercosur, trade diversion, trade institutions, agro-industrial trade, Common Agricultural Policy, free trade agreement |
Subjects: | D - Microeconomics > D4 - Market Structure, Pricing, and Design F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade F - International Economics > F1 - Trade > F15 - Economic Integration F - International Economics > F1 - Trade > F17 - Trade Forecasting and Simulation F - International Economics > F5 - International Relations, National Security, and International Political Economy F - International Economics > F5 - International Relations, National Security, and International Political Economy > F51 - International Conflicts ; Negotiations ; Sanctions F - International Economics > F5 - International Relations, National Security, and International Political Economy > F53 - International Agreements and Observance ; International Organizations F - International Economics > F5 - International Relations, National Security, and International Political Economy > F55 - International Institutional Arrangements F - International Economics > F6 - Economic Impacts of Globalization > F61 - Microeconomic Impacts |
Item ID: | 94885 |
Depositing User: | PhD Julio Jorge Nogues |
Date Deposited: | 11 Jul 2019 11:00 |
Last Modified: | 26 Sep 2019 12:56 |
References: | K. Anderson & J. Swinnen, Eastern Europe and Central Asia’, in Distortions to Agricultural Incentives: A Global Perspective (K. Anderson ed., The World Bank 2009), http://elibrary.worldbank.org/doi/abs/10.1596/978-0-8213-7665-2#. E. Baracat, M. Finger, R. Leon & J. Nogués, Trade Reform and Institution Building: Peru and Argentina Under the WTO, 14(4) World Trade Rev. 579–615 (2015). B. Bellora, C. Emlinger, J. Foure & H. Guimbard, Research for Agri Committee UK-EU Trade: State of Play and Possible Impacts of Brexit, Brussels, European Parliament, Policy Department for Structural and Cohesion Policies (2017), http://www.europarl.europa.eu/RegData/etudes/STUD/2017/602008/IPOL_ STU(2017)602008_EN.pdf. A. Bromhead, A. Fernigough, M. Lampe & K. O ‘Rourke, When Britain Turned Inwards: Protection and the Shift Towards Empire in Interwar Britain University of Oxford, Discussion Paper in Economic and Social History No. 152 (2017): https://www.economics.ox.ac.uk/materials/working_papers/2834/152-final.pdf S. Clarke, I. Serwicka & L. A. Winters, Will Brexit Raise the Cost of Living?, Nat’l Inst. Econ. Rev. No. 242: http://blogs.sussex.ac.uk/uktpo/files/2017/11/ Will-Brexit-Raise-the-Cost-of-Living.pdf Department for the Environment, Health and Rural Affairs (2018). ‘Health and Harmony: the future for health, food and the environment in a green Brexit’: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/684003/future-farming-environment-consult-document.pdf T. Donnellan & K. Hanrahan, Brexit: Potential Implications for the Irish Agri-Food Sector (2016), https://www.teagasc.ie/media/website/publications/2012/ BrexitPaperApril13final.pdf. Drabik, Trade Creation and Trade Diversion in the Enlarged EU Market: Evidence for Agricultural Trade in Slovakia, 57(9–10) Chezch J. Econ. & Fin. 433–447 (2007), http://journal.fsv.cuni.cz/storage/1086_fau_9_10_2007_00000021.pdf. European Commission (2005), ‘Equivalent ad valorem duties’, MAP-Brief, European Commission, https://ec.europa.eu/agriculture/sites/agriculture/files/ trade-analysis/map/brief1.pdf. European Commission (2017), ‘EU-Canada comprehensive economic and trade agreement’, http://trade.ec.europa.eu/doclib/docs/2017/september/tra doc_156056.pdf. https://eurlex.europa.eu/legalcontent/EN/TXT/?uri=COM%3A2018% 3A312%3AFIN European Parliament (2018), ‘Proposal for a regulation of the apportionment of tariff-rate-quotas in the WTO schedule of the Union following the withdrawal of the United Kingdom’, http://www.europarl.europa.eu/legislative-train/themea- balanced-and-progressive-trade-policy-to-harness-globalisation/file-brexit-tariffrate-quotas-in-the-wto. M. Gasoriek, P. Holmes & J. Rollo, UK-EU Trade Relations post Brexit: Too Many Red Lines? UK Trade Policy Observatory, Briefing Paper # 5 (2016). C.Germond, The End of the Cold War and the Unification of the European Continent’, in A Companion to Europe Since 1945 (K. Larres ed., Wiley-Blackwell 2009). Government of Canada (2017), ‘Canada-EU Comprehensive Economic and Trade Agreement’, http://www.international.gc.ca/trade-commerce/trade-agreements-accordscommerciaux/agr-acc/ceta-aecg/index.aspx?lang=eng. G. Gudgin, K. Coutts, N. Gibson & J. Buchanan, The Role of Gravity Models in Estimating the Economic Impact of Brexit, Centre for Business Research, University of Cambridge Working Paper No. 490 (2017). D. Helm, British Agricultural Policy After Brexit, Natural Capital Network, Paper 5 (2016), http://www.dieterhelm.co.uk/natural-capital/environment/agricultural-policy-after-brexit/. HM Treasury (2016), ‘HM Treasury analysis: the long-term economic impact of EU membership and the alternatives’, https://www.gov.uk/government/publications/hm-treasury-analysis-the-long-term-economic-ipact-of-eu-membershipand-the-alternatives. M. Lawless & E. Morgenroth, The Product and Sector Level Impact of a Hard Brexit Across the EU, The Economic and Social Research Institute, Dublin, Ireland 2016), https://www.esri.ie/publications/the-product-and-sector-level-impact-ofa-hard-brexit-across-the-eu/. C. Malmstrom, EU Trade Agreements and the Agri-Food Sector’, European Commission (2016), http://trade.ec.europa.eu/doclib/docs/2016/november/tra doc_155113.pdf. A. Mathews, Implications of Brexit for Food and Agriculture in Developing Countries, Trinity Economic Papers No. 0318, Trinity College (2018), https://www.tcd.ie/Economics/TEP/2018/tep0318.pdf. P. Messerlin, The Mercosur-EU Preferential Trade Agreement: A View from Europe, CEPS Working Document No. 377 (2013), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2277476 P. Minford, & E. Miller, What Shall We Do if the EU Will Not Play Ball: UK WTO Trade Strategy in a Non-cooperative Continent (2016), https://www.economistsforfreetrade.com/wp-content/uploads/2017/08/What-shall-we-do-if-the-EUwill-not-play-ball-110417.pdf. 370 JOURNAL OF WORLD TRADE J. Nogués, Unequal Exchange: Developing Countries in the International Trade Negotiations, in The Political Economy of Policy Reform: Essays in Honor of J. Michael Finger (D. Nelson ed., Elsevier B.V). J. Nogués, Dismantling Argentina’s Barriers on Agricultural Exports: Economic and Social Impacts (2015), report prepared for The World Bank: http://documents.worldbank.org/curated/en/2016/03/26071462/barriers-agricultural-exports-economic-social-impacts-disposal-barreras-sobre-las-exportaciones-agropecuariasimpactos-económicos-y-sociales-de-su-eliminación. J. Nogués, Mercosur-EU Trade Negotiation: Ending Trade Diversion, Strengthening Trade Institutions(2017), Trade, Law and Development Vol IX, No. 1: http://www.tradelawdevelopment.com/index.php/tld/article/viewFile/9%281%29%20TL%26D%201%20%282017%29/306 . Politico (2018), ‘Justin Trudeau: UK-Canada trade talks can begin day after Brexit’ (April 12): https://www.politico.eu/article/justin-trudeau-uk-canadatrade-talks-can-begin-day-after-brexit/. Reuters (2017), ‘Brexit to trigger UK farm policy overhaul and EU funding gap’, April 10: http://uk.reuters.com/article/us-britain-eu-farming/brexit-to-trigger-uk-farm-policy-overhaul-and-eu-funding-gap-idUKKBN17C0UE. RFI (2018), ‘French farmers say EU/Mercosur trade deal will put them out of business’: http://en.rfi.fr/20180222-french-farmers-say-eumercosur-trade-dealwill-put-them-out-business/. T. Robijns, Commission Proposals on the CAP: Will this Be Another Decade of Biodiversity Decline? (2018a), http://capreform.eu/commission-proposals-on-capwill- this-become-another-decade-of-biodiversity-decline/ T. Sampson, S. Dhingra, G. Ottaviano y J. Van Reenen, How Economists for Brexit Manage to Defy the Laws of Gravity (2016), http://voxeu.org/article/howeconomists-brexit-manage-defy-laws-gravity. A. Swimbank, World Trade Rules and the Policy Options for British Agriculturepost-Brexit, UK Trade Policy Observatory, Briefing Paper #7 (2017), https://blogs.sussex.ac.uk/uktpo?s=swinbank. L. A. Winters, Will Eliminating UK Tariffs Boost UK GDP by 4%? Even Economists for Free Trade Don’t Believe It, UK Trade Policy Observatory (2017),https://blogs.sussex.ac.uk/uktpo/2017/04/19/will-eliminating-uk-tariffs-boostuk-gdp-by-4-percent/. W. Yu, C. Elleby & M. Thomsen, Modelling the Potential Impacts of Two Brexit Scenarios on the Danish Agricultural Sector, IFRO Report No. 260, Department of Food and Resource Economics, University of Copenhagen (2017). |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/94885 |