Project Syndicate: Brexit in a Brave New World

Trade increases efficiency, reducing costs for all parties. Large economies have advantages with tariffs, and “The advantage of the larger economy is even greater when it comes to non-tariff barriers, which often result from differences in regulations and standards among trading countries,” explains Daniel Gros for Project Syndicate. “In most cases, the smaller country must simply accept the larger one’s rules.” The United Kingdom, as net importer, will not have a strong position in Brexit negotiations with the EU. A US deal is possible, but the UK's standing is brashly conveyed by the "America first" slogan used by the US president and the UK can expect to abide by fast-changing US standards and regulations. Small nations should realize that bilateral deals give the EU, the US and China greater clout, so much that agreements could become untenable. “If more countries follow Trump’s lead, and the rules-based global system continues to deteriorate … costs will only grow,” notes Gros. He suggests that the so-called bad deals in place now are better than no deals at all. – YaleGlobal