Question

2. Last week, the United States and China signed a trade deal, de-escalating the trade war that was going on for two years. This event was well received by the stock market. What did this "deal" involve? Which points of contention between the two countries did it resolve, and what are some that require further negotiations? 3. The United Kingdom of Great Britain and Northern Ireland is set to leave the European Union on January 31, 2020. Enumerate some of the most important in your opinion - changes this will bring for the relationship between the UK and the EU. Ideally, at least one item on your list will be related to international trade.

Answer 1

2

The main points of United States and China trade deal are as follows:

• The Parties recognize that the United States produces and can supply high-quality, competitively priced goods and services, while China needs to increase the importation of quality and affordable goods and services to satisfy the increasing demand from Chinese consumers.
• Recognizing the importance of their agriculture sectors, of ensuring safe and reliable supplies of food and agricultural products, and of helping to meet the demand of the two countries peoples for food and agricultural products, [the Parties] intend to intensify cooperation in agriculture, to expand each Party’s market for food and agricultural products, and to promote the growth of trade in food and agricultural products.
• The Parties shall ensure fair, adequate, and effective protection and enforcement of intellectual property rights. Each Party shall ensure fair and equitable market access to persons of the other Party that rely upon intellectual property protection.
• To ensure prompt and effective implementation of this Agreement, the Parties establish the following Bilateral Evaluation and Dispute Resolution Arrangement (the “Arrangement”).
• The Parties shall work constructively to provide fair, effective, and nondiscriminatory market access for each other’s services and services suppliers. To that end, the Parties shall take specific actions beginning with the actions set forth in this Chapter with respect to the financial services sector.

3.The UK has voted to leave the EU, but not in favour of any specific alternative to EU membership. This poses a challenge for UK policymakers and the new prime minister, Theresa May. What should the UK’s relations with the EU be following Brexit? It is naïve to expect that economic considerations will be the only factor determining what relationship the UK eventually seeks with the EU, or what deal the EU is willing to grant the UK. If the UK government’s objective were to obtain the highest possible standard of living for UK citizens, it would not invoke Article 50 of the Treaty of Lisbon and start the Brexit process. But if Brexit must happen, it is useful to understand which option would do least harm to the UK economically. This option can then serve as a benchmark for evaluating the trade-offs required to obtain political objectives such as limits on immigration and “taking back control”.

Economically, none of the options facing the UK is preferable to staying in the EU. But joining the EEA and remaining part of the Single Market is the best available option, as it would minimise the disruption to the status quo and keep the UK closely integrated with the rest of Europe. Given the importance the new UK government – and at least part of the UK public – attaches to imposing controls on immigration from the EU, the EEA option may not be politically viable. But this only highlights that the government’s political objectives have economic costs. The question the UK must address as it debates the aftermath of Brexit is whether these costs are a price worth paying.