Brexit and trade

Aerial photo of a highway on the border between Northern Ireland and the Republic of Ireland
This country road between County Fermanagh in Northern Ireland and County Monaghan in the Republic of Ireland could have a customs post if Brexit talks fail (source: dpa)
  • The impasse in Brexit talks points to a last-minute compromise or a “hard” Brexit
  • In the former case, real trade talks between the UK and EU may not start until 2020
  • A no-deal Brexit would hurt trade on both sides and could strenghten protectionism

Brexit negotiations between the European Union and the United Kingdom were supposed to be concluded at the October EU summit. But the deadline passed with no breakthroughs, and no plans for a new meeting, unless “decisive” progress is made by the negotiators. At least in Brussels, the two sides avoided the theatrics of the informal September summit in Salzburg that the British popular media depicted as an “ambush” and “humiliation” for Prime Minister Theresa May. After it was over, Brexiters renewed their calls for the country to “take back control” and French Finance Minister Bruno Le Maire responded that the EU would not “commit suicide” by acceding to British demands.

Such hyperbole distracts attention from the economic realities underlying the negotiations, many of which concern trade. British negotiators maintain that the long-term solution to avoiding a hard border across Ireland lies in “frictionless” trade between the EU and the UK. Options for future trade arrangements are the subtext of the inconclusive talks on the terms for Britain’s withdrawal from the EU scheduled for March 29, 2019. Brexit will also diminish the EU’s weight in international trade talks and may tilt its posture toward greater protectionism, especially in light of the Trump administration’s penchant for trade conflict.

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