A no-deal Brexit could damage smaller economies trading with the United Kingdom (UK) – but bring substantial gains for China and other trading partners such as South Africa.
New research from the UN Conference on Trade and Development (UNCTAD) shows that the UK and its future trading partners need to expedite bilateral deals if they are to avoid the costs of exiting the EU without a deal.
These costs are considerable, the research found, with the EU standing to lose out on $34.5 billion in exports to the UK.
The second-biggest loser in the event of the UK’s no-deal departure from the EU would be Turkey, taking a $2.4 billion export hit.
China, meanwhile, could gain an additional $10.2 billion in exports to the UK, with the second-ranked United States standing to add $5.3 billion through its exports to the UK.
South Africa would potentially be the fifth biggest ‘winner’, as the country stands to gain an additional $3 billion in exports, the research showed.
“Brexit is not only a regional affair,” said Pamela Coke-Hamilton UNCTAD’s director of international trade and commodities.
“Once the UK has left its 27 European Union partners behind, it will alter the ability of non-EU countries to export to the UK market.”
“The UK’s intention to lower Most Favored Nations tariffs would increase relative competitiveness of major exporting countries, such as China or the United States, thereby eroding market-share away from less competitive countries,” she said.
Many developing countries’ exports enjoy very favourable market access conditions to UK markets, largely because of bilateral trade agreements and because of EU unilateral preferential schemes.
Countries wanting to retain this market access need to negotiate – and quickly – with the UK.
The EU currently has about 70 trade agreements, but these are often not easy to replicate, and negotiations take time.
“In many cases, United Kingdom-third countries agreements, or continuity agreements, have not been signed, and there is substantial uncertainty as to whether many of these agreements will be concluded any time soon,” Coke-Hamilton said.