EU economic integration agreements, Brexit and trade

Stack, M.M. ORCID: 0000-0002-9213-7607 and Bliss, M., 2020. EU economic integration agreements, Brexit and trade. Review of World Economics, 156 (3), pp. 443-473. ISSN 1610-2878

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The effects of regionalism on trade have been extensively evaluated within a gravity model framework. With the expected exit of the United Kingdom (UK) from the European Union (EU), the prospect of regional disintegration has brought about a new impetus to studying trade policy effects. Using actual and forecast data for a panel of bilateral imports between the EU15 and the rest of the world, this paper examines the trade effects of EU economic integration agreements (EIAs), their evolution over time and the related counterfactual Brexit trade policy scenarios. Distinct trade effects are obtained for the EU trade related agreements; positive, significant and of similar magnitude for the EU and free trade agreement (FTA) coefficients, but negative and significant (and smaller in magnitude) for the regional economic partnership agreements (EPAs). The subperiod results suggest the positive coefficients of EU and FTA membership tend to diminish over time, implying earlier membership of EIAs came with greater trade benefits. Finally, in generating the predicted values for the trade effects of three alternative counterfactual Brexit scenarios (hard Brexit, hard Brexit plus, global Britain), the findings suggest an asymmetric effect depending on the perspective of the UK versus the EU. Whereas the UK’s trade would decline substantially with all three country groups (the EU, the FTAs and regional EPAs) and rise substantially with the rest of the world, only minor percentage changes are predicted for EU bilateral trade.

Item Type: Journal article
Publication Title: Review of World Economics
Creators: Stack, M.M. and Bliss, M.
Publisher: Springer
Date: August 2020
Volume: 156
Number: 3
ISSN: 1610-2878
Divisions: Schools > Nottingham Business School
Record created by: Linda Sullivan
Date Added: 06 May 2020 12:39
Last Modified: 31 May 2021 15:03

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