Deep Integration and UK-EU Trade Relations

Mulabdic, Alen ; Osnago, Alberto ; Ruta, Michele

World Bank, Washington, DC

关键词: trade agreements;    trade effects;    regional integration;    trade intensity;   

DOI  :  10.1596/1813-9450-7947
RP-ID  :  WPS7947

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper studies the impact of deepagreements on United Kingdom-European Union trade relations.A standard gravity model is applied to assess the effectthat European Union membership had on the UnitedKingdom's trade. The paper uses new information on thecontent of trade agreements to build a measure of"depth" based on the number of provisions theagreements cover. The analysis relies on information ongoods, services, and value-added trade from the World InputOutput Database. Deep trade agreements are found to increasegoods and services trade by 42 percent, and value-addedtrade by 14 percent on average. European Union membershiphad a particularly strong effect on United Kingdom'sservices and global value chain trade. Because of itsmembership, the United Kingdom's services trade morethan doubled, and the country's backward and forwardparticipation in global value chains increased by more than30 percent each. The paper uses these estimates to evaluatethe future of United Kingdom-European Union trade underdifferent scenarios. The findings show that UnitedKingdom-European Union trade declines under all scenarios,ranging between 6 and 28 percent for trade in value added.This drop is sharper (particularly for services and globalvalue chain trade) the lower is the depth of the futurearrangement relative to the depth of the European Unionagreement. As trade flows adjust slowly to changes in tradecosts, these effects are expected to emerge over time. Butthe trade-off between the depth of trade agreements andtrade intensity will delimit policy choices going forward.