Brexit: The Political Economy of the New Economic EU-UK Relationship?
Assignment
Your assignment will be to write a well-argued essay in which you explain to the general audience of a Member State of the EU of your choosing, what the economic consequences are of the EU-UK Trade and Cooperation Agreement, compared to a No-Deal Brexit.
Prepare a brief essay with a well-formulated research question, a clear introduction, a well-structured middle part, and a well-argued conclusion.
Structure your essay as follows:
Decide which Member State to focus the analysis on.
Explain what the four EU-UK relationships (including EU membership) outlined by the UK Treasury entailed?
How would the various arrangements have affected trade with the country that you selected?
How would they affect its imports and how would it affect their exports? What are the benefits, rules and contributions involved, if any?
Explain what arrangement ultimately prevailed in the EU-UK Trade and Cooperation Agreement and what would have been the arrangement in case no trade agreement would have been reached (so-called ‘hard’ Brexit).
Use the website referenced above to research existing trade flows between the Member State you selected and the UK. Give a general description of the trade relation between the Member State of your analysis and the UK. How intensive is trade between these two countries?
Is this primarily an import or export relation? Subsequently focus your analysis on both an exporting and importing sector with a relatively high intensity of trade. Provide references for your claims.
Also, research for both the export and import sectors, what new tariffs would have been put in place after Brexit, if there would have been no trade deal (the so-called ‘hard’ Brexit).
First analyze the effects of the EU-UK Trade and Cooperation Agreement for the import sector of your Member State’s economy, by comparing the situation of a No-Deal (hard Brexit) with the situation of the EU-UK agreement. Draw a graph that depicts the imports from the UK (using abstract prices and quantities). Assume that in case no deal would have been concluded, your Member State would have imported its goods from another Member State of the EU.
What are the welfare effects of the EU-UK agreement compared to not having a trade agreement (compare: situation-before = ‘No-deal’ with situation-after = with a trade deal)? Are the effects positive or negative; and what parties benefit, and which do not?
Now analyze the effects for the exporting sector of the economy of the selected Member State. Draw a simple graph that depicts the export sector of the Member State that you selected. What would happen to the export sector if a No-Deal Brexit would have materialized.
Depict the No-Deal scenario in the graph as if the exports from your Member State would fetch a lower price on the world market due to less demand (why would the latter be the case?). Are the welfare effects for this sector positive or negative; and what parties benefit, which do not?
On the basis of the analysis of these two sectors, derive some more general conclusions about the economic consequences of the benefits of the EU UK trade deal for the Member State you selected. Try to generalize from your analysis of the consequences of the one exporting and one importing sector to arrive at a plausible conclusion for the economy of the selected Member State as a whole (also think of the trade patterns as a whole). Is the EU-UK trade agreement favorable for the Member State selected? Make a convincing argument that is accessible to the general audience.
Explain economic concepts where necessary.
Concentrate the analysis in your essay on one Member State only. You can also opt to take the UK as the unit of analysis. In that case you should pick one trading partner of the UK, to derive more general conclusions for the UK as a whole.
