Evaluating UK Trade Post-Brexit: A Detailed Report on WTO Terms

This report analyzes the implications of the United Kingdom trading under World Trade Organization (WTO) terms post-Brexit, examining its potential to become the 'Singapore of the North Atlantic' by adhering to WTO regulations. It discusses the principles of non-discrimination and most favored nation (MFN) status, the necessity for additional trade agreements beyond WTO rules, and the potential disruptions to trade flows, including border checks. The report also explores the contrasting effects of monetary and fiscal policies, highlighting Europe's experience with a single monetary policy and multiple fiscal policies, and the challenges posed by the 2008 debt crisis and the recent Corona Virus crisis. It emphasizes the need for new monetary and fiscal policies to manage the current crisis effectively, given the interconnectedness of European economies.

DOING BUSINESS

Answer to Question 1
World Trade Organisation is a body which provides specific rules and regulations for trading
with other countries. The members of the organisation are bound to follow all the regulations
and this has helped in accelerating the world economy too. United Kingdom and European
Union, both are members of WTO and Brexit has levied the regulations of WTO on these two
specific bodies too. Singapore of North Atlantic, this name could be given to United
Kingdom if it follows all the rules of WTO concerning the international trade relations with
all its partners as well as with European Union.
World Trade Organisation specifies some crucial as well as favouring terms and conditions
for trading with other countries. The principle of WTO being non-discrimination which is
also known as most favoured nation principle (MFN), which accurately checks on the
discriminating exercise of any country doing trade. The principle states that none of the
countries could discriminate between the trading countries or partners. In case of United
Kingdom, it carries an intention of reducing tariffs on European Union then it would have to
provide the same reduced tariff rate to all the other WTO partners. European Union has a
well-developed free trade agreement and United Kingdom being an extension of the EU, it
has some free trade agreements with the states such as Canada, South Korea and Singapore.
In order to gain the maximum benefit from such agreements, United Kingdom needs to have
an agreement with each of the countries for its maintenance (Barnard et al. 2018). Failure of
such agreements could be unfavourable for British imports and exports as it would face tariffs
under WTO terms. The terms of WTO provides its members with a free trade position but an
additional agreement is always required. Though the trade barriers have reduced through
WTO rules the additional agreement produces a lower friction among the countries. United
Kingdom do not trade with the countries outside European Union on WTO terms and
conditions. For UK, United States is a non EU partner and this trade is regulated through 100

sectorial agreements which goes well beyond WTO regulations. As Singapore and Hon Kong
has a zero import duty on maximum or almost all the products, UK could be the Singapore of
North Atlantic through taking up the rules of WTO on EU relations. Almost half of imports
into the EU already enter duty free because the normal tariff is zero, because of free trade
agreements or because the EU already scraps the import duty on many products from
developing countries. The smooth flow of products without border checks would be disrupted
once UK is not a part of EU and as per the terms of WTO, every product is to be checked for
crossing a countries border. WTO’s Trade Facilitation Agreement would be nil or
inapplicable on the check of border check by EU or UK. As per WTO rules, the products of
each region must pass through a veterinary border inspection post with accurate checking on
all documents and papers. Technical Barrier to Trade states that the import goods presented
by EU, would make them liable if something wrong is witnessed in it, though it was a UK
product.
WTO rules conveys that the UK is the Singapore of North Atlantic as the follow up of the
WTO regulations makes the country a sole body which functions and carries but its activities
as per its own laws and policies. The World Trade Organisation builds up the United
Kingdom a sole country which is treated like any other member of the ruling body.
Answer to Question 2
Monetary Policy and Fiscal Policy are the two sides of the government financial position.
Monetary policy is the supply side or the flow of money in the economy while the fiscal
policy reveals the spending or the demand side of the government. Monetary policy conveys
the amount of money is in the economy and the fiscal policy which consists of taxes and
debts conveys the capability of the government to spend. Europe practiced one monetary
policy with multiple fiscal policies which provided it with a capability of growing as a whole
and developed at a faster pace.

In 2008, the debt crisis or the great depression experienced all over the world, reveals the
major issue of taking up different fiscal policies with single monetary policy. European
countries all worked through the one monetary policy which provided it with an ability to
expand and explore the capacity of each country. The increasing borrowing capacity which
was supported by the Germans provided European Central Bank with a wide expansion and
the lower rate of interest supported it for a long time. The inability to repay the debt and
reduced money flow, created the great depression and the different fiscal policies
contradicted with each other. The contradiction of each fiscal policy that is the policies for
repayment of the debt and collection of taxes impacted the proper functioning of each country
which increased the problem. The European Central Bank controlled the monetary policy for
entire Europe which maintained a single monetary policy while the fiscal policies were based
on the government policies and laws. Post 2008, the variation in fiscal policy in Europe has
been experienced which is based on a particular law. The basics of the fiscal policy remains
the same while the difference in the variables and rates exits. The control lies in the hands of
the government and this helped in maintaining the crisis. A limit to the borrowing has been
specified which provides the European countries with a boundary on borrowing. The current
crisis of Corona Virus, is an unplanned and unidentified crisis which has again impacted the
entire world along with the Europe. This crisis requires each country to support the economy
through maintaining the flow of money in a way that each country has not a stable but
something closer to it, economy (Youtube.com/watch, 2020). The cut off from each country
is the solution to the current crisis of corona, and this would impact the European countries
majorly as it has one monetary policy with different fiscal policies. The dependency of each
country in Europe is quite high which makes it a crucial scenario for the current crisis. The
corona crisis needs to be handled on new framed up monetary and fiscal policies.

Europe being a combination of large number of countries adds on to the risk of its
management. The European central Bank requires to maintain the flow of money in each
country at this essential and crucial time of corona which is a tough job. The European
Central Bank controlled the monetary policy for entire Europe which maintained a single
monetary policy while the fiscal policies were based on the government policies and laws.
The crisis of 2008, was managed well by the world through framing up new policies and laws
which helped in gaining a grip over the economy. The same scenario has returned and the
corona crisis needs to be handled by the world as a whole.

References
Barnard, C., and Menon, A. 2018. What would ‘trading on WTO terms’ mean for the
UK. The UK in a Changing Europe, 1-33.
Youtube.com/watch 2020. [online] Available at: <https://www.youtube.com/watch?
v=kbcvdKwmCtg> [Accessed 4 April 2020].