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EU Rules to Hurt U.K. Trade More Than Just Tariffs After Brexit


© Reuters. EU Rules to Hurt U.K. Trade More Than Just Tariffs After Brexit

(Bloomberg) — Rules and regulations will compound the problem of tariffs for U.K. exporters looking to keep selling to the European Union after Brexit.

Economists at the UN’s Conference on Trade and Development estimate that the impact of tariffs plus non-tariff measures such as sanitary regulations, pre-shipment inspections or quality control measures is 2.5 times larger than just tariffs.

They dual burden could lead to a 14% drop in exports to the bloc, compared with a 2015 baseline.

Authors Ben Shepherd and Ralf Peters said in the report published Tuesday that there is a “significant European Union membership effect” over and above zero tariffs.

Arrangements “that do not involve Single Market membership or something very close to it would see these gains disappear, with potentially significant trade and welfare implications for both parties,” they said.

Even in the case the U.K. agrees a “standard” free-trade agreement with the EU, exports could drop by 9%.

While Prime Minister Boris Johnson has stressed that one of the benefits of leaving the EU is not having to adhere to its regulations, U.K. exporters will still need to meet its standards if they want to sell their products within the bloc, which is by far the biggest destination for trade.

The UNCTAD report noted that non-tariff barriers disproportionately hit smaller companies.

Officials in London and Brussels have until the end of this year reach a trade deal or the two economies default to trading on terms set by the World Trade Organization, meaning the returns of tariffs and quotas.

Even if the U.K. manages to clinch an FTA but is no longer in the customs union, it’ll have to meet rules of origin requirements proving goods are indeed British, according to the Institute for Government.

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