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Trade policyThe EU would remain a large economic blocNominal GDP in 2014, $trillion20151050US14.3%Japan China US EUBrazil1.8%UK3.5%EU277.4%Russia3.0%India2.8%UKThe EU would be a diminished trade blocShare of global trade by country/bloc, 2013Note: the UK figureincludes EU27 trade;the EU27 figure excludesintra-EU27 tradeSource: IMF WEOChina13.2%Japan4.9%Source: World Bank , GC calculationsThe EU has an open, liberalising approach to trade policy, in part due to UKinfluence. The UK, more than any other state, has put top-level politicalweight behind trade negotiations. The EU would be a less attractive partnerfor trade agreements if the UK was no longer part of the deal.• The EU’s top trade priorities are the Transatlantic Trade and InvestmentPartnership (TTIP) with the US and the Economic Partnership Agreement withJapan. But the EU is not the top trade priority for either the US or Japan, whoare preoccupied with negotiating the Trans-Pacific Partnership (TPP).• EU GDP would be around 15 percent lower without the UK. (3) While the EU willremain an attractive trade partner, its appeal will be reduced. The externaltrade of the EU 27 is only a little over double the total trade of the UK andnot much above half that of the US. (4)• The UK has championed a liberalising agenda for the EU. The UK was one ofthe strongest advocates for launching TTIP and wants an investmentagreement with China to lead to a full FTA negotiation. The UK was also thestrongest supporter of the Doha round. Successive UK Prime Ministers haveinvested political capital in the completion of trade deals.• The EU may, however, turn out to be a tougher negotiating partner that isbetter able to extract a good deal without the UK. This is arguably most truewith China, where the UK has been criticized for rushing to launchnegotiations, without obtaining prior commitments. The UK has also usedtrade as part of its development policy.• The UK leaving the EU may shift the balance in favour of more active use oftrade remedies. While some industries would welcome this and regard traderemedies as a legitimate means to counter unfair competition, this woulddisadvantage consumers and firms that rely on imported intermediates,particularly from emerging markets. It also risks a protectionist response.Impact on the European Union© Global Counsel 201523