Jun Du explores the impact of Brexit on UK–EU goods trade in a Centre for Inclusive Trade Policy blog
In a blog for the Centre for Inclusive Trade Policy, Professor Jun Du, Managing Director of The Productivity Institute, explores why the impact of Brexit on UK–EU goods trade has varied so widely across products and sectors. Drawing on five years of product-level trade data, Jun explains how established production networks have helped some sectors withstand new barriers, while many less embedded product lines have disappeared. She also considers where future UK–EU regulatory cooperation could deliver the greatest benefits.
The blog discusses recent research on supply chains and EU-UK trade by Jun with Oleksandr Shepotylo (Aston University) and Yujie Shi (The Productivity Institute).
Key takeaways:
- UK export product varieties to the EU fell by an estimated 53.8%, while export values declined by 16.5%. Import varieties and values fell by 31.5% and 23.1% respectively.
- The effect of the Trade and Cooperation Agreement varied roughly ten times more across products than across EU partner countries, suggesting that what was traded mattered more than where it was going.
- Trade proved more resilient in closely integrated sectors, including pharmaceuticals, chemicals and automotive components, where firms had invested in shared production networks and established commercial relationships.
- The proposed Sanitary and Phytosanitary agreement could reduce barriers affecting agri-food trade, but would not address technical barriers such as conformity assessments and dual certification.
- Separate research by Jun, Oleksandr Shepotylo and Lin Zhang estimates that mutual recognition of testing and certification increases trade by around 10% on average, and by close to 28% in sectors where the effect is significant.
- Jun proposes that the next phase of UK–EU cooperation should address rules of origin alongside the SPS negotiations, before focusing on sector-specific conformity assessment agreements in areas where the two markets are most economically interdependent.
Read the full blog on the Centre for Inclusive Trade Policy website
