Brexit trade impacts' and Mercosur's negotiations with Europe

Julio J.

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate that a hard Brexit (HB) would reduce UK agro-industrial-imports from the EU by around 50%. Following the dismantling of the Common Agricultural Policy (CAP) the UK Government has proposed to shift towards market-oriented agricultural policies and negotiating free trade agreements (FTAs) with interested countries. Assuming that the UK restores the previous level of agro industrial products, the paper estimates the net export gains that Mercosur could achieve in the UK market for different agro-industrial products. In the event of a Hard Brexit, and assuming that the Mercosur-EU negotiations are not completed before, Mercosur would then face two negotiations in Europe: with the EU27 and with the UK. We argue that failing Mercosur to give priority to talks with the UK, other countries are more than likely sign trade agreements and fill its import gap thus creating additional trade diversion effects against the Mercosur. We offer back-of-the-envelope estimates indicating that under such an FTA, Mercosur could double its agro-industrial exports to the UK. These significant export gains are concentrated in a group of products that are now highly protected by the CAP.

Keywords: Brexit; Mercosur; trade diversion; trade institutions; agro-industrial trade; Common Agricultural Policy; free trade agreement (search for similar items in EconPapers)
JEL-codes: D4 F13 F14 F15 F17 F5 F51 F53 F55 F61 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-agr, nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of World Trade Issue 3.Vol 53(2019): pp. 343-372

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94885

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