BREXIT - tralac.org · 3. March 29, 2019: UK expected to leave the EU (unless negotiations are...

1

BREXIT Implications for Africa

AfricanRegionalConsulta3ononMul3lateral,RegionalandEmergingTradeIssues

Working Session on the Implications of “BREXIT” for African Trade and Integration

Mauritius - 25 May 2017

Paul R. Baker

Key Messages

•  Exposure varies by region and sectors: Southern and Eastern are most

exposed

•  UK-EU outcome uncertain; Focus of Africa needs to be initially on

transition phase

•  MT risks: Preference erosion and impact on Sterling

•  LT risks: Market confidence & demand, as well as risks of contagion

•  Coherence and cohesive approach is preferable; improved

intelligence and early preparation necessary; securing built-in

agenda for future UK FTAs

2

Brexit Milestone Events

Key Milestones:

1.  June 23, 2016: UK citizens vote to leave the EU.

2.  March 29, 2017: UK officially notifies Brexit to the European Council - negotiations

on Brexit begin.

3.  March 29, 2019: UK expected to leave the EU (unless negotiations are extended)

Brexit opens “Pandora’s Box”: first time a Member State has ever decided to

exit the EU. Due to the strong ties, not only between the UK with the EU, but

also with the rest of the World, the outcome of negotiations will have a

significant impact on the World’s economy.

Process: Article 50 of the Treaty of the European Union

Steps Towards Brexit

TEU Article 50: Key elements

1.  Step 1 - Initial requirement: Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

This requirement was fulfilled through the “European Union (Notification of Withdrawal) Act 2017”, adopted by the UK Parliament on March 16, 2017.

1.  Step 2 – Notification: A Member State which decides to withdraw shall notify the European Council of its intention.

This requirement was fulfilled on March 29, 2017.

1.  Step 3 – Negotiation: In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

2.  Step 4 – The Effects: The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

Source: BBC

3

Legal Implications of Brexit

Immediate consequences:

1.  Suspension of directly applicable EU Law and its replacement: Trade

Defences, Trade Policy and agreements, state-aid regulation…

2.  Ending of rights of access;

3.  Differential treatment;

4.  Need of new national policies and institutions; and

5.  Interpretation and application of laws based on EU Law Principles.

In the case of those EU rules transposed into British legislation, the UK will

have to decide whether they remain applicable, need to be modified, or

should be abolished. Overall, it has been estimated that 20,833 EU laws and

regulations would have to be scrutinized by the negotiators.

Challenges

Uncertainty. One of the main problems of Brexit is the uncertainty surrounding it. Art.

50 TEU triggers the negotiations surrounding the relationship between the EU and the

UK, and this arrangement – or the lack of it - will have an implication on third

countries. Unlikely successful conclusion of talks, compounded by other macro risks.

Short period. Both parties disagree on how to carry out the negotiations. On the one

hand, the UK wants to negotiate both Brexit and the future trade agreement

simultaneously. On the other hand, the EU wants to agree first on the proper Brexit

agreement, and then start negotiations on the trade agreement. Therefore, the two

year period is likely to be exhausted before a trade agreement is achieved. In this

scenario, and without any kind of transitional agreement, trade between the EU and

the UK would be subject to the WTO rules (see below).

Market access. Currently, Mauritius enjoys preferential market access to the EU (28)

under the iEPA. What will be implications of the different types of agreements? Will

Mauritius retain its acquired market access rights to the UK?

4

UK’s Relevance to West & Central Africa

Central Africa-UKBREXIT DASHBOARD

Macroeconomic Exposure to BREXIT

UK trade and investment with Central Africa

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20

30

40

50

60

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UK MFN Tariffs

Share of products in table in total imports of UK from Central Africa: 99%

UK Tariffs and Impact on Central Africa’s welfare

USD

mill

ions

Exposure to Contagion

High

Exposure to UK markets

Low

Current account (% of GDP) -6.9

Reserves in months of imports 10.9

FDI net inflows (% of GDP)2.3

Trade (% of GDP)51.5

Exports to UK (% of total)2.5

FDI flows from UK (% of total)0.1

Sterling/Dollar Change (%) -13.1

Sterling Debt (% of total)0.0

HighLow

Welfare Impact by 2020 against baseline, given different scenarios

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000UK trade with Central Africa, USD millions

ExportImportBalance

HS DescriptionUK imports from Central Africa UK imports from World

Growth 2012-16, %Share of Central Africa

in UK imports, %USD millions, 2016 Growth, 2012-16, %

27 Mineral fuels 636 -23.2 -19.8 1.6 44 Wood 18 25.9 7.8 0.3 74 Copper 10 -26.0 -5.3 0.5 29 Organic chemicals 9 -19.1 -14.5 0.1 84 Machinery 5 -32.2 0.1 0.0

-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015

UK FDI flow to Central Africa, USD millions

Central Africa’s main exporters, main markets and products

Central Africa’s trade with the World

Sources and NotesCentral Africa: Angola, Central Africa Republic, Chad, Congo, Congo DRC , Equatorial guinea, Gabon, Sao tome and PrincipeWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and

consumer demand in UK and EU.Sources: International Economics calculations based on World Bank: WITS, WDI; ITC: Trademap, MacMap; BIS: Quarterly Banking Statistics; fDi

Markets; Purdue University: GTAP; CEPII/ITC MAcMap TASTE

© International Economics Ltd (2017)

Exports of services, USD millions, 2014

www.tradeeconomics.com

2015

Note: Top 20 partners in 2016; Bubble size represents share in world imports of partner countries

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Trade in Value with World, USD millions

ExportImportBalance

Central Africa share in world exports

7.63.1

1.50.7

0.20.10.10.10.00.0

Mineral productsWood & products

Base metalsPrecious stones

Art worksVegetable products

Chemicals & allied…Animal/vegetable fats

Prepared foodstuffsAnimals & products

RCA,

201

6

1,645

157

81

49

32

22

7

1

0

0

Travel

Transport

Government

ICT

Other

Personal

Financial

Construction

Insurance

Royalties

0.002% (2006)

0.006% (2011)

0.003% (2016)




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UK MFN Tariffs



USD

mill

ions


High


Low









HighLow


-4,000

-3,000

-2,000

-1,000

0

1,000


ExportImportBalance





-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015


Central Africa’s main exporters, main markets and products

Central Africa’s trade with the World

Sources and NotesCentral Africa: Angola, Central Africa Republic, Chad, Congo, Congo DRC , Equatorial guinea, Gabon, Sao tome and PrincipeWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and






2015


-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000


ExportImportBalance

Central Africa share in world exports

7.63.1

1.50.7

0.20.10.10.10.00.0

Mineral productsWood & products

Base metalsPrecious stones

Art worksVegetable products

Chemicals & allied…Animal/vegetable fats

Prepared foodstuffsAnimals & products

RCA,

201

6

1,645

157

81

49

32

22

7

1

0

0

Travel

Transport

Government

ICT

Other

Personal

Financial

Construction

Insurance

Royalties

0.002% (2006)

0.006% (2011)

0.003% (2016)

UKFDIinCentralAfrica(US$millions)

West Africa-UKBREXIT DASHBOARD


UK trade and investment with West Africa

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UK MFN Tariffs

Share of products in table in total imports of UK from West Africa: 90%

UK Tariffs and Impact on West Africa’s welfare

USD

mill

ions


High


Low









HighLow


-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

UK trade with West Africa, USD millions

ExportImportBalance

HS DescriptionUK imports from West Africa UK imports from World

Growth 2012-16, %Share of West Africa in

UK imports, %USD millions, 2016 Growth, 2012-16, %

27 Mineral fuels 1,112 -34.6 -19.8 2.8 18 Cocoa 312 1.1 2.8 12.4 08 Fruit & nuts 144 8.3 4.1 2.3 09 Coffee & tea 123 244.4 2.5 7.1 16 Prep. of meat & fish 97 5.1 -2.0 2.2

-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016

UK FDI flow to West Africa, USD millions




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High


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0

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ExportImportBalance





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MFN

FTA

DEMAND

238

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1,824

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2012 2013 2014 2015 2016





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ExportImportBalance





-700

-600

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-400

-300

-200

-100

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MFN

FTA

DEMAND

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53 29 7 5

2011 2012 2013 2014 2015





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High


Low









HighLow


-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016


West Africa’s main exporters, main markets and products

West Africa’s trade with the World

Sources and NotesWest Africa: Benin, Burkina Faso, Cameroon, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania,

Niger, Nigeria, Saint Helena, Senegal, Sierra Leone, Togo

Welfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and

consumer demand in UK and EU.

Sources: International Economics calculations based on World Bank: WITS, WDI; ITC: Trademap, MacMap; BIS: Quarterly Banking Statistics; fDi





2015


-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000


Export

Import

Balance

West Africa share in world exports

3,342

2,243

1,030

1,004

939

199

158

92

47

18

Travel

Transport

ICT

Other

Government

Construction

Financial

Insurance

Royalties

Maintenance

0.007% (2006)

0.01% (2011)

0.004% (2016)

5.0

4.9

2.7

2.2

1.7

1.4

1.0

0.5

0.4

0.4

Mineral products

Prepared foodstuffs

Precious stones

Wood & products

Vegetable products

Animal/vegetable fats

Animals & products

Raw hides, skins & furs

Plastics/Rubbers

Textiles

RCA

, 201

6

UKFDIinWestAfrica(US$millions)

West Africa’s main exporters, main markets and products

West Africa’s trade with the World

Sources and NotesWest Africa: Benin, Burkina Faso, Cameroon, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania,

Niger, Nigeria, Saint Helena, Senegal, Sierra Leone, Togo

Welfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and

consumer demand in UK and EU.

Sources: International Economics calculations based on World Bank: WITS, WDI; ITC: Trademap, MacMap; BIS: Quarterly Banking Statistics; fDi





2015


-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000


Export

Import

Balance

West Africa share in world exports

3,342

2,243

1,030

1,004

939

199

158

92

47

18

Travel

Transport

ICT

Other

Government

Construction

Financial

Insurance

Royalties

Maintenance

0.007% (2006)

0.01% (2011)

0.004% (2016)

5.0

4.9

2.7

2.2

1.7

1.4

1.0

0.5

0.4

0.4

Mineral products

Prepared foodstuffs

Precious stones

Wood & products

Vegetable products


Animals & products

Raw hides, skins & furs

Plastics/Rubbers

Textiles

RCA

, 201

6

Southern Africa-UKBREXIT DASHBOARD


UK trade and investment with Southern Africa

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

UK trade with Southern Africa, USD millions

Export

Import

Balance

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UK MFN Tariffs

-300

-250

-200

-150

-100

-50

0

MFN

FTA

DEMAND

Share of products in table in total imports of UK from Southern Africa: 93%

UK Tariffs and Impact on Southern Africa’s welfare

HS DescriptionUK imports from Southern Africa UK imports from World

Growth 2012-16, %Share of Southern

Africa in UK imports, %USD millions, 2016 Growth, 2012-16, %

71 Precious stones, etc. 7,958 -8.8 -4.1 11.2 08 Edible fruit and nuts 590 3.5 4.1 9.4 87 Vehicles 478 12.4 5.8 0.6 84 Machinery 137 -18.3 0.1 0.2 22 Beverages 135 -5.2 -1.8 1.7

USD

mill

ions


High


Low









HighLow


0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016

UK FDI flow to Southern Africa, USD millions

East Africa-UK

BREXIT DASHBOARD


UK trade and investment with East Africa

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UK MFN Tariffs

Share of products in table in total imports of UK from East Africa: 70%

UK Tariffs and Impact on East Africa’s welfare

USD

mill

ions


High


Low







Sterling/Dollar Change (%)-13.1


HighLow


-2,000

-1,000

0

1,000

2,000

UK trade with East Africa, USD millions ExportImportBalance

HS DescriptionUK imports from East Africa UK imports from World

Growth 2012-16, %

Share of East Africa in


09 Coffee & tea 259 0.1 2.5 15.0 16 Prep. of meat & fish 145 -7.3 -2.0 3.3 07 Vegetables & roots 144 -4.3 2.0 3.4 61 Knitted clothing accessories 123 -12.6 1.0 1.0 06 Cut flowers, etc. 86 -3.8 1.2 5.4

-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016

UK FDI flow to East Africa, USD millions

UK’s Relevance to Eastern & Southern Africa

UKFDIinSouthernAfrica(US$millions)

UKFDIinEastAfrica(US$millions)

East Africa-UK

BREXIT DASHBOARD



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20

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UK MFN Tariffs



USD

mill

ions


High


Low









HighLow


-2,000

-1,000

0

1,000

2,000



Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016





-20,000

-15,000

-10,000

-5,000

0

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Export

Import

Balance

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UK MFN Tariffs

-300

-250

-200

-150

-100

-50

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MFN

FTA

DEMAND







USD

mill

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High


Low









HighLow


0

500

1,000

1,500

2,000

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2012 2013 2014 2015 2016


East Africa-UK

BREXIT DASHBOARD



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-2,000

-1,000

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Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


East Africa’s main exporters, main markets and products

East Africa’s trade with the World

Sources and NotesEast Africa: Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Mayotte, Mozambique, Rwanda, Seychelles,

Somalia, South Sudan, Sudan, Tanzania, Uganda, Zambia, ZimbabweWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and


Markets; Purdue University: GTAP; CEPII/ITC MAcMap TASTE© International Economics Ltd (2017)




2015

-120,000

-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000


ExportImportBalance

East Africa share in world exports

7.74.2

3.12.7

2.51.51.5

1.00.90.8

Vegetable productsPrepared foodstuffs

Base metalsAnimals & products

Precious stonesTextiles

Raw hides, skins & furs…Wood & productsMineral products


RCA,

201

6

8,674

7,243

2,188

1,733

1,095

339

307

267

85

82

Travel

Transport

Other

Government

ICT

Financial

Insurance

Construction

Personal

Royalties

0.003% (2006)

0.003% (2011)

0.002% (2016)

East Africa’s main exporters, main markets and products

East Africa’s trade with the World

Sources and NotesEast Africa: Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Mayotte, Mozambique, Rwanda, Seychelles,

Somalia, South Sudan, Sudan, Tanzania, Uganda, Zambia, ZimbabweWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and


Markets; Purdue University: GTAP; CEPII/ITC MAcMap TASTE© International Economics Ltd (2017)




2015

-120,000

-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000


ExportImportBalance

East Africa share in world exports

7.74.2

3.12.7

2.51.51.5

1.00.90.8

Vegetable productsPrepared foodstuffs

Base metalsAnimals & products

Precious stonesTextiles

Raw hides, skins & furs…Wood & productsMineral products


RCA,

201

6

8,674

7,243

2,188

1,733

1,095

339

307

267

85

82

Travel

Transport

Other

Government

ICT

Financial

Insurance

Construction

Personal

Royalties

0.003% (2006)

0.003% (2011)

0.002% (2016)




-20,000

-15,000

-10,000

-5,000

0

5,000

10,000


Export

Import

Balance

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0

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UK MFN Tariffs

-300

-250

-200

-150

-100

-50

0

MFN

FTA

DEMAND







USD

mill

ions


High


Low









HighLow


0

500

1,000

1,500

2,000

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2012 2013 2014 2015 2016


Southern Africa’s main exporters, main markets and products

Southern Africa’s trade with the World

-150,000

-100,000

-50,000

0

50,000

100,000

150,000


ExportImportBalance

5.1 1.8 1.8

1.7 1.4

1.3 1.0 1.0

0.8 0.7

Precious stonesBase metals

Vegetable prod.Mineral prod.

FoodstuffsPulp and paperboards

TransportationAnimals & products

Wood & productsChemicals

RCA,

201

6

10,755 3,262

2,784 880 644 524

257 145 128 89

TravelTransport

OtherFinancial

ICTGovernment

InsurancePersonalRoyalties

Maintenance

Sources and NotesSouthern Africa: Botswana, Lesotho, Namibia, South Africa and SwazilandWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and






Southern Africa share in world exports

2015


0.52% (2006)

0.68% (2011)

0.53% (2016)

Southern Africa’s main exporters, main markets and products

Southern Africa’s trade with the World

-150,000

-100,000

-50,000

0

50,000

100,000

150,000


ExportImportBalance

5.1 1.8 1.8

1.7 1.4

1.3 1.0 1.0

0.8 0.7

Precious stonesBase metals

Vegetable prod.Mineral prod.

FoodstuffsPulp and paperboards

TransportationAnimals & products

Wood & productsChemicals

RCA,

201

6

10,755 3,262

2,784 880 644 524

257 145 128 89

TravelTransport

OtherFinancial

ICTGovernment

InsurancePersonalRoyalties

Maintenance

Sources and NotesSouthern Africa: Botswana, Lesotho, Namibia, South Africa and SwazilandWelfare impact: MFN: UK applies EU MFN tariffs with all partners; FTA: UK liberalises with all countries; Demand: Major drop in confidence and






Southern Africa share in world exports

2015


0.52% (2006)

0.68% (2011)

0.53% (2016)

5

General Exposure to Contagion




-20,000

-15,000

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Export

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-4,000

-3,000

-2,000

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ExportImportBalance





-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015





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ExportImportBalance





-700

-600

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MFN

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DEMAND

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53 29 7 5

2011 2012 2013 2014 2015





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10

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UK MFN Tariffs


UK Tariffs and Impact on Central Africa’s welfareUS

D m

illio

ns


High


Low









HighLow


-4,000

-3,000

-2,000

-1,000

0

1,000


ExportImportBalance





-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015





-20,000

-15,000

-10,000

-5,000

0

5,000

10,000


Export

Import

Balance

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High


Low









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0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016





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High


Low









HighLow


-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016





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UK MFN Tariffs



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-8,000

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ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016





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UK MFN Tariffs



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High


Low









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-8,000

-6,000

-4,000

-2,000

0

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6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016

UK FDI flow to West Africa, USD millions East Africa-UK

BREXIT DASHBOARD



Rice

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UK MFN Tariffs



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High


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-2,000

-1,000

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Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


East Africa-UK

BREXIT DASHBOARD



Rice

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UK MFN Tariffs



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High


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Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


East Africa-UK

BREXIT DASHBOARD



Rice

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UK MFN Tariffs



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High


Low









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-1,000

0

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2,000



Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


Source:Interna3onalEconomicsLtdCalcula3ons

General Exposure to BREXIT




-20,000

-15,000

-10,000

-5,000

0

5,000

10,000


Export

Import

Balance

Rice

Oth

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Man

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0

10

20

30

40

50

60

70

UK MFN Tariffs

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-250

-200

-150

-100

-50

0

MFN

FTA

DEMAND







USD

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ions


High


Low









HighLow


0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016





Rice

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Man

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0

10

20

30

40

50

60

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UK MFN Tariffs



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mill

ions


High


Low









HighLow


-4,000

-3,000

-2,000

-1,000

0

1,000


ExportImportBalance





-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015





Rice

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Man

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10

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40

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UK MFN Tariffs



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High


Low









HighLow


-4,000

-3,000

-2,000

-1,000

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ExportImportBalance





-700

-600

-500

-400

-300

-200

-100

0

MFN

FTA

DEMAND

422

53 29 7 5

2011 2012 2013 2014 2015





-20,000

-15,000

-10,000

-5,000

0

5,000

10,000


Export

Import

Balance

Rice

Oth

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Man

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0

10

20

30

40

50

60

70

UK MFN Tariffs

-300

-250

-200

-150

-100

-50

0

MFN

FTA

DEMAND







USD

mill

ions


High


Low









HighLow


0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016





Rice

Oth

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Man

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0

10

20

30

40

50

60

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UK MFN Tariffs



USD

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High


Low









HighLow


-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016





Rice

Oth

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Man

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UK MFN Tariffs



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High


Low









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-8,000

-6,000

-4,000

-2,000

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4,000

6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016


East Africa-UK

BREXIT DASHBOARD



Rice

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High


Low









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-2,000

-1,000

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1,000

2,000



Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


East Africa-UK

BREXIT DASHBOARD



Rice

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40

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UK MFN Tariffs



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High


Low









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-2,000

-1,000

0

1,000

2,000



Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016


Source:Interna3onalEconomicsLtdCalcula3ons

East Africa-UK

BREXIT DASHBOARD



Rice

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High


Low









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-2,000

-1,000

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2,000



Growth 2012-16, %




-140

-120

-100

-80

-60

-40

-20

0

20

MFN

FTA

DEMAND

1,266

2,236

273

1,962

271

2012 2013 2014 2015 2016





-20,000

-15,000

-10,000

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0

5,000

10,000


Export

Import

Balance

Rice

Oth

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Man

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10

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50

60

70

UK MFN Tariffs

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-250

-200

-150

-100

-50

0

MFN

FTA

DEMAND







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mill

ions


High


Low









HighLow


0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016





Rice

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Man

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0

10

20

30

40

50

60

70

UK MFN Tariffs



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mill

ions


High


Low









HighLow


-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000


ExportImportBalance





-1000-900-800-700-600-500-400-300-200-100

0100

MFN

FTA

DEMAND

238

989

471

1,824

56

2012 2013 2014 2015 2016





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30

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50

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UK MFN Tariffs



USD

mill

ions


High


Low









HighLow


-4,000

-3,000

-2,000

-1,000

0

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ExportImportBalance





-700

-600

-500

-400

-300

-200

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FTA

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422

53 29 7 5

2011 2012 2013 2014 2015


6

The EU-UK Trade Models and their Implications on Mauritius

Model EffectsonMauri1us

Norwegian/EuropeanEconomicArea(EEA)Model

ImpactonTariffs:ThefutureMFNtariffsappliedbytheUKremainamystery.TheUKwillbeabletoestablish its own trade policy and could nego3ate FTAs, including with ESA States. The crucialques3on fromanESApointof view iswhether theUKwouldwish tomaintain theexis3ngmarketaccesscondi3onscontainedintheiEPAintheframeworkofanFTAwithESAcountries.CustomsandTradeFacilita1on:Underthesemodels,customsprocedureswillbenecessary,meaningthattraderswill faceaddi3onalcostsanddelays. Introducingnewcustomsprocedureswouldmeanaddi3onaladministra3vebarriers.RulesofOrigin:RoOwouldalsobedifferentfromthosecurrentlyappliedbytheEU.TheexclusionofESAproducts fromthebenefitsconferredbytheorigina3ngstatuswill inevitablyhappenunlessanFTAbetweentheUKandESAStatesisagreedandcumula3onallowed.

SectoralAgreements-SwissModel

FreeTradeAgreement(FTA)

CustomsUnion-TurkishModel

ImpactonTariffs: EUcustomsdu3eswillneed tobemaintainedacross thewholeEU+UKcustomsterritoryforall import, includingMFNandpreferen3alrates.TheUKwouldalsohavetoacceptthepreferen3alagreementsconcludedbytheEUwiththirdcountries.Forproductsthatarenotcoveredby the CU, theUKwould determine its own tariffs for the imports coming from the EU and thirdcountries.CustomsandTradeFacilita1on:therewouldbenocustomsborderandcustomscontrolbetweentheEU and theUK, this one adop3ng the EU custom code. Consequently, ESA goods entering the CUwouldfacethesame,uniformlyappliedcustomsrulesandproceduresasbefore.RulesofOrigin:theRoOwouldnotbeaffected.

NoPreferen1alAccess-WTOModel

Impact on Tariffs: If theUK and EU are unable to agreewithin the set 3me, trade between themwouldbesubjecttotheirrespec3veSchedulesonGoods.ESAStateswouldhaveadirectstakeintheWTOmembership renego3a3onof theUK that needs thorough, line-by-line analysis of their tradeposi3ons in the UK market and iden3fica3on of their offensive interests. This seems par3cularlyimportantforagriculturalproductswhererenego3a3onwouldalsoconcerntheEU.ApossibleEU–ESAStatesagreementwillhavetocarefullyobservethenego3a3onsattheWTO,asthehighertheliberalisa3on,thehigherwillbethepreferenceerosionsufferedbyESAStates.

Impacts on non-tariff measures: technical barriers to trade and sanitary and phyto-sanitary measures

UK-Africa Trade: Alternatives

• Sign a FTA, which would follow the example of the existing iEPA. In this sense, the UK would liberalise immediately the totality of its tariff lines in its trade, whilst African nations would adopt a gradual liberalisation approach

• WTO - Most-Favoured Nation: average customs duty 4.8 percent

•  G e n e r a l i s e d S c h e m e o f Preferences (GSP): the UK would eliminate tariffs on more than 5,000 tariff lines, whilst the average customs duty would be 2.4 percent, in comparison with the current 4.8 percent for the MFN. This would exclude upper-m i d d l e a n d h i g h - i n c o m e countries.

Brexit also means that the UK will no longer be part of all the trade agreements signed by the EU – despite being signatory to them-, due to the Territorial Application clause.

“[this] Agreement shall apply […] to the territories in which the Treaty establishing the European Community is applied and under the conditions laid down in that Treaty”. [See Article 63 EU-ESA iEPA]

The UK will be able to establish its own trade policy agenda. This gives the opportunity for countries to negotiate, as a group or individually, a trade arrangement that accommodates their needs. The foreseeable options are:

•  Commonwealth FTA: Covering 52 countries, it would account for 15% of the world’s GNI and a market of over 2 billion people. However, the benefits of improved preferential access to all Commonwealth States might be exploited only by t h e d e v e l o p e d a n d m a j o r emerging economies, leaving the Commonwealth’s small state without “much of a look-in”.

7

Policy implications Try to mitigate fallout

from lower Sterling and diversify towards new

markets & sectors

Strengthen domestic reforms/prepare for adjustment in

affected sectors

Adopt a regional position with other nations to have a coordinated negotiating

position

Find trade-offs within and across FTAs with

the UK

Timing:TheUKwillonlybeabletonego3atetradeagreementsonceitexitstheEU(March2019),whichislikelytocreateagap un3l a new trade agreement is achieved withMauri3us and other developing countries. A transi3onal agreement,maintainingthesame levelofpreferencesgrantedbydevelopedcountries todevelopingones,shouldberequested.Thistransi3onalagreementwouldrequireaWaiverfromtheUK’sWTOObliga3ons.

Way forward

CommonwealthGroup

Dra1ac3onpaper

Na3onalInter-

MinisterialCommi:ee

ACPGroup

Dra1ac3onpaper

EmbassiesLondon

EmbassiesBrussels

UK

DIT

MissionsinGeneva

WTOWaiver

EU

DGTra

de

WTO

Secreta

riat

WTOC

oali3o

ns

EU-UKNego3a3onIntelligence UK-E

UNego3a

3on

Intellige

nce

UKTPIntellige

nce,

FTAinten

3onsand

GSP

EUCurrentFTA

Enforcement

WiderStakeholders

Na3onalTechnicalWorkingGroup

WTOMe

mber

Inten3o

nsonW

aiver

RegionalTechincalGroupingWorkingGroups

Na3on1 Na3on2

Na3on3

Na3on4

Na3on5

Na3on6Na3on7

Regional

Posi3ons

8

Possible Roadmap for countries to take..

2017Q2

2018Q1

2018Q3

2017Q3

2017Q4

2018Q4

2019Q1

2018Q2

90°

MacroAnalysis

StageIGroundwork

ECandUKformalisetermsofNego>at'

Macro/Coali>on/Sector

IntelligenceMonitoringSystem

ACPCoali>onBuilding

Common-wealthCoali>onBuilding

45°

ProductStudy

IndustryConsulta>ons

PrivatesectorStrategyFormulate

135°

StageIIPosi>onspapersandImpact

Assessments

ECandUKSubmitoffers

IndustryEPA

Coali>ons

StageIVConsolida->on&

Conclusion

ECandUKConcludeNego>at'

Guaran-teesarereached

StageIIIFinalisa>on

ofNego>a>ion

s

ECandUKFinaliseseveralrounds

ImplementNego>at'Mi>ga>on

&Adapta>on

PrepareInfoon

RegulatoryChgs

Nego>atedoutcomes

Planbudgetitems

2018/19

Coali>on/NGOBuilding

Nego>a>onStrategyFinal


PrivatesectorStrategy

Implement

0° 180°

SuggestedFlightPlanforBREXIT

Posi>onPapers

PreparePlan"B"

PrepareAdj

Measures



IntelligenceMonitoringSystem

IntelligenceMonitoringSystemIntelligence

MonitoringSystem

Planbudgetitems2019+

StrategywithUKIndustry

UK-AfricaBusinessForum

EUFTAGroupForum

TakeStock

Paul Baker [email protected]

THANK YOU FOR YOUR ATTENTION

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