11 February 2022 Nicolo Tamberi is Research Officer in Economics at the University of Sussex and Fellow of UKTPO. With trade data for the full year 2021 just released, we update our earlier estimates of the UK-EU Trade and Cooperation Agreement’s impact on bilateral trade between the UK and the EU for the first year of the agreement. […]
Briefing Paper 66 – January 2022 Download Briefing Paper 66 Ingo Borchert, Michael Gasiorek, Guillermo Larbalestier, Nicolo Tamberi Key Points Introduction Global value chains and vertical fragmentation in services and manufacturing industries Approaches to measurement UK engagement in value chains, specifically mode 5 Services value-added share Services value-added share and exports intensity Services value-added share and foreign ownership in industries Which services are used as inputs? The importance of manufacturing and other sectors for service industries What can we learn from using firm-level data? Who trades services? Who trades goods? The use of services by manufacturing firms Impact of UK FTAs on services trade and Mode 5 UK-EU TCA effects Conclusion Disclaimer Key Points Services increasingly matter for the UK economy and for UK trade. Services can be traded either directly, be this by selling a design service from one country to another or by sending a consultant abroad, or they can be traded indirectly as inputs into goods trade. The latter is often referred to as ‘Mode 5 services trade.’ The interconnectedness of services trade and goods trade does not simply derive from the use of services by goods producers, but also because services themselves are traded by [...]
This Briefing Paper aims to further understanding of the importance of trade in services for the UK economy. In particular, to shed light on the relationship between services and manufacturing trade, including an increasingly significant form of services trade known as Mode 5. We explore input-output data, firm-level data and the links between services and manufacturing in the context of the UK’s independent trade policy. The authors provide evidence that shows that the nature of how these services interact with goods trade and the policy or market access barriers and their implications need to be understood in much greater detail for policy purposes. Read Briefing Paper 66: Links between services and manufacturing trade in the UK: Mode 5 and beyond
Download Briefing Paper 63 Briefing Paper 63 – November 2021 Yohannes Ayele, Guillermo Larbalestier and Nicolo Tamberi Key Points Introduction UK Trade Trade in goods: TCA effects Preference Utilization Rates (PURs) Trade in services Conclusion Key points For the period January-July 2021, we estimate that the TCA has reduced goods exports to the EU by 14% and by 24% for imports from the EU. The effect on exports is mostly concentrated on a prominent decline in January 2021, while imports exhibit persistent negative effects throughout all months. The reduction in trade brought about an estimated combined hit to the UK economy of around £44 billion with £32.5 billion lost in potential imports to the UK and £11 billion in exports to the EU. Footwear & headgear, animal and vegetable oils & fats, textiles and clothing, vegetable products, ceramic and metals sectors have seen a sustained reduction in trade. For the first seven months of 2021, between 26-32% of UK exports to the EU that could have entered under a zero-tariff did not do so. Despite the zero-tariff, zero-quota trade agreement of the TCA, firms end up paying tariffs to avoid the bureaucratic costs of claiming zero tariff. The [...]
Since the UK-EU Trade and Cooperation Agreement (TCA) came into force, firms trading with the EU have faced new costs as they learn to trade under new regulations and comply with customs formalities that were otherwise not present. In this Briefing Paper, we provide an analysis of UK monthly trade data to assess how UK goods trade has performed in the period January-July 2021. We also expand our analysis on preference utilization rates (PURs), which depict the extent to which UK exports to the EU have benefited from the tariff-free treatment agreed in the TCA as well as examining the impact of the TCA on trade in services in the first two quarters of 2021. Our analysis shows that the introduction of the TCA reduced trade between the UK and the EU, but this is not homogenous across sectors, although, whilst exports took a knock in January and have since recovered, the impact on imports has persisted. Furthermore, despite the zero-tariff, zero-quota trade agreement of the TCA, firms end up paying tariffs to avoid the bureaucratic costs of claiming zero tariff. The foregone duty saving amounts to £534.6 million. Read Briefing Paper 63: POST-BREXIT: TRADE IN GOODS AND SERVICES (II)
23 July 2021 Nicolo Tamberi is Research Officer in Economics at the University of Sussex and a fellow of the UKTPO. We have updated our estimates of the effects of the introduction of the Trade and Cooperation Agreement (TCA) on UK-EU trade in 2021 through to April. The methodology used was described in the UKTPO briefing paper 57 (see the appendix for details). We find that over the period January-April 2021, the TCA reduced UK exports to the EU by 18.7% and imports from the EU by 25.8% compared to the scenario in which the UK did not leave the EU. […]
Download Briefing Paper 57 Briefing Paper 57 – May 2021 Yohannes Ayele, Guillermo Larbalestier and Nicolò Tamberi Key Points Introduction Total Trade: Exports and Imports Trade by Sectors and Industrial Categories Rules of Origin and Preference Utilization Rates Conclusion Appendix Key Points While the TCA is a tariff-free trade deal this does not mean that trade between the UK and EU is as easy as it was before. Customs formalities and paperwork are now needed and this cost for firms is likely to impact on trade. We look at the evidence for the first three months of 2021 and highlight the negative impact of UK-EU trade over this quarter. Our estimates suggest that the TCA is estimated to have reduced UK exports to the EU by 15% and imports by 32%. The impact on exports is possibly in part because of the increased customs formalities, but this applies to a much lesser extent to imports which were also affected. More work needs to be done to understand this and the extent to which this may be because of integrated supply chains, concerns by EU firms about trading with the UK, or the lowering of MFN tariffs by the [...]
After decades of close economic integration, the UK’s relationship with the EU, its biggest and closest trading partner, is now governed by the Trade and Cooperation Agreement (TCA). In this Briefing Paper we look at how UK merchandise trade has performed under the new regulations in the first quarter of 2021. We employ different methodologies to quantify a TCA-effect and find that trade with the EU was hit hard in January 2021 but may have rebounded in February and March 2021, with heterogenous effects across sectors. We also investigate the extent to which UK exports have benefited from tariff-free access in EU markets. Read Briefing Paper 57: POST-BREXIT: UK TRADE IN GOODS
13 March 2021 Yohannes Ayele is Research Fellow in the Economics of Brexit, Nicolo Tamberi is Research Officer in Economics, and Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex. All are Fellows of the UKTPO. On Friday 12 March, the Office for National Statistics (ONS) and HM Revenue and Customs (HMRC) released the UK’s trade in goods figures for January 2021, providing data for the first month following the end of the Brexit transition period. The ONS has provided their own interpretation of these data portraying a rather gloomy scene for UK trade. We have downloaded the raw data and here offer some initial thoughts on what we learn from the changes in trade flows in January 2021. […]
3 February 2021 Michael Gasiorek is Professor of Economics and Director of the UKTPO. Guillermo Larbalestier is Research Assistant in International Trade, and Nicolo Tamberi is Research Officer in Economics, both for the UKTPO. As widely anticipated and signalled in advance, the International Trade Secretary announced on Monday 1 February that the UK notified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of its intention to join. The CPTPP is a free trade agreement between 11 ‘Pacific’ countries which was signed in 2018.[1] This is an early step in the UK’s newfound and hard-won sovereign and independent trade policy. […]
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