University Of Bedfordshire

Student Name: Jacob Balding

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Research Question: The forecasted impacts that Brexit is likely to have on the
United Kingdom’s trade agreements with countries within and outside of the
European Union.
Abstract

Ever since the recent outcome of Britain’s exit (Brexit) from the European Union
there has been worldwide concern regarding the increasingly likelihood of an
uncertain future; in regards to rules and regulations based on trade. Thus, the
occurrence of a no-deal Brexit appears to be looming as very little concrete evidence
is being shown to highlight the alternative trade arrangements; that are available to
the UK. Additionally, there is a lack of prior research findings that relates to the
probable impacts that Brexit will have on UK trade after they leave the EU single
market and customs union. Hence, the purpose of this dissertation is to supply the
reader with a clearer picture of the extent to which Brexit will impact the United
Kingdom’s ability to trade with the twenty-seven EU members, if the UK decides on
trading with them post-Brexit. Moreover, these new barriers to trade will be assessed
in order to evaluate the potential alternative trade agreements that could potentially
be implemented by the UK. This will all be conducted through secondary research
and the interpreting of data, of which has pointed out that the UK will face tariff
barriers of up to forty-percent within certain sectors, due to the UK needing to adopt
World Trade Organisation rules (WTO). Furthermore, this investigation has found
that there is the possibility that non-tariff barriers will also be incorporated within UK
trade, which includes rules of origins and longer border delays for goods that pass
through customs.
Table of Contents

1 – Introduction…………………………..pp 1

1.1 – Research Questions………..pp4

1.2 – Aims and Objectives……….pp4

2 – Literature Review

2.1 – Brexit and its Potential Consequences: the Hard Brexit Approach…pp4

2.2 – Post-Brexit Potential Options: the Soft Brexit Approach……………..pp8

2.2.1 – The EEA and EFTA Membership Alternative……………….pp8
2.2.2 – The CETA-style Agreement Solution………………………..pp10
2.3 – Other Post-Brexit Options: Trading with non-EU Countries………....pp13
2.3.1 – A Free Trade Agreement with the United
States……………..pp13
2.3.2 – Joining the Trans-Pacific Partnership (TPP)
………………….pp15

3 – Methodology and Methods

3.1 – The Justifications for Implementing Secondary Data in Research...pp17
3.2 – Problems Encountered by the Researcher through the
Implementation...Pp18 of Secondary Data and the Weaknesses of Secondary
Research
3.3 – Strengths of the Adopted Mixed Method Approach…19
3.4 – Limitations in Mixed Method Approaches…pp20
3.5 – Chosen Data Analysis Methods…..pp21
3.6 – Weaknesses of the Chosen Data Analysis Methods… pp21

4 - Analysis
4.1 – Changes Caused to the United Kingdom’s Future Trade and Economy,
as a Result of Leaving the European Union…pp22
4.2 – Alternative Trade Agreements as Potential Solutions to Trade Barriers
and Implications………………………………….pp22
5 – Conclusion………….23
6 – References…..pp27
7 – Appendices….pp
 1- Introduction

This dissertation is going to explore how UK trade will be affected through

Britain’s majority vote decision to depart from the European Union (Brexit), as a
result of the 2016 referendum (Asthana, Quinn and Mason, 2016). This is a
significant topic as there is a large amount of uncertainty in regards to the future
trade agreements that the United Kingdom can enter into after Brexit, which takes
full-effect in March 2019 (Strupczewski, 2017). This is due to the potential
eradication of the free movement of goods between countries within the UK and
those who operate as member states of the European Union (Hobolt, 2016).
Furthermore, it has been discovered that the United Kingdom would be prevented
from continuing to trade through the EU customs union. Therefore, this is thought
to lead to trade barriers for the UK, if they wish to proceed with importing and
exporting goods to and from countries within the EU. It is suggested that possible
trade barriers would be attributable to employing a hard Brexit strategy, which
would involve buying and selling goods with EU countries through World Trade
Organisation (WTO rules) (Erken et al., 2018).This is a result of triggering article
50 in the Lisbon treaty by the government, which declares that any of the EU
member states have the right to leave the EU; however must do so within a two
year period (Morphet, 2017).

Therefore the UK would automatically be required to trade under WTO rules if

they do not reach an agreement with the European Union based upon future
trade relations, in which tariff quotas are likely to be added (De Grauwe, 2016).
This means that the EU may be able to limit the amount of goods exported and
can charge low tariffs on small orders, however can raise tariffs depending on
high volumes sold. Furthermore it has been suggested that those who operate in
the European Union could add large tariffs to Britain’s imports, especially to the
car manufacturing industry who are thought to be severely affected as they are
forecasted to incur a ten-percent tariff charge (Gardner, 2018). These further
costs would be accommodated through forcing consumers to pay higher prices,
which is believed to increase the price of cars by over two-thousand pounds per
vehicle (Cox, 2017). It has also been estimated that British farmers would likely
incur additional costs of between thirty-forty percent in order to export to the

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 European Union (Feng et al., 2017). Thus leading to the possibility of multiple
imports and exports to no longer being viable.

Moreover, the United Kingdom would be the first member state ever to leave
either the European Union or the European Economic Community (Evans and
Menon, 2017). Therefore, the unpredictability surrounding Brexit is constantly
growing, especially as the majority of current legislation is based on European
laws but this will change to new and updated British rules and regulations after
Brexit (Martill and Staiger, 2018). Thus, it is essential that the researcher
undertakes the mentioned dissertation as Brexit is affecting the UK economy and
trade; which is influencing the everyday life of inhabitants. Moreover, Brexit has
caused considerable fluctuations in the exchange rate of the Great British Pound
to foreign currency, in which the value of the pound hit its lowest value seen since
31 years prior to the decision to leave the European Union (Ryan, 2016).
Therefore stock that is imported to the United Kingdom is becoming more
expensive for companies that operate in Britain. This has already been as the
price of fuel and food has pushed inflation to three-percent, this represents the
highest amount observed within five years (Allegretti, 2018). Therefore there are
many cause for concerns in relation to the possible impacts on trade for the UK in
the near future. Hence Brexit is constantly debated and reported on a daily basis,
thus aspects regarding impacts on trade will be examined as it is a current and
relevant topic. Industry trends are also going to be stated in order to establish
which industry’s trade is likely to be affected the most as a result of Brexit.

Additionally there are fears that if Britain leave the EU then they may face further
charges of a minimum of a billion pounds per annum, due to enhanced custom
checks and procedures which are thought to disrupt the free movement of goods
(Sini, 2018). This is because goods that are delivered between both the UK and
the EU will be subject to long-lasting border delays, hence leading to slower trade
and stationary traffic for approximately ten-thirty miles (which could represent a
tripling of time queuing at major ports such as Dover) (Roberts, 2017).
Additionally the drivers of the imports and exports would be required to declare
customs and complete passport checks which are presently only basic.

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 Currently, the United Kingdom ranks as the fifth largest economy with a GDP
value (gross domestic product) of 2.9 trillion dollars and is the third most
populated member state in the EU with in excess of sixty-four million people
(Ives, 2018). Furthermore the UK contribute a substantial amount of capital
towards the EU budget (net contribution of approximately eight billion and nine-
hundred million pounds in 2017 alone). Moreover the European Union comprises
of over three-hundred billion pounds worth of imports to the UK, which is higher
than the UK’s trade imports with the rest of the world (230 billion pounds) (Office
for National Statistics, 2018). Hence the UK’s withdrawal from the European
Union has induced panic across the continent because of this as there are
potentially huge consequences for both Europe and the United Kingdom.
Therefore this aspect will be explored in text to pinpoint the possible
repercussions as a result of leaving the European Union, as it is clear to see that
both parties could lose significant trade.

Therefore, two differing approaches to Brexit will be explored (known as hard

Brexit strategies and soft Brexit strategies), so that potential outcomes of both
methods can be evaluated. This is significant as there are many mixed opinions
on the benefits and drawbacks of either decision made by the government on UK
trade. This piece of written work will assess a compilation of experts opinions as
well as facts to attempt to discover the most likely to occur, in addition to the
probable repercussions facing the UK after Brexit. Consequently this study will
investigate different trade agreements that the United Kingdom can join, in order
to remain trading partners with countries within the European Union; following the
conclusion of Brexit. This would permit the UK to maintain trade relations with the
European Union, for instance through European Economic Area membership
(European Parliament, 2018). Furthermore various trade agreements will be
investigated such as the Trans-Pacific Partnership (TPP), this will be done to
highlight how the UK could adopt trade agreements with countries outside of the
EU (Brügge, 2018). The purpose of which is to demonstrate methods that the UK
can embrace to eliminate the potential and predicted trade barriers that are
thought to occur following Britain’s exit from the EU.

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 1.1-Research Questions

 To what extent will Brexit influence the future trade of the UK? 
 What are the barriers and trade implications which will be caused by Brexit?
 Will alternative trade agreements help the UK to overcome the barriers and
trade implications that may be caused by Brexit?

1.2-Aims and Objectives

 To explore the effects that Brexit will have on the UK after they withdraw from
the customs union and the EU single market.
 To investigate the barriers and trade implications caused by Brexit: including
the problems with continuing future trade relations with countries that remain
in the European Union.
 To analyse potential alternative trade agreements that the United Kingdom
can adopt post-Brexit, in order to ensure a sustainable economy.

2. Literature Review

2.1 Brexit and its Potential Consequences: the Hard Brexit Approach

The United Kingdom is faced with various choices regarding future trade deals
that will be accessible; once the UK government determine which Brexit
approach is going to be ratified. The hard Brexit approach relates to the United
Kingdom wanting to gain full access to their borders, gaining new trade deals and
governing their own laws through leaving the EU (Smith, 2018). The majority of
the UK population decided on Britain leaving the EU because the UK currently
adopt the rules and regulations of the European Union, additionally they did this
due to mass immigration. Thus Whyman and Petrescu (2017) have suggested
that a hard Brexit approach would probably mean that the United Kingdom will be
required to formulate trade agreements with countries outside of Europe. This is
because the UK will be prevented from further participation in the European
Union’s customs union and single market. Furthermore Morgan (2016) agrees
that any type of hard Brexit technique would be a hindrance to the UK, as there

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 would realistically be high tariffs included on imports; which would be a result of
Britain falling back on World Trade Organisation regulations (WTO).

Research has indicated that specific industries will be affected the most through
the EU trade tariffs. It has been predicted that those in the car industry, airline
industry, pharmaceutical industry, agriculture as well as food and drinks will be
impacted the worst. Furthermore it appears that the United Kingdom are heading
for a no-deal Brexit, in which they would be forced to trade under these WTO
rules and hence trade tariffs would be imposed on the UK (Stone, 2017). Leaked
government papers have claimed that terminating EU membership will lead to
companies operating in the United Kingdom to pay sixty-six billion pounds a year,
by replacing the EU single market with WTO trade rules (Coates, 2016). This has
been judged to greatly decrease the Gross Domestic Product (GDP) of the
United Kingdom between five-eighteen percent over the next fifteen years. This
represents an expected loss of over two-hundred and fifty billion pounds by 2033
and would indicate dropping in GDP ranking from fifth to ninth on the list of world
economies (Merrick, 2018). These estimates correlate with a similar study
conducted by Hosoe (2018), who claims that export losses will accumulate to
between five and six percent of UK GDP; as a result of Britain’s exit from the
European Union. Within the World Trade Organisation agreement there are
specific trade rules that all countries must adhere to, the most important principle
is known as the Most-favoured-nation (MFN) (Vickers and Khorana, 2018). This
entails treating all trading partners equally through offering the same tariffs to
each member, thus ensuring that countries are not able to exhibit discriminatory
actions to one another. However, there are a few authorised exceptions to this
rule; such as giving preferential treatment to developing countries. Additionally
one of the countries may increase the trade obstacles on goods that are deemed
to be bought and sold unjustly, nevertheless this only applies under severe
circumstances. It has been predicted that the change of tariff free entry that was
exhibited within the EU could lead to MFN tariffs after Brexit, which range on
average from five-eight percent (Clegg, 2017). However, from looking at the
results of an exploration carried out by Clarke, Serwicka and Winters (2017) it is
evident to see that the potential MFN tariffs could be much higher than
anticipated, especially on dairy products and meats (see appendix 2). This is

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 significant as Britain has been able to trade freely prior to this, and would now
face significant charges on imports and exports. Furthermore leaving the
European Union means that the United Kingdom will stop receiving the ability to
implement trade with all of the fifty-six free trade agreements that the European
Union hold, these FTA’S authorise greater entry to external markets such as
Mexico, Chile and Korea. Thus a hard Brexit would mean that the United
Kingdom would be allowed and required to make their own trade arrangements
on their own terms. Something which is widely disputed as being either beneficial
or negative depending on the scholar. This is because on one hand this would
allow the UK to reap the benefits of trading with various countries, whereas on
the other hand the UK would be subject to high tariffs on imports and exports.

Moreover, the United Kingdom would face non-tariff barriers associated with a
hard Brexit; if they wish to continue trading with the EU, such as rules of origin
which are applied to exports, in order to track where the product originates from.
This is carried out under two methods: preferential rules of origin and non-
preferential rules of origin. Supposing that the United Kingdom and the EU
consent on a free trade agreement (FTA) in order to abolish the imposed tariffs
for one another’s products, this would allow preferences between the two (of
which is not made available to others). This is known as preferential rules of
origins in which commodities transferred from the United Kingdom to the EU will
be required to evidence how they came from the UK, based upon the specific
regulations that were accepted within the free trade agreement (House of Lords,
2017). Consequently, this means that countries who are not involved within trade
deals are blocked from gaining entry to the EU market via the United Kingdom
and the European Union. This would permit the continuation of the free-flow of
goods to and from Britain and the European Union member states, which is
thought to endorse future trade between both which is likely to strengthen both
parties. However, it appears that this would still mean that certain companies
within the United Kingdom would face issues, since a handful of businesses
would not be eligible as a result of the goods that they are selling containing an
inadequate amount of UK content. This is known as non-preferential rules of
origin which occur when a customs union is not present, every single exporter
from the United Kingdom would still be acquired to mention the origin of the

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 products, whilst buying and selling with the European Union. The purpose of this
is for the countries importing to implement further tracking procedures as well as
safeguarding their producers.

The reasoning behind the United Kingdom experiencing issues due to rules of
origin is because a large percentage of goods do not get manufactured in a
single country, in which components arrive from multiple regions (HM Revenue &
Customs, 2017). Therefore a product must be categorised as originating from the
country that it is constructed in, thus the goods need to comply with the sufficient
transformation criteria (Adams and Capparelli, 2018). Hence there is a lot of
worry from those who operate within the United Kingdom in which the supply
chain structure of UK businesses are going to drastically change. Additionally it
was found that British companies are likely to be exposed by the merging of both
compliance fees and administrative costs based on rules of origins, in which vary
from four-fifteen percent of the cost of goods that are sold (Centre for Economic
Policy Research, 2013). Thus the expenses associated with supplying evidence
for preferential origin often exceeds the benefits gained from doing so. The
impacts of which have been forecast to significantly alter the current customs
procedures in a vast amount of UK businesses, as they utilise just-in-time
production. The main benefit of employing just-in-time systems is to reduce the
overhead costs of a company through the limiting of the materials and goods they
possess within their inventory at one time, hence the supply chains of those
operating in the United Kingdom are at risk. This would affect those in the United
Kingdom as many companies rely on JIT systems, additionally there are thought
to be further queues of up to three times as much at the customs borders due to
newly proposed regulations after Brexit. Therefore the purpose of which is to limit
the time that stock is kept, for instance Nissan and Jaguar only rely upon two
hours of stock on specific items for the purpose of decreasing costs. However,
with the inclusion of further border delays in the future and rules of origin this is
likely to halt the assembly line production due to the extra time consuming
procedures. As a result this is thought to result in the UK paying in excess of a
billion pounds per annum, hence impacting upon businesses profit margins.

Moreover it is clear from reviewing research that that the anticipated

repercussions of exiting the EU single market is thought to result in the long-

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 lasting depletion of UK trade with Europe; by twenty two to thirty percent. This is
if Britain does not agree on a similar free trade agreement that they currently
have with the EU, although this seems unlikely as numerous countries within the
European Union have stated that they do not wish to trade with the United
Kingdom (Wright and Waterfield, 2018). It has been reported that the United
Kingdom are already suffering GDP losses of approximately forty-billion pounds
as a result of leaving the European Union (or two-percent of the economy)
(Partington, 2018). Furthermore emerging markets such as the economies of
Brazil, Indonesia, Mexico, Russia, Turkey and India are expected to grow year on
year by near enough three and a half percent, in comparison to the UK who are
forecasted an increased figure of just over one-percent per annum by 2050
(Hawksworth, 2017). These statistics however are based upon if Britain will enter
into favourable trade agreements after Brexit, nevertheless the impacts of a no
deal Brexit have been highlighted to lead in a reduction of roughly four-percent of
UK GDP by 2030.

2.2- Post-Brexit Potential Options: the Soft Brexit Approach

2.21- The EEA and EFTA Membership Alternative

One option that is available to the United Kingdom in regards to trading post-
Brexit is through the gaining of European Economic Area membership (EEA), this
agreement was established in 1994 and allows countries to trade with those in
the European Union as well as Lichtenstein, Norway, and Iceland (Holter and
Baur, 2018). In order for the United Kingdom to participate in the EEA they would
first be required to join the European Free Trade Association (EFTA), as only EU
member states and those from this trade agreement can buy and sell goods
amongst themselves as part of the arrangements. The EFTA is a free trade
agreement and trade association amongst the three aforementioned countries in
addition to Switzerland, if the UK entered into this then they would be required to
accept the majority of EU laws (Belke and Gros, 2017). Dhingra et al (2017) have
declared that the United Kingdom can maintain and benefit from trade relations
with the European Union through joining the European Economic Area
agreement. This would allow Britain to trade in the EU’s single market due to
bilateral agreements (which is identical to Norway), even though Britain would be

8
 categorised as a non-member of the European Union (Armstrong, 2018).
Furthermore it has been discovered that the United Kingdom can limit the amount
of restrictions imposed by the EU through offering good-will and accommodating
to the needs of the EU (Bissinger, 2018). Additionally, it has been argued that if
the United Kingdom choose this option over a hard Brexit approach, then they
would be reducing the economic impacts incurred with leaving the EU’s single
market and customs union. This would mean that the UK would incur similar tariff
levels as they do currently and would ensure the continuation of free trade of
goods with certain countries.

Therefore the United Kingdom would also be able to strike trade deals with
countries that reside outside of the European Union, whilst ensuring the
eradication of any of the further trade barriers that would be associated with a
hard Brexit approach (such as added custom checks and delays) (McGowan,
2017). This is because the United Kingdom would regain access to the European
Union single market which guarantees the removal of non-tariff barriers in order
to ensure the free movement of goods. It has been suggested that the EEA is
much more advantageous than a free trade agreement as it permits closer
relations with the European Union, however the United Kingdom would have to
welcome the four freedoms of the single market on goods, services, capital and
labour (Hix, 2018). This would also mean that Theresa May would have to
reconsider the red lines that she previously set out, including the decision to
neglect the idea of the UK trading within the EU’s single market (Alexander et al.,
2018). Therefore if this was to happen then the UK could potentially reap the
rewards of the forecasted EEA membership. Although, the United Kingdom would
be required to still contribute towards the EU budget (although a lower sum),
which is one of the main reasons why the public chose to leave the EU (Pisani-
Ferry et al., 2016). According to Grice (2018), if the UK gained EEA membership
then they would minimise the potential impacts on trade since the proposal
covers services and goods (which accommodate for eighty percent of the
economy).

Consequently, the United Kingdom amassed a trade deficit with the EU of sixty-
seven billion pounds within 2017 alone and has been suffering the same
consequence of minus trade with the EU per year since 1999 (Bootle, 2017).

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 Hence critics condemn any continued trade relations that involves the EU, as
they consider the UK contributing too much money into the EU budget. Thus they
highlight this as a predominant advantage of leaving the European Union (Rose,
2016). However those in favour of resuming trade with the EU, highlight the
importance that UK-EU trade has since roughly seventy-percent of the UK’s food
is bought and transferred from the EU to the UK (Minford and Gupta, 2016).
Additionally the United Kingdom’s agriculture food exports to the European
Union; amounts to approximately sixty to sixty-five percent of all UK agriculture
consumables. For instance dairy and meat contributed to three billion pounds in
total UK exports to the EU, outside of the food industry the largest UK-EU export
category was motor vehicles with a sum of eighteen billion pounds (Office for
National Statistics, 2018). Therefore the protection of food and transport is a clear
priority to the public, hence the EEA would likely allow the safeguarding of
agriculture goods and services.

Nonetheless there are doubts and concerns that British membership of the
European Economic Area may be hindered by the governments of Norway,
Iceland, and Lichtenstein (Green, 2018). This is because of the relatively large
size of the UK in comparison to these three countries, as a result they feel
discontent that the UK entering the organisation would change the balance of
power within the group; which is not seen as acting in their best interests.
Furthermore they fear that the United Kingdom will want to request alterations in
the agreement, in which Norway have endorsed trade agreements with in excess
of thirty seven countries and hence believe that the deals would need to be
amended as a result of this. If the United Kingdom adopted a soft Brexit approach
then they would not be able to make any choices over the decisions and policies
made by the EU. This is because the UK would no longer be a full member of the
European Union and thus would be required to embrace EU laws, however most
academics have pointed out that a soft Brexit would be more favourable than a
hard one (Welfens, 2017). This can further be viewed through the evaluation of
investigations that were conducted by Dhingra, Machin and Overman (2018), as
it was discovered that the UK may face up to five-percent higher charges on non-
tariff barriers; through a hard Brexit approach as opposed to a soft Brexit
approach to trade (see appendix 1).

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 2.2.2- The CETA-style Agreement Solution

There is also the possibility of the United Kingdom joining the Comprehensive
Economic and Trade Agreement (CETA) which is a free trade agreement
between Canada and all of the EU member states (Boffey, 2017). CETA as a
trade agreement entered into force on the 21 st of September 2017, and is
currently provisionally applied until all EU members approve the arrangements
included within the agreement. The aim of this treaty is again to remove ninety-
eight percent of all duties that would have been paid at Canadian customs,
however the policymakers have stated that the treaty still requires two percent
work before it is fully ratified. They also have pointed out that all twenty-eight EU
member states would all have to consent to this treaty before it becomes into full
force, however parts of the agreement are still pending and therefore this
arrangement can be thwarted if at least one EU member state informs Brussels
that it wishes to refuse this treaty. Apparently Italy are keen to reject the
ratification of this treaty over concerns regarding the copyright of producing
goods such as Parmigiano-Reggiano cheese and Parma ham (Harman, 2018).
This is because Canada have acknowledged only forty Italian Protected
Destination of Origin labels (PDO) and Protected Geographical Indication (PGI)
labels out of a possible two-hundred and ninety two. Thus meaning that the
majority of Italian products would be able to be replicated in other geographical
locations other than Italy itself. Hence these products would not be protected
from the tripling of global counterfeit Italian consumable exports, this would
represent a figure of one hundred and twenty three billion pounds worth of goods
(Sisto and Jones, 2018).

Therefore the likelihood of the European Union accepting any trade deal that
involves the United Kingdom appears bleak, as they can refuse signing the CETA
trade agreement. Furthermore, the Prime Minister of Luxembourg Xavier Bettel
described the United Kingdom’s approach by stating that “They want to have their
cake and eat it whilst getting a smile from the baker, but not the other things even
though there are European values which cannot be separated or cherry picked”
(Cooper and Baume, 2017). This highlights the negative attitude that the EU
members now hold about the United Kingdom, in particular as the mass
population of the UK voted to leave the EU due to the migration of people from

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 different nationalities and apparently take control of borders. This has left a bitter
taste in the mouths of the EU member states and as a result has affected the
relationship between the EU and UK. Furthermore this indicates that the EU
members now have authority when it comes to negotiating with the United
Kingdom, as all twenty seven states have a total of twelve trillion pounds in GDP
in comparison with the UK (one trillion and eight hundred billion pounds)
(Hulsman et al., 2016). This is due to the fact that the United Kingdom have
enjoyed participating within a robust trading bloc for many years, until now when
the region is viewed as a solitary trading country (Giles, 2017).

Nevertheless the United Kingdom have stated that if they do not receive any form
of trade agreement with the European Union then they will not accept
responsibility in paying the EU divorce bill, which is in the region of thirty five
billion pounds. However, the contrast in rules and regulations is thought to
negatively affect the United Kingdom as this agreement would still involve certain
trade costs such as showing compliance with the EU rules of origin, as well as
customs checks. Furthermore it has been argued that CETA does not revolve
around services, something that constitutes the majority of the UK economy.
Advocates of this agreement disagree and believe that CETA would result in
twenty percent growth to all partners involved, in addition to the expansion of EU
wealth by nineteen billion pounds per annum, through the trading of goods.
Hence the United Kingdom could strongly benefit financially if they managed to
negotiate a CETA style agreement with Canada and the European Union.

According to Michel Bernier, the European Commission’s chief Brexit negotiator,

a CETA style agreement represents the best option for the UK in terms of a
future economic relationship with the EU (Zatat, 2018). In December 2017, David
Davis (the former Brexit Secretary) declared that he was hoping to obtain a
“CETA +++” settlement for the UK, i.e. an agreement even better than the one
adopted between the EU and Canada (Watson, 2017). This was an option later
confirmed by Prime Minister Theresa May during her speech in 2 March 2018
where she stated that she wished for “the broadest and deepest possible
partnership with the EU – covering more sectors and co-operating more fully than
any Free Trade Agreement anywhere in the world today” (May, 2018). The
current CETA agreement eliminates ninety-four percent of agriculture tariffs, and

12
 almost the full tariffs on goods. Hence the aim of a CETA+ trade agreement
would be to totally abolish all of the tariffs on goods and other sectors, without
having to stay in the single market; and thus gain control of full freedom in terms
of trade policy. Nonetheless, there would still be limitations to a CETA
agreement, which have been expressed by Owen, Stojanovic and Rutter (2017).
They claim that although CETA will allow a handful of service markets between
Canada and the EU, as well as trade outside of their domestic market; the
proposal would mean the exclusion of many large and important UK markets.
The markets that would be omitted from the agreement include: financial
services, aviation services, public services and audio-visual services are
excluded from the deal. According to Gamble (2018), if the UK chooses the
option of a CETA-style agreement then this would introduce significant barriers
regarding the trade of services, especially if the EU decides not to recognise the
UK’s services as equivalent to the EU ones. In addition, this agreement requires
the establishment of a regulatory system, meaning that the UK would have to
renegotiate regulatory recognition from the beginning; while the UK wishes to do
the contrary and negotiate on a ‘de-recognition’ (Hassan and Gunson, 2017).

Another issue lies in the fact that CETA includes a Most Favoured Nation clause,
which means that if the EU makes a better offer to the UK on areas such as
investment or financial services for instance, such an offer will have to be
presented to Canada as well (Howarth and Quaglia, 2017). Therefore, if the EU
and UK agree on a CETA+ deal, this would mean that all the nations that have
signed an FTA with the EU that include an MFN as well will be entitled to claim
the same offer (Oppenheim and Grant, 2017). Realistically though there is no
guarantee that the EU would make concessions to the UK. Although it has been
argued that the CETA approach appears to be the best option for the UK,
however such an agreement is most likely to suit the EU’s commercial interests
more than the UK’s.

2.3- Other Post-Brexit Options: Trading with non-EU Countries

2.3.1- A Free Trade Agreement with the United States

It looks increasingly likely that the United Kingdom will explore the possibility of
negotiating trade deals with the United States in which Theresa May has not

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 ruled out the privatisation (selling off) the National Health Service (NHS) (Watts,
2017). This is thought to affect the United Kingdom, from not only an economical
perspective but also from a health and safety viewpoint. The reason for this is
that Britain may also be required to receive chicken soaked in chlorine, beef
products that include added growth hormones and the manufacturing and
exchanging of genetically modified consumables after Brexit (Marris, 2017). All of
which are prohibited by European laws, however Liam Fox is pushing for the
elimination of these strict regulations in order for the UK to replace meat gathered
from British farms to inexpensive imports from the United States. The problem
being that these imports do not comply with hygienic practices or the quality of
welfare for the animals in which they are bred in harmful conditions within
America. Furthermore it has been suggested that if the EU tariffs are
incorporated after Brexit then Britain may be persuaded into free trade
agreements with the US, especially if trade barriers are removed in the process.

It has been estimated that bilateral trade between the US and UK could increase
by forty-billion pounds a year by 2030 if a post-Brexit deal is agreed between
both countries (Blitz, 2017). Additionally, the United States is the United
Kingdom’s biggest individual country trade partner, with a combined import and
export value of in excess of one hundred and sixty billion pounds. During the end
of the financial year of 2016, the United Kingdom operated a trade surplus of
thirty-four billion pounds from trading with the United States. The United Kingdom
is constantly expanding the amount of exports to the United States, in which
exports grew by a quarter over the past eight years. Furthermore both the UK
and US have funded and contributed one-trillion pounds to one another’s
economy through foreign direct investment (FDI), thus it is claimed that the
Department for International Trade have placed an importance on entering free
trade agreements with the US post-Brexit. Having said that the EU overall is a
much bigger market in regards to goods exported from the twenty-seven
countries (three hundred and eighteen billion pounds) in comparison to the US:
sixty six billion pounds (Spence, 2018).

It is thought that a UK-US FTA would lead to a minimum of up to one-percent UK

increase in GDP (House of Commons International Trade Committee, 2018 ). This
was a modest estimation made by government, and thus it is possible that the

14
 financial benefits of a UK-US FTA could well be much higher. Hence the United
Kingdom have a good opportunity to make profit post-Brexit through FTA’s with
the US. Nevertheless, there is one major issue with this approach that many
experts have predicted, as it is stated that the United Kingdom would only be able
to choose between trading with the either the US or the EU; since they are both
embroiled in trade wars. Within these trade wars were extra tariffs on goods that
both imposed on each other, as high as twenty-five percent on steel tariff imports
that enter the United States and vice versa.

Furthermore the public have expressed concern that if the UK were to agree on
the acceptance of US standards, then this would highlight how they would
deviate from EU standards. Hence it is more probable that this would disrupt the
possibility of am FTA with the European Union member states. Oliver and
Williams (2016) declared that a UK-US free trade deal is unlikely as a result of
the United Kingdom’s aim of attaining an FTA with the EU which eradicates
tariffs, as this is not consistent with the demands that the USA are asking for.
This is because of the aforementioned aspect of both trade wars between the two
as well as the USA wanting a separate agreement with the UK as opposed to the
involvement of several countries. Furthermore, a customs partnership would
need to be formed with the EU in order to gain free movement of goods, hence a
customs partnership restricts the capacity of individual countries abilities to enter
into FTA’s. Additionally, there is scepticism regarding the long periods of time that
are needed to create and agree trade deals; which is usually a period of between
five-ten years (Standage, 2018). Therefore many people question this treaty as
an immediate fix to Britain leaving the EU.

2.32- Joining the Trans-Pacific Partnership (TPP)

Lastly, the United Kingdom have the alternative choice of becoming a member of
the Trans-Pacific Partnership (TPP), this is a trade agreement that permits eleven
countries to buy and sell goods to and from one another including: Mexico, Brazil,
Vietnam, Japan and Brazil (Compton, 2018). The purpose of this trade
agreement is to substantially minimise the tariffs added to imports and exports so
that growth can increase through free trade. The combination of countries have a
combined global wealth of thirteen percent, furthermore this agreement removes

15
 ninety-eight percent of the overall tariffs that they charge one another (Davies,
2018). Collaboratively all eleven members of the TPP only accounted for
approximately eight-percent of the UK goods that were exported in 2017, in
comparison to five EU countries which alone constituted a third (Mance, Pickard
and Donnan, 2018). However, Jackson and Shepotylo (2018) propose that it
would be in the UK’s best interest to access this FTA; considering the
contribution that Asia as a continent will provide towards the future economic
growth of the world. This is significant as Asia is expected to continue being the
quickest growing region in the world until at least 2030, for instance Japan (one
of the eleven TPP members) has watched their GDP rise by almost two-percent
this year (Yueh, 2017). Furthermore predictions suggest that Japan will grow by
one percent over the two following years, thus highlighting the significant
development within Asia. Delimatsis (2017) also recommends that the UK enters
into the Trans-Pacific Partnership as the countries that are involved in the
agreement constitute fifteen-percent of overall global trade. TPP members were
found to provide the United Kingdom with eighty-two billion pounds worth of trade
within 2016, this equates to more than France, Holland or China.

Nevertheless Holmes, Rollo and Winters (2016) have contrary opinions as they
contend that the European Union is a larger market and assert that becoming a
member will not accommodate for departing the EU’s single market. This can be
viewed by comparing the EU’s world GDP of nineteen- trillion dollars in
comparison to those from the TPP (fourteen-trillion dollars). Having said that the
TPP would still clearly represent a good chance for the United Kingdom to
establish trade relations outside of Europe and thus create their own trade
policies. The total size of EU GDP to the eleven countries within the TPP is
similar, and therefore it is believed that leaving the European Union will not make
much difference to future UK trade. However, critics have asserted that the
United Kingdom would profit from prioritising the magnitude of economies and the
proximity of future trading partners. Moreover, the United Kingdom would be the
first country to sign the pact that does not reside near the Pacific Ocean or Asia.
Hence, critics argue that it is too risky to invest in trade agreements with
countries on the other side of the equator. Deals such as this have been
forecasted to lead in roughly two percent reduction of GDP by 2030, this is still

16
 much lower than the predicted outcome of a no deal Brexit. TPP would also
mean that the United Kingdom would potentially lead to the removal of
sovereignty as there are fundamental regulatory provisions. Hence this would
again mean Theresa May changing her stance regarding Brexit, and thus experts
believe that this unlikely. Furthermore, there are various concerns which been
expressed by scholars and the public alike, who both state that there has been
very little publicly available information on this trade agreement as it has been
conducted in private. As a result people believe that UK trade would be affected
by this agreement and they believe that the NHS could be involved in trade
negotiations.

3. Methodology and Methods

3.1- The Justifications for Implementing Secondary Data in Research

The chosen research methods that are going to be applied throughout this
dissertation are going to utilise solely secondary data, due to tight time restrictions
related to the completion date of the aforementioned dissertation. The predominant
reason for such a time-consuming task is a result of the dissertation topic; as Brexit
has occurred recently and relatively little is known about the consequences of
leaving the EU (Clarke, Goodwin and Whiteley, 2017). Hence the study needs to be
comprehensive through the inclusion of expert opinions, therefore this academic
piece of work will be highly valid as the information presented is precise (Hair et al.,
2016). The selected data collection methods will collect statistics from an assortment
of different sources, which includes academic databases (such as Discover on
BREO and Google Scholar), journal articles, reliable websites (for instance the
Financial Times) and books. The importance of this mixture of techniques is to
remove any possible research bias from the exploration process as these methods
correspond with one another, which aids in the eradication of the author’s personal
opinions (Bryman, 2016). Additionally they are highly trustworthy materials due to the
academic rankings that they obtain, for instance the employment of journal articles
and books allow the author to locate extra references which are useful, which is
attributable to inspecting the discoveries of prior scholars (Saunders, Lewis and
Thornhill, 2015). The implemented journal articles are peer reviewed by those with
expertise on Brexit and therefore this makes the amassed data trustworthy (Sekaran

17
and Bougie, 2016). Furthermore the entirety of accumulated data is going to be up-
to-date since Brexit begun in 2016, it is also constantly spoken about on a day to day
basis.

Other benefits of using secondary data is that the researcher does not have to worry
about ethical issues regarding collected data as the information is available to the
public through the internet, journals and books (Crowther and Lancaster,
2014).Therefore there are fewer complications with ethical issues when gathering
secondary data, thus confidentiality and anonymity do not pose a problem when
adopting this approach. Furthermore, secondary research does not require the
safeguarding of participants information from being compromised by third parties and
the misuse of data (Graziano and Raulin, 2013). This aspect saves the researcher a
lot of time and ensures the safety of information when carrying out research.
Furthermore it has been argued that primary research on its own is inadequate as
the researcher can make up their findings, thus there is no supporting evidence to
corroborate what they are speaking about (Padgett, 2016). Thus secondary research
is beneficial as information can be evidenced from a host of sources, all of which
interlink with one another. Moreover, secondary research is cost-efficient in
comparison with primary research as conducting qualitative methods on a large
scale; for instance producing a thousand surveys is expensive (Zikmund et al.,
2013). Thus several pieces of existing secondary data that correspond to the
selected dissertation theme have been collected, this permits the researcher to
explore larger sample sizes which can be analysed with minimal effort (Patten and
Newhart, 2017).This can be seen as secondary research methods have permitted
the researcher to identify the potential impacts of Brexit on the whole of the UK
(sixty-five million inhabitants), in comparison with small-scale sample sizes that are
often found through conducting primary research (Guthrie, 2010). Additionally this
form of secondary research has allowed the researcher to gather official statistics
through government data, therefore the reliability of this study is enhanced (Bulmer,
2017).

3.2- Problems Encountered by the Researcher through the Implementation of

Secondary Data and the Weaknesses of Secondary Research

18
There have been multiple problems experienced by the researcher whilst
undertaking this study, including difficulty in gaining access to certain data sets
which require payment methods to retrieve. These sources only contained previews
of information, which lead to the examination of incomplete data, this feature is often
associated with carrying out secondary research (Flowerdew and Martin, 2015).
Furthermore many written pieces of work were full of information, however were not
academic and hence had to be disregarded as credible sources. This is a known
disadvantage of conducting secondary research, as it is common to find a lack of
data quality when searching for existing information (Weathington, Cunningham and
Pittenger, 2017). Furthermore focusing on a specific topic of Brexit has presented
issues as details about Brexit and trade are fairly scarce in comparison to other
dissertation themes, consequently this means that it is harder to find data.
Additionally selectivity was required during the research period, in order to narrow
down searches that relate to both trade and Brexit, as there were vast arrays of
information on unrelated subtopics. During the initial stages of research, the author
examined varying statistics regarding the GDP of the UK and the degree of impact
that Brexit is likely to cause on trade. These figures indicated discrepancies, as
diverging results were shown between sources, nevertheless this issue was solved
through further examinations which allowed the correlation of information from a
variety of references. It has been contended that secondary data also contains the
weakness of being less tailored to the requirements of the researcher, as the
researcher is unable to choose, expand and customise the research instruments to
achieve the objectives within their study (Olsen, 2012). Therefore the viewed data
may not provide answers to the researcher’s questions, thus the intended research
questions must already be answerable based upon available existing data (Adams,
Khan and Raeside, 2014). This was a slight issue for the researcher as some
irrelevant information was found, however this problem did not last long as persistent
research aided in eradicating this issue.

3.3- Strengths of the Adopted Mixed Method Approach

This research will adopt both quantitative and qualitative procedures considering
statistical data is going to be assembled by evidence based research, which
demonstrates the figures that relate to trading outside and within the European
Union (Neuman, 2013). Moreover the verdicts of specialists are going to be

19
inspected so that the prospective consequence that Brexit may play on trading in the
future can be investigated. Through the execution of this, research triangulation
would transpire, this has been discovered to increase the accuracy of the
dissertation as a result of supporting evidence (Mertens and Hesse-Biber, 2013).
Furthermore it has been discovered that research triangulation results in additional
knowledge creation through the observations of numerous perspectives, as opposed
to assessing just one viewpoint (Creswell, 2015). Mixed methods such as this are
beneficial to the author as the limitations of each approach: qualitative and
quantitative are cancelled out due to the combined strengths of both (Morse and
Niehaus, 2016). For example, qualitative research on its own would only convey the
thoughts of professionals rather than the quantitative approach, which would permit
the researcher to view and utilise relevant facts and figures; in regards to Brexit.
These can then be correlated with each other, in order to get a more in-depth
perspective which would lead to a detailed and likely forecast which would indicate
the probable scenarios after Brexit (McKim, 2017). Fetters and Freshwater (2015)
propose that adopting mixed method approaches to research leads to synergy,
through the combining of qualitative and quantitative data. They state that this is
more beneficial than the independent components of each method, furthermore they
suggest that using mixed methods is helpful in leveraging the overall integration of a
study.

The mixed method research design incorporates methodological appropriateness, in

which the researcher chooses and then merges the most suitable research methods
for the purpose of answering the research questions (Molina-Azorin, 2016). This is
known as methodological eclecticism or pragmatism, which is outcome-orientated
(Hermans, 2014). The researcher uses a trial and error approach to test certain
methods; in order to establish which methods would and would not be applicable.
According to Tashakkori, and Teddlie (2010) it is beneficial for researcher’s to
conduct mixed methods research as the paradigm of choices, lead to understanding
that specific and divergent approaches are needed to answer different research
questions. Thus, the mixed method technique judges methodological standards on
the appropriateness of implemented techniques (Cameron, 2011). The researcher
embraces the incorporation of deductive and inductive reasoning to explore the
various perspectives of the research questions and problems (Cohen, 2017).

20
Pragmatic approaches has been found to increase the research quality because of
this, additionally mixed methods studies such as this are easy to replicate and
eradicate dogmatism in the process (Shannon-Baker, 2016). Dogmatism can be
described as agreeing upon principles without evaluating evidence and ignoring
expert opinions, hence leading to bias. Therefore mixed methods ensures that
biases are reduced through the evaluation of multiple sources (Walliman, 2017).

3.4- Limitations in Mixed Method Approaches

Some mixed method limitations include the complexity of mixing both methods as it
is often stated that a researcher should choose only one method or the other and the
long amounts of time that is needed to review information and complete work (Leavy,
2017). Additionally it has been argued that many researchers are not fully trained in
both qualitative and quantitative methodologies, hence do not possess extensive
expertise within specific topics (Brannen, 2017). Thus, long periods of time were
exerted in order to establish and review potential data sources.

3.5- Chosen Data Analysis Methods

Data is analysed throughout this study by using exploratory analysis as well as

predictive analysis, this is significant as exploratory research assists in examining
new issues that have either not been researched before or that comprise of barely
any initial information (Neelankavil, 2015). Hence the subject matter in question,
relates to this as the variable (in this case: trade) is going to correlated with the event
Brexit to conclude how UK trade will change after the events of leaving the European
Union, in addition the likely trade agreements embraced afterwards. It has been
stated that this approach is effective for identifying emerging trends and patterns
within the data which has aided in highlighting the differences in UK trade policies
pre-Brexit vs post-Brexit (Schutt, 2012). Furthermore the combination of exploratory
and predictive analysis has permitted the researcher to compare and contrast the
changes in the Gross Domestic Product (GDP) value for the UK, based on current
and future figures. Secondary charts and numerical data were assessed through
statistical analysis, which aided in extracting key pieces of information regarding the
impacts of Brexit on trade. Furthermore exploratory analysis has been found to save

21
future researchers time and effort in examining thorough datasets, such as the
impacts that Brexit is likely to cause to the United Kingdom (Albers, 2017). This has
allowed predictive analysis to take place through reviewing and analysing current
statistics, this will aid in indicating the most likely effects of Brexit on trade based on
current data and expert’s opinions.

3.6- Weaknesses of the Chosen Data Analysis Methods

Although there are many positive aspects that are related to the selected data
analysis methods, there is also some possible limitations; for instance since the
researcher was not involved in collecting the initial figures from primary research the
original writer of documents may have omitted certain information from the published
texts (Vartanian, 2011). Therefore the predictive analysis may be inaccurate if the
figures used are not reliable, however all sources used are academic and thus
makes this an unlikely feature.

4- Analysis

4.1- Changes Caused to the United Kingdom’s Future Trade and Economy, as a
Result of Leaving the European Union

The findings clearly indicate that the United Kingdom’s ability to negotiate and trade
in general post-Brexit, will be much harder than previously experienced; since the
UK used to be representatives of the combined powerhouse of the EU as a trading
bloc. This can be viewed from the previous work that was administered by Giles
(2017), as he suggested that the UK had become accustom to relying on the
strength of the other members of the EU, in order to successfully trade with other
countries. Furthermore, it became apparent that this has some truth to it, as it was
discovered that the UK’s GDP is twelve times lower than the combined total for the
twenty-seven EU member states. Therefore, it is transparent that due to the majority
of the UK public’s choice to attempt to gain sovereignty through wanting the UK to
leave the EU due to the introduction of their own laws, and holding personal believes
regarding immigration and people from different backgrounds that the likely impacts
on the economy were not thought out or prioritised. Hence, this is why many

22
scholars indicated that the voters were fixated too much on these aspects, rather
than the potential upcoming of the UK’s future economic stability to accommodate for
such a loss. As a result, this has clearly left the UK in a disposition; as there are no
pre-signed trade deals for after the occurrences of Brexit, and thus the likelihood of a
no-deal Brexit grows day by day. Therefore, it could be argued that any
consequences that the United Kingdom face may be seen by some as self-inflicted.
Therefore, the general consensus regarding a hard Brexit strategy has been met
with a lot of negativity; such as the statements made by Morgan (2016) and Coates
(2016) who both highlighted the impact of leaving the EU without a deal. They stated
that the likely outcome of which would be the believed tariffs on UK trade, which
would be substantial in addition to the large expenses that would need to be made
by companies as a result of trade quotas, and non-tariff barriers such as rules of
origin which are thought to lead to additional border delays at customs. Some of
these rates were discovered to be extensive, additionally Merrick (2018) noticed that
the global UK GDP ranking would reduce from fifth to ninth by 2033, in which the UK
are forecasted to lose in excess of two-hundred and fifty billion pounds in the
process. Clarke, Serwicka and Winters (2017) showcased this through their
predictions which claimed that the UK would face high tariffs on both dairy and meat
by up to forty-five percent. This issue was addressed by Whyman and Petrescu
(2017) who both clarified the necessity for the UK to explore at least some trade
agreements outside of the EU, this could represent a good opportunity for the UK to
build relations with different countries. This is particularly important as it is doubtful
that the EU will want to continue trading with the UK (or at least on favourable terms
to both parties) due to the breakdown in communications between the two, as well
as the fact that the UK no longer have access to the EU single market and customs
union. Moreover, it is less probable as it was found that the majority of trade
agreements that would involve the UK and EU would permit any individual state
member to rule out participation on trade, which would mean that the agreement
does not get ratified. Nevertheless trading on WTO rules mean that the EU cannot
give the UK favourable trade options post-Brexit anyway as it has a clause in the
agreement called the Most Favoured Nation which means that all trade partners are
equally treated.

23
Therefore, the complete landscape of UK trade appears likely to change drastically
as a result of a mixture of a hard Brexit without a trade contingency plan after leaving
the European Union. However, those in favour of the leave vote have stated that a
hard Brexit approach would allow the United Kingdom to create their own laws and
progress with worldwide trade.

4.2- Alternative Trade Agreements as Potential Solutions to Trade Barriers and

Implications

The enquiries into potential trade agreements that can be joined after Brexit have
been found to all contain quite a lengthy amount of limitations involved within each,
such as the EEA which would require the UK to abide by EU laws and regulations.
This was a key reason for the UK wanting to exit the European Union in the first
place, hence the probability of this agreement being signed off is slim. Although, this
trade agreement would allow the UK to simultaneously trade with the combination of
the EU, Norway, Iceland and Lichtenstein. Therefore, there is plenty of opportunity
for the UK to expand upon growth from trade as a result of this. This was evidenced
by Dhingra et al (2017) who all claimed that the UK can benefit from continuing trade
relations with the EU, as they view the EU as having a lot to offer countries due to
their wealth. However, it is clear to see that the UK would realistically need to make
a tempting offer to entice the bloc of nations. Furthermore it has been suggested that
the United Kingdom would need to include good-will in order to stand any change of
regaining custom from the EU. The argument for this was that Britain would regain
access to trading in the EU’s single market through bilateral agreements, and due to
the outcome of Brexit relations between the two have soured. The benefit of which
have been confirmed by various scholars who have suggested that the United
Kingdom would be able to enjoy similar tariffs to what they currently are, i.e. free
movement of goods in specific countries. Furthermore, it has been stated the UK
would be available to create their own trade deals after leaving the European Union
as would not be restricted from trading with multiple countries such as a hard Brexit
approach. Additionally, the regulatory trade barriers that are associated with such
approaches would be nullified and hence the UK would be able to freely trade.
Nevertheless, this means that the UK would need to welcome the four freedoms of
the single market on goods, series, capital and labour as earlier stated by Hix (2018).

24
5. Conclusion

In conclusion, there are many available approaches that the United Kingdom can
embrace regarding Brexit, even though it is transparent that there are numerous
limitations within each alternative trade agreement. Hence, it would appear that the
government and UK public’s decision to leave the European Union in the first place
is a bad one, as the benefits provided in-text have clearly indicated that the pros of
trading in the EU through the current arrangements outweigh the cons. This was
indicated through the fact that the UK would not continue having access to the free
movement of goods if they choose a hard Brexit approach and encounter a no-deal
verdict, thus the government would incur significantly high tariffs on imports and
exports to the European Union during future trade due to WTO rules. Additionally, it
was found that replacing the EU laws for WTO rules would result in losing sixty-six
billion pounds per annum to businesses. This would lead to the significant lowering
of the UK’s total GDP. Also, many scholars suggested that a hard Brexit that would
include no alternative agreed trade deals (no-deal) would be the worst case scenario
for the United Kingdom.

Whereas the soft Brexit approach was found to result in similar tariff charges that are
incurred now whilst allowing the UK to remain trading in the EU single market and
maintaining free trade with many countries. Furthermore it would permit the UK to
expand their trading partners through the incorporation of Norway, Lichtenstein and
Iceland who are all involved within the EEA. Therefore, agreements such as the EEA
would allow the UK to grow their trade agreements to those outside of the EU, whilst
trading with all EU member states. However, the secondary research specifies that
the UK would have to accept EU laws and regulations, including the four freedoms of
the single market on goods, services, capital and labour. Thus it seems unlikely that
the United Kingdom’s government would accept a soft Brexit agreement such as the
EEA, moreover this means that Theresa May would be required to backtrack on the
red lines that she set out; which of course encompassed the discarding of EU single
market access. Furthermore, it was discovered that the UK would still be required to
pay into the EU, albeit a much lower proportion of money would be involved.
Therefore, the UK government would need to make alterations to their original plans,
in which they would have to realise that the only way that looks plausible for the EU
to continue trading with them; is if the UK resumed paying into the EU budget.

25
Nonetheless, the EEA was discovered to cover services and goods which account
for eighty percent of UK GDP, hence this this trade agreement is the nearest match
to the current system of EU-UK. Therefore this would clearly be somewhat
advantageous for the UK to join, however it was discovered that the UK have held a
trade deficit with the EU every year since 1999. Additionally this investigation has
discovered that any EEA agreement with the UK is likely to be neglected as Norway,
Lichtenstein and Iceland have expressed their discontent with the UK joining, over
fears regarding the size of the UK which means that they would likely dominate the
market. Hence any prospective trade agreements that the UK embraces will be
subject to the acceptance or dismissal of other countries willingness to implement
the UK as a trade partner. Therefore the bargaining power of the UK will be
significantly lower once they leave the EU as a stand-alone country which was
mentioned in-text, this is because it is much easier for countries to reject the UK’s
demands as they will not be trading within a multibillion pound trade bloc.
Additionally this also means that the UK would need to negotiate on their trade
agreements on their own accord, something that has not been done in many years.
The CETA agreement was also found to lower duties paid by ninety-eight percent,
however it is not fully ratified yet. Critics have stated that all members of the treaty
need to agree to sign or the trade agreement gets scrapped and looks increasingly
likely that Italy will not sign the treaty. Hence it is unlikely that the UK will get to join
this FTA as a result. Academics pointed out that the UK would suffer due to EU rules
of origin costs to prove where products were made and the additional custom
checks, which would slow trade and cost considerable amounts of money. The treaty
apparently neglects the services industry, which constitutes the majority of UK GDP.
However, apparently the treaty will lead to twenty percent growth to all trading
partners and strong advocates state that it is the best for the UK for a meaningful
relation with the EU, as it removes most of the trade barriers whilst ensuring that
would not be involved in the EU single market. However, it was found that the CETA
agreement involves MFN clauses hence the UK cannot be offered a better deal than
any of the other trading partners. This is because by law the EU cannot discriminate
between any of their trading partners and thus must adhere to the local government.

It was discovered that an FTA with the USA appears to be the joint worst option for
the UK as the NHS has not been disregarded from being privatised, if trade

26
negotiations pursued between the UK and the USA. Hence the public health of the
United Kingdom would change drastically as healthcare would need to be paid for,
instead free through the NHS. Furthermore, it was also found that Britain would likely
be required to buy and consume chicken soaked in chlorine, beef injected with
hormones and genetically modified food. All of which are banned within EU laws, but
once the UK leaves the EU, they will become legal and Liam Fox’s plan of trading
with USA would put UK agriculture at risk; especially as cheap, unsafe meat would
be included in a deal. Hence the United Kingdom clearly have a decision to make
over whether they would prefer to possibly make huge profits through trade, but
sacrifice the health and safety of food standards of the UK in the process. Although,
bilateral trade between the two could mean an extra forty-billion pounds a year by
2030, therefore this could increase the UK funds as they currently have a surplus of
trade with the USA. However it was found that the EU is a much more substantial
market (three hundred and fifty eight billion dollars) in comparison to the US: sixty six
billion pounds. Additionally, it was found that trade wars between the EU and the
USA regarding high tariffs added to imports and exports make this an unlikely option
for the UK. This is because the UK government stated that they wish to proceed with
trading with the EU in the future, thus the USA is unlikely to want to trade with the
UK; as they are wishing to proceed to trade with their rivals.

It was discovered that the TPP is similar to the CETA in terms of removing ninety-
eight percent of tariffs in which all eleven members represented eight-percent of UK
exports, whereas just five members of the EU equated to a third. Therefore, it is
clear from reviewing all of the evidence that leaving the EU for any other trade
agreement is inconceivable. However, some of the forecasts highlight the TPP as a
decent opportunity to invest in as there are some Asian countries within the trade
agreement, this is an important factor as Asia is the highest growing region.
Although, all countries within the agreement only equate to fifteen-percent of global
trade, which is much lower than that of the EU. Moreover, it was discovered that
similar pacts to the TPP have been estimated to lead to a two-percent reduction in
UK GDP by 2030, still is significantly lower than the impacts of a no-deal Brexit. It
was found that the UK would lose sovereignty if it agreed to the rules of the TPP,
therefore based on all of the findings, it is clear to see that the UK will likely need to
offer the EU some kind of incentive to trade in an attempt to improve relations

27
between the two. Therefore, the future trade of the United Kingdom is still unknown
especially as there has been no pre-trade agreements with any countries to date,
and thus the uncertainty of a nation rests in the hands of those in power.

Word Count: 10,993

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7- Appendices

Appendix 1: This is an appendix that displays the potential impacts of a soft vs hard
Brexit and includes the calculations of industry experts based on the tariffs and non-
tariff barriers (NTBs) that will apply after Brexit, depending on the approach adopted
by government. It is clear to see that a hard Brexit would cause the United Kingdom
more problems than a soft one due to the WTO tariffs leading to the average
increase of eight-percent per non-tariff barrier.

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Table 1. Brexit Scenarios

Soft Brexit Hard Brexit

Tariffs Remain at zero EU’s WTO tariffs

NTBs: 2.77% increase 8.31% increase

Future EU integration: Relative increase of 5.63% to NTBS in ten years vs Relative

increase of 12.65 % to NTBS in ten years

Fiscal Impact: 0.09% of GDP saving of fiscal contribution vs 0.31% of GDP fiscal
contribution

Source: Dhingra, S., Machin, S. and Overman, H. (2018). Local Economic Effects of

Brexit.

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Appendix 2: This is an appendix to show the Most-Favoured Nation tariffs which are
thought to be added to goods after Brexit, therefore it is clear to see that dairy
products and meat goods will be charged extortionate amounts in duties. These will
be added to imports to the EU and hence an average tariff of nearly forty-five percent
will be added to dairy products alone. Thus, the United Kingdom are at an
considerable risk of paying these expenses in the near future, if they decide to trade
with the EU as a result of leaving the EU customs union; which had allowed for the
free flow of goods.

Source: Clarke, S., Serwicka, I. and Winters, L. (2017). Will Brexit Raise the Cost of
Living?

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