EconPapers    
Economics at your fingertips  
 

EU-UK global value chain trade and the indirect costs of Brexit

Rita Cappariello (), Milan Damjanovic (), Michele Mancini and Filippo Vergara Caffarelli
Additional contact information
Milan Damjanovic: Bank of Slovenia

No 468, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Production networks in the European Union (EU) and the United Kingdom (UK) are highly integrated and Brexit poses a threat to supply and demand linkages across the Channel. In a world of Global Value Chains (GVCs), tariffs might be more harmful than in a world where trade is purely direct. In this paper we highlight the features of GVC-trade between the EU and the UK, disentangling the complex network of bilateral EU-UK value-added flows. Assuming that following Brexit the UK adopts the same Most-Favoured-Nation tariff schedule as the EU, we compute the direct and indirect costs of these tariffs, taking into account the EU-UK GVC-trade patterns. Tariffs would add almost 1 percentage point to the cost of manufacturing inputs in the UK, while the corresponding input cost in the EU would be only marginally affected, despite some heterogeneity at the country-level.

Keywords: Brexit; tariffs; global value chains (search for similar items in EconPapers)
JEL-codes: D57 F13 F15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-int and nep-tid
Date: 2018-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.bancaditalia.it/pubblicazioni/qef/2018-0468/QEF_468_18.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_468_18

Access Statistics for this paper

More papers in Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-09-21
Handle: RePEc:bdi:opques:qef_468_18