Shaping UK trade policy after Brexit

The UK Trade Policy Observatory has provided immediate authoritative research and analysis to help reconfigure UK trade policy, informing many approaches to post-Brexit trade policy by central government and devolved administrations across the UK.

The 2016 vote to leave the European Union (EU) was probably the greatest political – and certainly the greatest administrative – shock that the UK has experienced in several generations.

Sovereignty

For the first time in nearly 50 years, the UK gained ‘sovereignty’ over its trade policy. Within a very short space of time (the triggering of Article 50 in March 2017 began a two-year process for the UK to formally leave the EU), the UK needed to negotiate the form of its future trading relationship with the EU, establish itself as a fully independent member of the World Trade Organization and start to define and negotiate its relationships with other countries.

As trade policy had been the domain of the EU in the preceding years, the UK had to tackle these challenges with very little expertise or experience. Yet, the decisions it made would shape economic outcomes for generations and affect all parts of society and all regions of the UK.

Professor L. Alan Winters, Professor of Economics, had long specialised in international trade and responded rapidly by establishing the UK Trade Policy Observatory (UKTPO) in late June 2016, to provide immediate authoritative research analysis on UK trade policy.

“Brexit required the UK to establish a wholly new set of trading relationships that had to be made in a world experiencing rapid and transformational technological change and beset by a range of trade tensions” explains Professor Winters, founding director of the UK Trade Policy Observatory.

The UKTPO, a partnership between the University of Sussex and Chatham House, brings together the country’s largest collection of academic expertise on the world trading system, with specialists not only in economics, but also in law, international relations, and business and management.

The Observatory has drawn on long-standing expertise in international trade and frontier analytical techniques to inform rapid-response research on key issues. It has provided rigorous fact-based, objective and accessible analysis and offering independent advice to assist parliament, industry and businesses to address the international trade challenges posed by the country's exit from the EU.

One of the UKTPO’s first pieces of research, on the UK Trade Landscape After Brexit, outlined the need for a transition period in October 2016 and explicitly noted that it needed to replicate current conditions. The Government accepted this as policy in July 2017.

Democratic debate

To inform public understanding of trade policy challenges, UKTPO researchers have written hundreds of blogs and produced a range of multimedia outputs – such as the Trade Bites podcasts – as well as contributing countless media articles, often being the first to introduce key issues to the public.

One of the main activities of the Observatory has been to engage with those who scrutinise government and can influence policy through Parliament and the media.

Over past five years, UKTPO fellows took the time to respond to over 40 Select Committee inquiries, leading to its research being cited in Parliament more than 30 times, helping to highlight issues of concern to parliamentarians, to shape parliamentary discussions and to aid scrutiny, public debate and government decision making.

For example, in the run up to the end of the transition period, UKTPO research consistently noted the issues with merely rolling-over existing trade agreements – and challenged the UK government’s announcements about them. Only seven out of 40 agreements that needed rolling over had been signed by the initial Brexit Day (29 March 2019) and none replicated the status quo precisely. The UKTPO’s research led the House of Commons International Trade Committee to also challenge statements from the Government that only 11% of UK trade is covered by EU third-country Free Trade Agreements.

Policy analysis

In 2018, as the country edged towards a potential ‘no deal’ Brexit, despite extensions to the transitional period, the UKTPO published detailed modelling of the effects of no deal. This led to a project with EURIS, a trade association of manufacturers with a combined turnover of around £148 billion and 1.1 million employees.

Brexit would potentially induce a huge change in the conditions under which all companies operating in the UK do business and EURIS sought advice on identifying, quantifying and responding to the likely impacts of the changing trade and regulatory relationship between the UK and EU. 

Economists in the UKTPO worked with EURIS to provide its member companies with unique insights into different Brexit scenarios. In particular, UKTPO formulated and executed a major survey of EURIS members in order to understand and communicate the major issues they faced with Brexit.  The project also involved research and analysis of various key issues surrounding UK/EU trade, including Rules of Origin (ROOs), customs procedures, regulations and mutual recognition agreements. 

The collaboration led to 150 industry leaders writing to the Prime Minister to express concern over a ‘no deal’ Brexit scenario. The UKTPO’s research informed firms, enabling them to lobby government for trade agreements that would have the most positive/least negative impact on income and jobs in the future.

The Observatory has also worked directly with government departments. For example, providing advice and consultancy services on modelling of trade and monitoring and evaluation of free trade agreements to the Department for International Trade, as well as research on the causes and effects of foreign disinvestment in the UK. Various members of the team have also delivered training to civil servants in the Department for International Trade and Department for Business, Energy and Industrial Strategy.  More recently, Dr Ingo Borchert and Professor Alan Winters organised a conference and ebook on how to address impediments to digital trade for the Department for Digital, Culture, Media and Sport. Other work has focused on and influenced policy approaches on developing countries and export restrictions.

Beyond, Whitehall, economic research for the Welsh Government explored the effects of the Northern Ireland Protocol on Wales. The research found that producers in Great Britain (including Welsh producers) would be likely to lose market share in Northern Ireland due to the introduction of new customs checks, customs duties, and other regulatory/administrative checks. These would also require increased border infrastructure in Welsh ports, leading to delays that would be particularly problematic for perishable food products, which make up a relatively large share of goods shipped. Furthermore, extensive trade barriers between the UK and the EU compared to Great Britain and Northern Ireland, would create an incentive to divert trade, which would impact on the level of freight going through Wales to Ireland. This research underpinned the Welsh Government’s decision to refuse consent for the Withdrawal Act in January 2020.

Through its comprehensive outreach programme across policy, business, civil society and the general public, the Observatory has become the ‘go-to’ organisation for trade policy expertise, informing and assisting multiple actors to navigate trade policy.