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Will Britain look East after Brexit?

By Wang Kan | China Daily | Updated: 2019-09-09 08:26

Britain's Prime Minister Boris Johnson is seen aboard the Opportunus IV fishing trawler in Peterhead, Scotland, Britain Sept 6, 2019. [Photo/Agencies]

Editor's note: Whether British Prime Minister Boris Johnson succeed in overcoming Parliament's opposition and formalize the United Kingdom's divorce from the European Union on or before the Oct 31 deadline is anybody's guess. But how will the UK handle trade after it exits the EU and how will Brexit affect its trade ties with Asian economies? Two experts share their views on the issue with China Daily's Wang Kan. Excerpts follow:

UK trying to maintain its overseas markets

The British government began making arrangements for the post-Brexit era long ago. Britain signed a free trade agreement with the Republic of Korea on Aug 22, indicating it wants to strengthen its economic and trade ties with its Asian trade partner after it leaves the EU.

Britain began negotiating a trade deal with the ROK to continue the bilateral preferential trade arrangement and avoid any negative impact of Brexit on its economy. The two sides reached a consensus on relevant principles in June.

Thanks to the EU's trade framework, Britain enjoys preferential trade arrangements for about 40 items with more than 70 economies. Post-Brexit, the UK cannot avail of this preferential treatment, which would cost it dear in terms of exports and imports.

That's why it started bilateral trade negotiations with other economies the moment it launched the Brexit process, and has inked 13 trade agreements with more than 38 economies.

As for the ROK, it has its own considerations. Under the EU-ROK free trade agreement (FTA), many commodities from the ROK can enter the British market under the preferential tariff agreement.

However, after the UK leaves the EU, higher tariffs could have been imposed on ROK exports to the UK. For instance, the tariff on ROK automobile exports to the UK could have increased from zero to 10 percent in the absence of a new UK-ROK trade deal.

And after the EU and Japan signed an FTA, the pressure on the ROK to sign such deals with other economies has increased, especially since relations between Seoul and Tokyo have deteriorated. Therefore, the ROK needs to stabilize its exports to the UK so that when Brexit becomes a reality, the FTA would help the two sides to have preferential trade arrangements as before.

Still, the UK would do good to also sign FTAs with more economies, Japan in particular.

Ni Yueju, a researcher of Institute of World Economics and Politics, Chinese Academy of Social Sciences

FTA with China in the works

As the British economy is largely export-oriented, it is obvious that the UK-ROK free trade agreement is of great significance to Britain's economy, particularly because Britain could lose its global economic status after exiting the EU.

Since Britain has to pay additional customs duties and can no longer freely export goods to EU member states after Brexit, the free trade deal with the ROK would help it to maintain one of its important overseas markets. Aside from the ROK, Britain has also signed FTAs with countries such as Chile and Switzerland, and is negotiating a free trade deal with China.

The ROK's free trade deal with the UK can be seen as further opening up of the Asian market. The FTA with the ROK will help Britain to address some of the problems that Brexit is expected to create.

The deal could also facilitate British automobile sales to the ROK. Besides, the UK-ROK free trade deal could be a precursor to such deals with other economies, especially China.

Due to its reliance on exports, particularly on the EU market, the UK needs to take measures to sustain its export markets to cope with the negative effects of Brexit.

The UK-ROK free trade deal, to a certain extent, could ease British exporters' pain, and arrest the slide of the pound sterling which is inching close to the US dollar in terms of value.

Besides, it could enhance investor confidence and stabilize the job market in the UK.

Li Gang, a researcher at the Institute of European Studies, Chinese Academy of Social Sciences

The views don't necessarily represent those of China Daily.

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