Trade in goods is one of the areas most significantly affected by Brexit. The UK’s departure from the EU will profoundly redefine its trade relations not only with the EU27 but also with the rest of the world.
A huge task lies ahead for the UK - and indeed for the rest of Europe. After 40 years of the UK’s participation in the Single Market, in which markets for goods and services of the UK and the other 27 Member States have been almost completely integrated, the eggs must now be unscrambled and the details of a new relationship must be laid out and agreed upon. As discussed in greater detail in our Brexit White Paper, the timing for doing so is extremely tight. Brexit is to become reality on 29 March 2019, and this fast-approaching deadline has been rendered all the more pressing by the fact that formal negotiations on a future trade relationship have not even started. The EU’s position has always been that these negotiations can only start if “sufficient progress” has first been made on the UK’s “divorce agreement” with the EU. So far, in the opinion of the EU, this has not been the case. The current consensus is that a breakthrough must occur within the next few weeks, in order for trade talks to begin in January.
Brexit however entails much more than a redefinition of the UK's relationship with the EU. On trade matters in particular, it will also affect the UK’s position in the WTO, reshape the way it trades with the rest of the world and require it to adopt a comprehensive domestic trade policy. Finally, Brexit will affect—albeit to a rather limited extent—trade relationships between the EU27 and other third countries.
This paper discusses the impact of Brexit on trade in goods. The first part will examine how trade between the UK and the EU27 is likely to be affected by Brexit. The second part, which will be published shortly, will deal with the impact of Brexit on trade between the UK and third countries and between the EU27 and third countries, respectively.