Brexit: trading uncertainties for third countries: What Brexit means for trade relations between third countries, the UK and the EU.

• Date: 01 October 2018
• Author: Bilal, San

The simple answer to how the United Kingdom of Great Britain and Northern Ireland's proposed withdrawal from the European Union (EU) will affect trade is increasing uncertainty. As we know, markets do not like uncertainty, nor do policymakers. All European Union (EU) trade partners are on the alert. However, specific consideration is needed for developing countries. Brexit could significantly impact their economic development through its impact on their trade relations.

Until 29 March 2019, the United Kingdom of Great Britain and Northern Ireland continues to be an EU member and thus current EU trade and regulatory regimes apply. However, economic operators and traders have started adjusting their activities in anticipation of Brexit, so trade and investment flows have already been partly affected.

The United Kingdom and EU negotiators have concluded a transition withdrawal agreement covering the period from 30 March 2019 until the end of 2020, according to which the UK will remain in the custom union with the EU, but not the EU Single Market, except for Northern Ireland (the backstop plan). The transition period can be extended to a maximum of two years, i.e. until the end of 2022. This means trade relations between third parties and the UK should continue to be determined by the EU's various trade regimes: its bilateral free trade agreements (FTAs), unilateral trade preferences (GSP, GSP+ and EBA) and most favoured nation (MFN) tariffs at the World Trade Organization (WTO).

However, some trade partners might object to this arrangement, arguing that EU FTAs and WTO obligations apply only to EU member states, which the UK would no longer be as of 30 March 2019. The UK would not be able to adopt alternative trade regimes with these...