6. Trade, Brexit, Models and Effects Flashcards
What was the Northern Ireland Protocol?
New trade border created between NI and rest of UK. Prime minister halted checks, opposed to them
- Inspections of products from GB into NI part of post Brexit agreement
- Agreed to ensure free movement of trade across the Irish border after Brexit
- Under deal, checks on goods from GB must take place at NI ports to ensure comply with EU laws
- Unionist politicians criticized arrangements - damage NI’s place in the UK
On the 24th Dec 2020 post Brexit agreement agreed
31 December, during transition period:
- UK followed all EU rules, remained in single market and customs union and free movement of people
- Many things sorted out: trade deal, following EU rules, cooperation in security
Where does UK trade come from
49% EU
11% Countries with EU trade agreements
40% Rest of world
What was the previous relationship in the single market
UK Trade and Cooperation Agreement:
Within EU, 4 freedoms aimed to create internal market, single market/common market:
Free movement of:
- Goods
- Services
- People
- Capital
Goods:
Right to movement originating in member states and goods from third countries in free circulation in member states
- No customs duties, restrictions
- Common external tariff
- Harmonize national legislation
EU member states member of single market - free trade, common regulations, common automated unions: comon external trade policies
Pros:
- Free trade with eachother
- Same agreements with other countries
Cons:
- Cannot set own trade agreements with other countries
When there is no custom union, there are checks at borders:
e.g. Norway-Sweden
- Free movement of people
- Free trade of goods but still customs cehcks for goods before passing border trucks must fill out paperwork, x rays and scanners used
What are some Non Tariff Barriers?
Quotas or export restirctions limiting number of exports/imports
Regulations: testing, standards, labelling
Levies
Border tax
Anti dumping duties
Surveillance
Minimum pricing
Export subsidies
Foreign exchange controls
Currency devaluation
What is antidumping
Dumping when foreign companies export with prices below domestic prices or average costs
WTO allows antidumping measures (=tariffs)
- Problem in measuring domestic prices or average cost. An increase in AD measures without much justification - around 200 intiations a year
What is UK protection under the EU
Within EU: free movement of goods doesn’t equal VAT
Outside EU:
-MFN tariff - 5.5%
-MFN tariff for agricultural products - 13%
-Non agricultural products - 4.2%
High tariff on:
21% beverages and tobacco
53% on dairy products
FTAs with several countries (Chile, Korea, Mexico, SA) and negotiations with others
Note the MFN policy - WTO members commit to apply non discriminatory tariffs to all other WTO members (some exceptions)
What are the types of Preferential Trade Agreement? What did the EU/UK trade agreement agree on
PTAs are exceptions to the WTO article 1
Types:
- Non reciprocal: one way preferential tariffs on parts of trade e.g. generalised system of preferences
- Reciprocal - two way preferences on part of trade e.g. LAFTA
- CU: free trade agreements with common external tariffs
- Common markets: CU + free movement of services, labour and capital (EU)
- Economic Unions - common markets + monetary and or fiscal policy e.g. Euro Area
There were several possibilities, but agreed new trading relationship after transition ends, the EU-UK Trade and Cooperation Agreement
What was the EU-UK Trade and Cooperation Agreement
Leaving single market and customs union
- Zero tariffs and quotas on all trade in goods originating in EU or UK from 1 Jan 2021
- No need to follow EU laws or being subject to jurisdiction of EU Court of Justice
Howver, products not automatically authorised to travel freely within EU - customs formalities apply - checks at borders, customs declarations
- Need to certify products seperately for regulators in the UK and the EU
- Different agreement for NI, where protocol will apply
UK agreements with other countries:
- EU trade agreements no longer apply
- UK negotiate new agreements with previous partners
- No free movement on services, capital or people
What was agreed regarding the Northern Ireland Protocol
- NI outside EU, republic of Ireland inside
- No checks/controls on goods crossing border within Ireland
- NI continue to follow EU rules on goods, rest of UK will not
- UK will leave EU customs union, NI will continue to enforce EU custom code at ports
- Check for risks goods moving between NI and other parts of the UK + customs declarations
Certain goods are checked when they enter NI from UK, then can move into the Republic of Ireland
- Inspection carried at NI ports - even if goods due to remain in NI
Unionist parties support NI being in the UK, but checks create an effective border between the two - means extra costs and delays
In 2021 more than a million customs declarations with multiplie steps, despite grace periods in place during which EU rules suspended
What changed in 2022 to fix the issues of the NI protocol?
Last year: calling for changes to NI protocol
- Eliminate checks and paperwork between GB and NI
- Goods remaining in NI only need to meet GB standards, dont comply with EU law and no need of checks
- Removing European Commission and European court of Justice have in overseeing how protocol is working
NI protocol bill would have empowered UK to unilaterally scrap the protocol without the EU’s consent
- EU likely to promot retaliatory action - fears of trade war
What was the Windsor Framework
Goods split into two lanes:
If destined for NI, goes into Green Lane - no checks, minimal paperwork
Goods destined for Ireland and EU go into red lane, checks carried out
EU access to database of tracking shipments between GB and NI in real time - could suspend trade easements if UK doesn’t compy with rules
VAT and state aid rules in NI decided by UK - only EU regulatory mechanism - without NI politicans having influence on them
What is the Stormont Brake?
Stormont brake:
- NI assembly object to new significantly different EU rules - only in emergency
Once UK tells EU the brake is triggered, rule would be suspended within maximum period of 4 weeks
Further independent arbitration with the EU via joint committe, oversees operation of protocol
What was the final result, what were some other possibilities?
UK exist transition, no EU trade deal and no transition extension
- UK trading on WTO terms with the EU
Transition period also extended
Other possibilities:
Norway Model
Ukraine Model
Turkey Model
Canada Model
What was the Norway model?
European Economic area - EU + Norway, Iceland and Lichenstein
European Free Trade Area: Norway, Iceland, Liechtenstein and Switzerland
Have the 4 freedoms of internal market + related policies + EU legislation + payments to the EU
Pros:
- Access to single market - full access to goods, services, capital and people
- Not part of Customs Union
- Not part of CAP or fisheries
- No jurisdiction of the Court of Justice of the EU
Cons:
- Under jurisdiction of the Court of Justice of EFTA
- Acceptance of 4 freedoms - especially migration
- EEA joint committe - incorporation of most EU legislation
- Customs checks at borders
What is the Switzerland model
EFTA but not in EEA
- 120 bilateral agreements with the EU
- Not part of Customs Union - own trade agreements, but controls at border
Pros:
- Single market access in most industries
Cons:
- Free movement of people
- Large part of EU legislation
- Payments to EU budget
- Jurisdiction of EFTA Court of Justice
- FInancial service access restrictied - passport rights
- No time - negotiations take long time period
- EU reluctance given the complexity
