UK-Commonwealth Trade After Brexit


Badri Narayanan Gopalakrishnan
Sindhu Bharathi
Sumathi Chakravarthy


Post-Brexit trade deals between the United Kingdom and the USA, Japan, European Union, Australia, New Zealand and Canada include the elimination of various tariffs. This paper employs a dynamic computable general equilibrium model to analyse the impact of this on the Commonwealth countries. Assuming the status quo in terms of tariffs and free trade agreements (FTA) to prevail after the UK’s transition from the EU, it uses a simulation to predict and analyse the trade dynamics, while assuming the conclusion of zero-tariff trade deals of the UK with (a) Japan and Australia by 2021; (b) The USA by 2022; and (c) New Zealand by 2023, while also considering the impact of COVID-19 as part of the baseline. It also simulates the impact of the anticipated deal between the UK and Canada. In both scenarios, the model predicts a negative impact for many Commonwealth countries in terms of gross domestic product (GDP), trade, investment and employment. This is more pronounced in least developed countries (LDCs). It also forecasts that countries that are highly reliant on UK markets for their exports, such as Belize, Kenya and Sri Lanka, might suffer a slump in their GDP, trade, output and investment.

ITWP 2021/05 cover



8 June 2021

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