Upon leaving the European Union, the United Kingdom creates an opportunity as well as challenge in designing another trade policy. Following the exit, it means that the policy makers have to deliberate new options for the country to continue trading with the rest of the world. Evidently, the foreign trading relationships of the United Kingdom will have to be redefined and renegotiated. Researchers suggest that the country is faced with immediate strategic choices in its trade policy approach (Dhingra and Sampson 2016; Katwala, Rutter, and Ballinger 2016). The new policy will necessitate a great deal of prioritization of its sparse diplomatic resources to get the greatest effects. Thus, whatever the option the policy makers decide to take, it is necessary to apply effective metrics to get the best possible results. Therefore, the paper discusses with research evidence the most effective trade policy for the United Kingdom to assume following Brexit.
Exiting the European Union does not mean that the United Kingdom has stopped dealing with Europe and the rest of the world. The country will still require a market for its products and will need to buy products from other nations. One of the main goals of the United Kingdom in leaving the European Union is to open it further to free trade (Mendez-Parra, Velde, and Winters 2016). The stated objective in the decision was to turn it into “a beacon for open trade” without being limited by the European Union regulations. The proposed trade policy for the country is one that will make it more global as opposed to being regional like would be by remaining within the European Union (Katwala, Rutter, and Ballinger 2016). “Global Britain” has been taking shape since the final decision to leave the regional block. However, it is important to note that at the moment, the policy makers have not developed definite and concrete proposals for a policy that will be used following the exit.
Given the fact that the United Kingdom has not thought of a clear trade policy to after the exit, there are options that are still open for the nation in the efforts to go global. All the options are geared towards allowing the country to become freer regarding assuming the ideas based on free trade. The United Kingdom appears to have room to expand its wings regarding increasing trade. A new policy should allow the UK to continue trading with countries in Europe, including those that are still part of the European Union (Dhingra and Sampson 2016). It will also be able to freely trade with the United States and other developed and developing nations. Even after leaving the block, the United Kingdom will not stop doing business with the nations in Europe, since this will continue without the limitations of the European Union regulations. In essence, Russia, Turkey, and Switzerland continue to be very important trading partners in the United Kingdom.
Regarding trading with countries within the European Union, the United Kingdom has the choice to remain within its customs union. However, such a choice means that it will have minimal changes in its relationship with the other members of the European Union. Thus, the United Kingdom will continue to trade its goods with the other nations without many restrictions. Under such an arrangement, the country will still use the current common external tariff set by the European Union (Anderson, Juden, and Rogerson 2016). In addition, the country will have the chance to assume any other preferences that it will negotiate with third nations. There are both advantages and drawbacks in remaining within the customs union, including the fact that it will not be required to introduce rules of origin. Thus, the country will be saved of the costly customs procedures. However, the U.K. will still be limited by the fact that it will not be able to carry out direct negotiations with third countries, in the world trade organization or bilaterally. Such negotiations will still be done through the European Commission.
However, it is possible that the United Kingdom will not, after all, remain within the customs union after exiting the European Union. Indeed, it means that the country will be free to trade and negotiate its trade agreements with different trading partners in Europe and the rest of the world. While this might be a challenge for the country will go back to the drawing board regarding negotiating trade agreements, it might be the best policy option (Lydgate, Rollo, & Wilkinson 2016). Whether within Europe or outside, the United Kingdom will have the chance to negotiate with other countries on the most effective trade terms and enter into business deals without directly using the European Union (Anderson, Juden, and Rogerson 2016). The nation will identify the trading partners that should be given priority and then assess the need for resources in undertaking the deals. Working outside the customs union will open a wide range of opportunities for negotiations. Clearly, this policy option provides a variety of options for the United Kingdom regarding foreign trade relationships.
Some of the things that can be done immediately include extraction of a United Kingdom schedule of commitment within the World Trade Organization from the European Union schedules, which presently comprise the United Kingdom. The country will embrace relationships for the multilateral trading system’s members who are not part of the European Union. In this case, the U.K. will have a chance to negotiate new agreements with the members of the European Union and other countries (Anderson, Juden and Rogerson 2016). The United Kingdom has the chance to negotiate new deals. Thus, it will provide the country the chance to either maintain the status quo, regarding trading with countries within the European Union or enter into new deals with countries outside the European Union. As such, the country has the chance to design and agree on future trade relationships with developing nations and the least developing states that are covered by the Generalized System of Preferences (GSP) of the European Union (Mendez-Parra, te Velde and Winters 2016). Eventually, the reality opens up a greater chance for the United Kingdom.
Whether other countries are in current negotiations with the European Union on the FTA or not, the United Kingdom has the chance to negotiate separate trade agreements with regional groups and individual countries. It is also possible to negotiate with other countries, including those that are not in negotiation with the European Union. The United Kingdom has the chance to consider its options without being restricted to the negotiations that are already in place or being made by the European Union. According to Lehmann and Zetzsche (2016), a policy that prioritizes trade with the United States and China will make a difference for the United Kingdom. Under the regulations of the European Union, it would be hard for the country to open up its options to trade with these countries. Therefore, by exiting the Union, the country has a greater chance to prioritize trade with whatever other country (Swanick et al. 2016). In essence, it is appropriate for the United Kingdom to invest in trade in other parts of the world, including Asian countries like Japan, Korea, as well as other countries within the ASEAN block.
The United Kingdom finally left the European Union, a situation that provides it a chance to redesign and renegotiate its trade policy relationships within Europe and the rest of the world. While there are major challenges for the United Kingdom in defining a new policy after exiting the European Union, there is a new opportunity for the country to come up with a policy of its choice. There is room to consider the options available for the policy makers and make a decision on the one that will provide the best possible results. While it could remain within the customs union, the United Kingdom might not consider this option. Instead, the country should deliberate other trade agreements outside the European Union. The policy makers in the country have a wider space to cast its net, with the best option being to prioritize those trading partners likely to bring in the best economic outcomes for the country, such as the United States and China among other developed, developing, and least developed countries.