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Brexit and the future of International Trade

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Essay Title – Brexit and the future of International Trade

In the globalization world, international trade is an important factor, The decisions on trade by some countries impact the whole world. Brexit also has a huge impact on the international trade of the European Union. First, we have to understand what BREXIT is.

What Is Brexit?

It is a decision by the United Kingdom of leaving the European Union which is an international organization that has 27 European countries in it (Mostly Western European Countries). EU (European Union) works on the common economic, social, and political policies which affect the trade policies also. When we talk about Brexit it is a “British exit”, the decision to exit the EU is taken by the UK because of the depreciation of the country’s currency against the dollar. The decision was taken in June 2016 and is to be realized in Jan 2020. This date of leaving was actually extended from Oct 2019 but due to political reasons shifted to Jan 2020.

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The Reason behind Brexit

The United Kingdom is an open economy which means fewer restrictions on international trade. Being a part of the European Union it was having a downfall in pounds against dollars. To save its economy from falling it decided to exit the EU. However, there are big implications of the British decision on International trade. It won’t only impact other countries but also the UK itself. Obviously, the decision of the UK and the voting that happened in favor of it, had some political biasedness or polarity, which is clear. International trade is fragile especially in the changing scenario of political policies impacting the economy and international trade specifically. But the decision was because of the sluggishness of the economy of the UK and the financial crisis which impacted the whole world. Of course, the UK was hit by one of the worst after that financial crisis. Its productivity declined and there was a clear need for some modern policy in international trade in the country.

Impact of the Brexit on EU

The UK is the largest partner of the EU. The EU customs union has its own tariff regulations which actually include all goods and services and have common ground on regulations. Getting out of that regulation of the UK and being freer can impact both the EU and UK. But the UK itself is interested in more partnerships economic which sound more impactful and successful for the economy of the UK

What the UK is seeking?

A new partnership to revive the economy is the priority for the UK. It actually wants to decide its own tariff for the trade outside the EU. The proposal is to decrease the frictions in the trade of goods. The UK is also targeting to reduce the impact of the financial crisis on its economy which impacted the wages, training opportunities for labor, and many more. The target is to appreciate the country’s currency which is a reflection of trade upliftment and besides that the whole economy.

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How Will Brexit impact the EU

The integration of the UK is very clear in the EU. It has a major contribution to the trade. EU may face more imports after Brexit. The market access can also be reduced for the EU. More than the loss in custom union and the trade it may actually be a loss of sovereignty. Most customers of the EU are indulged in trade with the EU; the exit actually can distort the trust of the customers. It also can affect investments and FDIs.

Impact on international trade

Positively, it can actually lead to the positivity of the leading roles. Multilateral rules can on the other side create adverse situations. Being out of the EU the non-discrimination can be tough for the UK and that can further affect international trade in an unpredictable manner. It can also make some countries more vulnerable who are members of the EU. Even compensating them, can reflect the more vulnerability of them. It can also lead to a change in the supply chains and can further create trade costs. It can also change the quality standards which may further impact the economies involved in the trade with Uk.

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