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.

Literature

Information on EU-UK Trade and Cooperation Agreement g. via:

https://ec.europa.eu/trade/policy/countries-and-regions/countries/united-kingdom/Her Majesty’s Treasury. 2016. HM Treasury analysis: the long-term economic impact of EU membership and the alternatives. Cm 9250. HM Treasury: London.

Website on trade: The Observatory of Economic Complexity (OEC): https://oec.world/en
Other literature assigned to Lecture / Class.

Introduction

In June 2016 close to 52% of the British people voted in favor of leaving the European Union. A few months before the referendum, the UK’s Treasury published an extensive economic analysis of the various scenarios for the future (economic) relationship between the UK and the EU:

(1) EU membership; and three alternative basic models:

(2) membership of the European Economic Area (EEA), often called the ‘Norway’-option;

(3) a negotiated bilateral agreement, often referred to as the ‘Canada’-option; and

(4) reverting to World Trade Organisation (WTO) terms. Compared to EU membership, the Treasury concluded, the less extensive the new relationship, the more it would suffer in terms of trade, employment, and income – a household might lose out on £5000 in yearly income on the long term, should the UK fall back on the WTO-scenario. It would remain unclear up until the last moments that a deal was concluded in December 2020, what option would emerge.

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.

Execution:

Write an assignment with a clear introduction, stating the research aims of your paper, a middle part in which you do the analysis and explain your arguments, and a conclusion in which you summarize your research
Make sure to explain your economic reasoning. Address your reasoning to a general audience of newspaper readers.
The assignment counts between 750 and 1250 words, containing at least two graphs.
Use Times New Roman, 11/12 , paragraph 1.5.;
Always print your name, student number, date and title of the course on the front page;

Assessment:

In the assessment there will be specific attention being paid to:

Formulation and motivation of research question in the introduction of the essay;
Ability to find relevant information on trade patterns and tariffs, and use appropriate referencing
Ability to use economic concepts and reasoning and cogency of the economic reasoning in the middle part;
Ability to provide a well-reasoned economic argument that provides a convincing answer to your research question in the conclusion of the essay.
A note on the graphs:

Draw your own graphs. Do not copy-paste from existing sources. You can use pen and paper and scan your graphs to include them in your document. Or you can prepare them using your computer (Powerpoint provides useful basic drawing tools).

The graphs will be judged on how you use them for your reasoning. Their technical execution will not be part of the assessment.

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