Post-Brexit trade and investment: explaining the issues, formulating trade agreements and understanding the effect on UK foreign direct investment

This proposal describes three exercises designed to advance the public understanding of and policy-making engagement with the Brexit process.

Video Explainers:
Since early 2017, the UKTPO has produced four three-minute animated videos that help to explain the issues and the effects of Brexit. These have enabled complex issues to be presented in an engaging and comprehensible manner. They have reached wide audiences and, through this, may have helped to inform public opinion and affect political decisions. They take great care to use layman's terms and avoid complex terminology and jargon. We propose to issue four new videos over the next eight months.

Brexit defies prediction, but all animations will be on highly pertinent issues in current debates that are not fully understood by many policymakers, MPs, journalists and the public. Our initial list is:
- Tracing Brexit effects to constituency level.
- Rolling over existing trade agreements.
- Trade remedies.
- EU trade negotiating structures.

Each video will be published on the University of Sussex's Vimeo and You Tube channels, the UK Trade Policy Observatory website and UK in a Changing Europe's website. Each will be accompanied by a press release to the UKTPO's media contacts and notification to the UKTPO's list of 1000+contacts. Each will also be posted on the University of Sussex social media accounts (Twitter and Facebook) and the UKTPO's Twitter account. It is hoped that UKiCE would also share the videos across their social media platforms.

Brexit and Foreign Direct Investment:
UKTPO research has already shown that, after the referendum, aggregate FDI declined relative to expectations (Briefing Paper No. 23). In addition, certain car manufacturers made clear that Brexit is at least a contextual factor behind their decisions to run down UK operations. We aim to extend this work, first by disentangling decisions deriving from the general uncertainty of the Brexit process from those reflecting the erosion of the UK's attraction as an export-platform. A partial approach to this will be to relate the extent of the exit to the potential change in trading conditions post-Brexit. For example, in goods it may relate to the tariffs that would follow a 'no-deal' Brexit; in services, the loss of the Single Market will similarly impede UK access to EU markets to degrees that vary across sectors.

In addition, we will compare firms' investment in the UK with that elsewhere (EU and non-EU) and also explore differences between greenfield FDI and M&A FDI.

Rules of Thumb for prioritising FTAs:
DIT has informally expressed interest in having such guidance. Obviously political dimensions are important but simple rules of thumb (or a checklist) of economic factors, which could be used by non-specialists, would be a useful supplement. Some UKTPO Fellows created one such set of rules in 2004. Experience since the Brexit referendum has suggested that the current rules need to be updated to reflect recent developments in theory, data and patterns of world trade. The aim is to create an operational bridge between simple clear concepts and identifiable data.

As well as obvious issues such as proximity, size, existing levels of trade and protection and the similarity of income levels, social norms and regulatory regimes - all of which require quite subtle handling to relate rules of thumb to economic welfare - we will specifically add services, FDI and value-chains to the mix.

The output would be a short analytical manual accompanied by guidance on available data. To the maximum extent possible the measures recommended will be operationalised in the TradeSift software, which has been developed by some UKTPO Fellows. The intended users are government officials with time and budget pressures, think tank analysts and academics teaching non-modelling courses.

This proposal offers a programme of original research and synthesis alongside communications and engagement that will analyse trade policy and provide guidance on future options for the UK's post-Brexit trade policy.

The UKTPO strives to input directly into policy-making and engage with key policy-makers as well as with those who scrutinise government and can influence policy through parliament and the specialist media. Through a comprehensive outreach programme consisting of written reports, papers and blogs, media articles, some 25+ events and hundreds private meetings with high-profile policymakers, the UKTPO has become an influential player in the debates around Brexit and post-Brexit trade policies, not only in the UK but also abroad.

The beneficiaries comprise four distinct groups:

1. Policymakers [ministers, policy officials and civil servants]
2. Influencers and scrutinisers [MPs, notably through Select Committees, think tanks, journalists,]
3. Affected parties and individuals [business, civil society, trade unions and associations, general public]
4. Academics [Economics, Business, Law, International Relations]

UKTPO outputs will enable target audiences to help shape trade policy, based on detailed and rigorous analysis, to ensure it is in their best interests and robust in the long term.

Demand for UKTPO analysis has been manifest in many ways since July 2016 (see Pathway to Impact for full details). The Observatory has a dedicated Business Manager responsible for all communications and engagement. The Business Manager will leverage existing networks and build new ones to ensure key stakeholders, as well as the widest audience possible, are informed of the learning and findings from this project. Engagement, further outlined in Pathway to Impact, will continue throughout the project and beyond.