Cumulative Effects of Brexit and Other UK and EU27 Bilateral FTAs on the World's Wine Markets

23 Pages Posted: 22 Jan 2018

See all articles by Kym Anderson

Kym Anderson

University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University

Glyn Wittwer

Monash University - Centre of Policy Studies

Date Written: January 2018

Abstract

Since Britain accounts for a major share of the world's wine imports, and EU member countries include the world's major wine exporters, Brexit and subsequent UK and EU27 bilateral free-trade agreements (FTAs) have the potential to disrupt wine markets globally. We use a model of the world's national wine markets, projected to 2025, to examine potential impacts of Brexit and a series of follow-on bilateral FTAs. The scenarios assume a UK-EU27 FTA is followed by EU27 bilateral FTAs with Australia and New Zealand and then UK bilateral FTAs with those two plus South Africa and Chile (with whom the EU already has FTAs). The new EU-Japan FTA is also assessed. Brexit's impact comes more from assumed changes to the UK's income growth and the pound's exchange rate than to its tariffs. The bilateral trade consequences of the trade-diverting and trade-creating effects of each additional FTA are highlighted. They are then compared with the effects of a multilateral agreement to remove all wine import tariffs globally. Unrealistic though this is, it exposes the far bigger contributions to wine producers and consumers that could emerge from a single multilateral undertaking than from several bilateral or regional FTAs.

Keywords: Brexit, global wine market modeling, preferential trading agreements

JEL Classification: F13, F14, F15

Suggested Citation

Anderson, Kym and Wittwer, Glyn, Cumulative Effects of Brexit and Other UK and EU27 Bilateral FTAs on the World's Wine Markets (January 2018). CEPR Discussion Paper No. DP12621, Available at SSRN: https://ssrn.com/abstract=3106825

Kym Anderson (Contact Author)

University of Adelaide - Centre for International Economic Studies (CIES) ( email )

School of Economics
Adelaide SA 5005
Australia
+61 8 8313 4712 (Phone)
+61 8 8223 1460 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University ( email )

Arndt-Corden Dept of Economics
Coombs Building
Canberra, AK ACT 2600
Australia
+61 8 8313 4712 (Phone)

HOME PAGE: http://publicpolicy.anu.edu.au/crawford_people/content/staff/acde/kanderson.php

Glyn Wittwer

Monash University - Centre of Policy Studies ( email )

Victoria 3145, Vic 3800
Australia
61 3 9905 5421 (Phone)
61 3 9905 2426 (Fax)

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