CEP News: Politico: Brexit Corner

Politico:
Brexit Corner - Three days to go

21 June 2016

Today Morning Trade talks Brexit and the future of U.K. trade policy with Swati Dhingra, a lecturer in economics at the London School of Economics and a member of the trade research program of the Institutions's Center for Economic Performance.

If Brexit were to happen, what would the U.K.'s negotiating position vis a vis that of the EU be?
It's hard to make precise predictions, but some insight on how the U.K. would fare following Brexit might be gained by looking at the experience of Canada, another medium-sized developed economy in close proximity to a much larger market, the U.S.
Are you thinking of Canada's experience with the North American Free Trade Agreement?
Yes. When you are a smaller market next to larger one, in this case the biggest market in the world, it is very hard to be considered an equal negotiating partner. The smaller partner usually ends up giving up more in order to obtain market access concessions from the larger partner. In the case of Canada and the North American Free Trade Agreement, Ottawa adopted the ''investment state dispute settlement,'' a dispute settlement mechanism that allows investors to bring claims directly against the government in case of provisions it deems unfair. An example is the proposal to introduce plain packaging for cigarettes, which the Canadian government dropped because American tobacco companies could have claimed that the proposal violated NAFTA.
Canadian companies have the same right under the ISDS court system, so why is it a problem?
The question is one of balancing investor rights with how much policy space is available to governments. There is also concern that U.S. firms are better able to take advantage of ISDS provisions than Canadian ones. The United States has won all of the 11 decided cases that it has initiated under the ISDS, while Canada has won seven of its 13 cases.
Would the UK be facing a similar scenario with the EU?
It’s not about ISDS per se, it's about the country finding itself in the position of having to give up on more than it would be willing to in other conditions. Let's take Schengen for example, an issue dear to the U.K., and an exception London has fought long and hard to have when it was part of the EU. If the U.K. were to leave the EU bloc, when it goes back to the negotiating table it might have to give up on the Schengen exception if, for example, it wanted concessions on the service side of the new trade deal.
- Switzerland frets it'll be a loser from Brexit:
Despite Switzerland likely reaping benefits from a Brexit due to the influx of funds from the City of London, it is afraid of currency appreciation as the Swiss franc is one of the few safe-haven currencies in times of uncertainty. If the franc appreciates Swiss exports that account for more than 50 percent of the country's GDP, according to the World Bank, will likely suffer.

Politico:Brexit Corner - Three days to go

Politico:
Brexit Corner - Three days to go