CNN, London :
Britain is preparing to split from the European Union, a separation that will affect U.K. trade around the world.
As it stands, the U.K. exports and imports goods and services worth just over £1 trillion ($1.3 trillion) a year. So there’s clearly a lot at stake.
As an EU member, the U.K. trades freely with the other 27 EU countries. That two-way flow was worth £513 billion ($680 billion) last year, just over half the U.K.’s total. A new EU-U.K. deal will now have to be struck.
But it doesn’t end there. The EU manages preferential trade deals with nearly 60 other nations, including Switzerland and Turkey, on behalf of its members. The U.K. will have to seek new ties with those countries.
For the rest of the world — such as the U.S. and China — the U.K.’s trading relationship is based on global standards overseen by the World Trade Organization. The problem: The EU manages Britain’s WTO membership.
So when the U.K. leaves the EU (in 2019 at the earliest), it will have to reset all these relationships by renegotiating trade terms with the EU, the WTO and every other partner. This is likely to take several years.
WTO director general Roberto Azevedo, along with many others, has warned that it will not be a simple process.
“Key aspects of the EU’s terms of trade could not simply be cut and pasted for the U.K.,” he said, according to the text of a speech he made in June in London, ahead of Britain’s EU referendum.
Trade won’t stop if the U.K. exits the EU without having new deals in place, but it could slow and become more costly, potentially damaging British jobs and companies.
Azevedo says this could cost British exporters up to 5.6 billion pounds ($7.4 billion) each year in duty payments — and that’s without taking into account the impact on trade in services.
Britain is preparing to split from the European Union, a separation that will affect U.K. trade around the world.
As it stands, the U.K. exports and imports goods and services worth just over £1 trillion ($1.3 trillion) a year. So there’s clearly a lot at stake.
As an EU member, the U.K. trades freely with the other 27 EU countries. That two-way flow was worth £513 billion ($680 billion) last year, just over half the U.K.’s total. A new EU-U.K. deal will now have to be struck.
But it doesn’t end there. The EU manages preferential trade deals with nearly 60 other nations, including Switzerland and Turkey, on behalf of its members. The U.K. will have to seek new ties with those countries.
For the rest of the world — such as the U.S. and China — the U.K.’s trading relationship is based on global standards overseen by the World Trade Organization. The problem: The EU manages Britain’s WTO membership.
So when the U.K. leaves the EU (in 2019 at the earliest), it will have to reset all these relationships by renegotiating trade terms with the EU, the WTO and every other partner. This is likely to take several years.
WTO director general Roberto Azevedo, along with many others, has warned that it will not be a simple process.
“Key aspects of the EU’s terms of trade could not simply be cut and pasted for the U.K.,” he said, according to the text of a speech he made in June in London, ahead of Britain’s EU referendum.
Trade won’t stop if the U.K. exits the EU without having new deals in place, but it could slow and become more costly, potentially damaging British jobs and companies.
Azevedo says this could cost British exporters up to 5.6 billion pounds ($7.4 billion) each year in duty payments — and that’s without taking into account the impact on trade in services.
