How big a drop in agricultural exports to the United Kingdom after Brexit? Simulations for sensitive products of four Visegrad countries.

Abstract

After the European Union (EU) was left by the United Kingdom (UK), a free trade area was established between these economies. Although bilateral trade in all goods is tariff-free, regulatory requirements make exports more costly and burdensome. We used a partial equilibrium model to analyze the implications of Brexit for agricultural exports from Visegrad countries (Czechia, Hungary, Poland and Slovakia). We assess trade creation and trade diversion effects resulting from an increase in non-tariff measures and border costs for 4-digit agricultural products identified as sensitive in each of the Visegrad countries. The simulations reveal that exports of sensitive products from Visegrad countries to the UK could decrease by up to 20%. While the macroeconomic importance of this change is not significant, for the producers of the sensitive goods such export losses are substantial.