January 31, 2017 | By: Robert Basedow
For many months, the spectre of a ‘hard’ Brexit has been haunting European and British political elites. The determination of the current British government to cut off its ties with the European Union (EU) seems to be as strong as the determination of European decision-makers to make the United Kingdom feel the pain of leaving the EU. The hard talk has triggered concerns over the reinstating of tariffs and other market access barriers between the EU and the United Kingdom as foreseen under the rules of the World Trade Organisation (WTO).
Such a ‘hard’ Brexit is thought to hurt the European and British economy and to increase unemployment. Yet, as I will argue, a ‘hard’ Brexit and return to basic WTO rules for EU-UK trade is unlikely to happen. Policy-makers should rather reflect about how to limit non-tariff barriers in the form of regulatory divergence after a Brexit. International Regulatory Cooperation (IRC) offers an array of helpful instruments to weather this challenge.
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