The United Kingdom’s withdrawal from the European Union will deprive it of the benefits of existing Free Trade Agreements between the EU and non-European countries such as Canada, Mexico, South Africa, and South Korea.
Among these countries, South Korea offers the greatest promise for a separate FTA with the UK reflecting (1) the high growth rate of British exports to that country, noted above, and (2) the large share (85 per cent) of products imported by South Korea that are subject to non-zero WTO tariffs and thus liable for duty elimination under an FTA with the United Kingdom. (Peterson Institute for International Economics, “Starting over on Tariffs: Post-Brexit Trade Agreement Partners for the United Kingdom, 12 July 2016)
Major emerging markets outside Europe also offer substantial scope for preferential tariffs under a stand alone FTA with the UK: Brazil, China, India, Indonesia, Russia. Brexit supporters claim that the UK can leverage its cultural and historical ties to forge FTAs with Commonwealth countries like India (“Empire 2.0”), granting concessions on agricultural trade in exchange for access to the developing service sectors of those economies.
However, free trade agreements between developed and emerging economies based on mutual concessions on agriculture and services have proven notoriously difficult to complete. Moreover, Indian officials have voiced doubts about such an arrangement with post-Brexit UK, noting the continuing uncertainties over British foreign work visas and the diminishing relevance of the Commonwealth connection in the 21st century. On March 31, the New Delhi government announced the expiration of the UK's bilateral investment treaty with India. (Financial Times, “India Dents UK Trade Hopes with Lapsed Deal”,5 April 2017)
This article was written by David Bartlett. David Bartlett is an Economic Adviser and Writer for RSM. He is Executive in Residence and MBA Director at the Kogod School of Business, American University in Washington, DC. Bartlett’s research, teaching, and consulting focus on International Corporate Strategy with special attention to emerging markets and emerging technologies. He has published widely on these topics while leading interdisciplinary research projects on the global economy.