Abstract
The book concludes by examining the alternative trading models that have been advanced for Brexit. These range from close forms of relationship with the EU, such as membership of the European Economic Area (EEA) or customs union, or more independent options, such as concluding a free trade agreement (FTA) with the EU or alternatively trading according to World Trade Organisation rules. Additional trade options are considered, such as membership of the European Free Trade Association, increasing trade with the Commonwealth, North American Free Trade Agreement and ‘Anglosphere’ countries, or joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). There is a fundamental choice facing policy makers—whether to seek to minimise short-term trade costs through the adoption of a close economic relationship with the EU, but at the cost of inhibited policy autonomy, or to utilise policy flexibility to pursue national economic objectives, but at the cost of short-term reduction in UK-EU trade. Rodrik’s trilemma model is used to illustrate this choice, between adopting a ‘golden straightjacket’ and opting for the benefits of greater national sovereignty and policy space. The chapter explains and evaluates the Chequers (May) and Johnson variants of the withdrawal agreement, before noting how game theory might suggest a mutually beneficial bargaining solution between the UK and the EU—based around a basic form of FTA.
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Notes
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Supplemental to the EEA agreement, Iceland has negotiated tariff-free access to EU markets for its fishery exports by allowing limited access for EU fishing vessels in Icelandic territorial waters.
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https://ukandeu.ac.uk/norway-or-common-market-2-0-the-problems-are-not-where-they-seem-to-be/. The backstop is discussed, in more detail, later in this chapter.
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Peterson Institute for International Economics, 2016. https://piie.com/blogs/trade-investment-policy-watch/how-long-does-it-take-conclude-trade-agreement-us
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Perhaps this should be more accurately 53 member nations, since Fiji is currently suspended.
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Whyman, P.B., Petrescu, A.I. (2020). Alternative Trading Models After Brexit. In: The Economics of Brexit. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-55948-9_9
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