A no-deal Brexit could damage smaller economies trading with the United Kingdom, hit European Union (EU) exports hard, but bring substantial gains for China, says the United Nations Conference on Trade and Development (UNCTAD), whose research suggests the United Kingdom and its future trading partners need to expedite bilateral deals to avoid the costs of such a Brexit.
These costs are considerable, the research found, with the EU standing to lose out on $34.5 billion in exports to the United Kingdom.A no-deal Brexit could damage smaller economies trading with the United Kingdom, hit European Union exports hard, but bring substantial gains for China, says the United Nations Conference on Trade and Development, whose research suggests the United Kingdom and its future trading partners need to expedite bilateral deals to avoid the costs of such a Brexit.#
The second-biggest loser in the event of the UK’s no-deal departure from the EU would be Turkey, taking a $2.4 billion export hit, according to an UNCTAD press release.
China could gain an additional $10.2 billion in exports to the United Kingdom, with the second-ranked United States standing to add $5.3 billion through its exports to the nation.
The UK market accounts for about 3.5 per cent of world trade and is an important trading partner for many developing countries. In 2018, the UK was the fifth largest importer inside the EU. It imported almost $680 billion worth of goods from the rest of the world, of which about $360 billion came from other EU countries.
The UNCTAD research estimates that the largest losses would accrue to EU countries, given that they are the most economically-integrated with the United Kingdom.
But other countries are likely to see a decline in their exports as well. The research cites South Korea, Pakistan, Norway, Iceland, Cambodia and Switzerland as countries at risk.
The biggest beneficiaries of a no-deal Brexit, meanwhile, would be countries which current face higher tariffs. Japan could expect to gain $4.9 billion.
A no-deal Brexit is also expected to result in increased imports from Thailand, South Africa, India, Brazil, the Russian Federation, Viet Nam and New Zealand, among others.
The EU currently has about 70 trade agreements, but these are often not easy to replicate, and negotiations take time.
As of March 2019, only 26 continuity agreements had been sealed between the UK and trading partners.
In a no-deal Brexit scenario, EU preferential trade agreements with third countries will abruptly cease to apply, and imports to the United Kingdom could end up taking place on Most Favored Nation (MFN) terms.
This is a World Trade Organization (WTO) principle that the same tariffs must apply to any trading partner, unless there is an exception set out in an actual trade agreement. (DS)
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