Including postings in europe, and from 2007 to 2008. At the rand corporation, Robin Quinville is a distinguished fellow at the council and the senior advisor, and served as Vice President for European Union and special edition at the council. Howard howard shatz is the director of rand, initiated research, and the party Rand Graduate School specialized in economics and national security. And so many varied studies im hardpressed to find something he had. Michelle egan is our nonrand expert, one of our own at the Wilson Center, fellow in global europe program, professor at American University school of International Service and coordinates european and russian studies program. With that, you are waiting, i will turn it over to charlie. Thank you very much. Robin didnt introduce herself but i will mention she is just back from top political jobs at the us embassy in london and in berlin, and knows quite a bit about this herself and hope she will intervene in the discussion period. I would like to the Wilson Center for hosting us today, and look forward to our discussion afterwards. The rand corporations mission is to help improve policy decisionmaking through research and analysis. We are a nonprofit nonpartisan Research Organization and as such we take no position on brexit itself was the british voters decided to undertake this journey but through this study we seek to provide independent, impartial, evidencebased insights on what will be one of the biggest moments for the uk in europe after the end of world war ii. Our goal is to understand the economic consequences of brexit. To undertake a study we assembled the Congress Researchers from rand us and rands affiliate in europe, and as already introduced with me today, fran burwell who took a lead in the political analysis of the study and howard is our resident expert on Foreign Direct Investment. Funding for this report was provided by donors and independent research and Development Provisions of contracts with the department of defense funded research centers. In addition a grant from the Iconic Foundation supported work on game theory in relationship to brexit as well as outreach and dissemination activities we are undertaking. What we produced is a new piece of analysis but look at the Economic Impacts of brexit under different scenarios for the uk, the eu and the us. It not only provides a thorough Economic Analysis that uses the game theory insights to explain the strategy they are choosing. Through Economic Impact scenarios and game period analysis our study, the significance of the decision reached by the eu last week to move to phase 2 in negotiations with the uk. The discussion of the unions future economic relationship with the uk. Let me begin by discussing these scenarios. Our base case could be considered the no deal case, the uk leaves the eu in 2019 with reaching any agreement for preferential trade with remembering the uk, we call this wto rules because in such a circumstance britain will trade with the eu, the us and every other country, only wto band goods and markets for its consistent services. We then compared the following four scenarios, the successful negotiation of the uk eu trade agreement which the uk was seeking. Second, creation of a us, uk freetrade agreement which the uk has begun to discuss with Us Trade Authority but cannot begin negotiations until it withdraws from the eu and common commercial policy and the uk, eu, us, fda, freetrade agreement, and the transatlantic investment partnership, and the negotiation between 20132016 but now frozen in light of Political Development on both sides of the atlantic and finally an extended transition period in which the eu and uk trade arrangement do not change materially, but progressively come into affect. With the sake of completeness, the impact of three soft brexit scenarios unlike the hard brexit scenarios, the uk will maintain access to the eu Single Market in some way and apply common external tariff towards the rest of the world, three such soft brexit scenarios are one, the norwegian model which would involve the uk becoming a member of the European Economic area, 2, the swiss model which would have British Trade with eu based on sectorial arrangements giving the uk wide Market Access to apply eu standards and regulations and finally, eu uk Customs Union like the eu has with turkey. For each of the post brexit trade scenarios we use gravity Economic Modeling to measure the percentage of monetary changes in gdp growth, gdp per capita, trade and Foreign Investment for the uk, the eu and the us, we analyze the effect of changes on three kinds, changes in tariffs, in nontariff barriers, customs measures and standards with the force of another agreement, with nontariff barriers over time, progressive divergence in regulations. What did we find from this Economic Analysis. Economically worse off inside the eu under most plausible scenarios, and how much will it be . The option of leaving with no deal, applying wto rules would lead to the greatest economic losss, the worst deal for the british economy post brexit. And it would reduce the uks future gdp by 5 after ten years which is a loss of 140 billion in lost growth, this is approximately 45 of the expected Economic Growth over the decade. Under no deal the eu lose economically but nowhere near the same proportion as the uk. And it would be 0. 7 of overall gdp which is a loss of 97 billion so that uk would lose more proportionally and absolutely than the eu under the no deal scenario. Uk would face tariffs at wto levels on goods exports to the eu and in turn apply to eu exports to britain. The tariff levels themselves are not so high, we determined the uk would inspect in value all crossborder trade as would eu country that assessed the uk would move from eu standards over time resulting in significantly increased nontariff barriers on goods but these scenario would be worse for services. A mainstay of the british economy, as uk Service Exporters would have only access to eu 27 markets on the basis of the limited Market Access provided the wto and not a Single Market enhanced friction free access. No deal scenarios by far the worst outcome of the uk would be worse off in all the trade scenarios we considered compared with current status. Of freetrade agreement, the trade agreement the uk is seeking would be modestly better. 3 Percentage Points of growth after ten years compared to the wto baseline. This difference is because the fta would prevent increase in tariffs, and such an fta would involve a host of nontariff barriers to trade, customs checks to verify rules of origin and standards would have to be made. What a freetrade agreement with us which would only be possible once britain left the eu be able to substitute for the preferential access to the eu, our analysis is it would not. Us uk fta would be 2. 4 Percentage Points with no deal baseline. Significantly worse for the uk and equivalent fta might be with the eu. Largely because existing levels of goods and Services Traded between the us and the uk while significant are substantially less than between the uk and european neighbors. For the us moreover the value of an fta with the uk alone is negligible. It would provide 0. 2 , Percentage Points of gain for much larger us economy. The only truly beneficial trade scenario that we found would be a trilateral uk eu agreement. We found for the uk the t tip scenario is 7 Percentage Points of gdp better than the wt no baseline better than continued eu membership alone, since through it the uk would get preferential access to the us and eu marketplaces. One reason for this outcome being so good is in addition the eu and the us themselves benefit economic and the pool effective enhanced growth from these two larger economies would help the uk. However, we fully recognized the arrangement is seen as very unlikely to occur in political environments on both sides. We assessed other scenarios including transitional arrangements, norway, swiss and turkish. Transitional arrangements would be good as long as the nation remained in Single Markets but Economic Uncertainty would hurt investors. The norway, swiss and turkish models, with lower trade barriers good for Economic Growth, with a significant loss of uk sovereignty over regulations and standards and budgetary contributions from the uk to the eu. On those grounds these options dont seem politically viable in the uk. Accompanying our Economic Analysis in this study is a new online calculator which is now live on our website. The calculator allows policymakers and economists to alter the decisions for the Economic Impact on the uk the eu and the us after brexit and allows users to create other scenarios for examination as the brexit negotiations develop and trade talks begin. Chapter 4 of our study is based on an application mentioned at the outset of the social science of games. Our aim in using this methodology was to create a better understanding of how a wide variety of structural factors influence contours in outcomes of the brexit negotiations but game theory describe the eu first, and the discussions in the future relationships. Why the decision to move to phase 2 talks of the future relationship is so important, by using its leverage to commit britain to painful terms of financial settlement before entering trade negotiations, the eu sought to discourage other would be leaders, which we assess is the eus top priority. The eus approach could be seen as a 0sum strategy in which it wins when it can show the uk loses. For the uk, game theory suggests it is an attempt to pick apart European Union since all Member States have more at stake from the core, the uk can offer to match and the effort would be likely to backfire. It is a sensible strategy for the uk to seek to broaden negotiation beyond phase i issues, arrange positive tradeoffs. This explains why Prime Minister may made a commitment in florence a couple months ago to pay its obligations as a member rather than put them on the good negotiating table. Finally in the game theory chapter we assess us interests in the Brexit Process. It is not at stake. And the trilateral outcome, the distant prospect, the us missed the loss of the pragmatic British Voice in Economic Policy and as far as direct investment by american firms in the us is concerned from the data it appears to be more motivated by domestic Economic Opportunities and trade ranges. We therefore conclude in brexit, the impact on european decisionmaking, with political inSecurity Issues and European Cohesion more generally. The worst would be a greater disintegration of european construction which wouldnt be good for the eu either. And in the aftermath brexit, the political insecurity structures of europe have to respond to common interests by strengthening the overriding message from our study in the best interests of the uk and to a lesser extent the eu to achieve open trading of investment relationships post brexit. The big challenge is the brexit negotiations are likely to be complications of such an agreement. Between 2 parties adopted conflicting negotiation position this, with a 0sum game and that is why this moved to phase 2 is so important. In public both sides declared their intent to have a positive partnership but if different asterisks and aspirations lead the uk and eu to walk away from the table would be significant. This is likely to pose a number of political challenges for the us as well. The Common Ground for the uk and the eu is the fact the no deal option would be damaging to all parties trying to avoid this at the top of the agenda for the uk and eu as economic tops begin. And we look forward to the discussion, and look forward to moving on. Thanks very much. I give him nonrandom member of our panel the opportunity to give impressions of this. The reports, align your expectation, you have been looking at brexit and talking about this for a while. Does this come out wildly . Besides recommending the report, very transactional view of europe so this is a transactional report. The reports conclusion, no brexit outcome is the best scenario versus no deal is the most costly, what many other reports and analyses have concluded concluding her majestys treasury, tanks and others. From the sense that this is one of the worst and best options. It emphasizes something at the british economy itself is very unbalanced, heavily geared and waited towards services, it is a differential impact across regions. The city of london is concerned about Financial Services, we need to unpack the difference between trading goods versus traded services and that is very important and what tells us important that tends to be forgotten in the press, the first thing is as the report points out, the sequential nature of the agreement being in three phases puts advantages to the eu over the uk. And lost that argument, and this report turns out, first of all we need the terms of the uk exit which is just been agreed upon tangentially this week. The second issue which is framed differently in the press but the second stage is the establishment of a framework for future relationship. That is not a trade deal but a framework. The third issue is the transitional arrangements, this report lays out clearly, that sequence benefits the eu relative to the uk and highlights the asymmetrical nature of these negotiations, leverage goes to the eu, and by putting up different scenarios, it helps differentiate something that is not always clear to many audiences and that is the distinction on a Single Market, the custom union is about trading goods, about 0 carats and you have to have an identical trade policy with respect to nonmembers. The uk does not get its trade policy in that scenario and that is an important choice, doesnt get back to the trade sovereignty, Single Market is very different, that is the uniformity and indivisibility of four freedoms, Capital Services and labor and something the british tribe wanted and expected some indivisibility and some opt outs in terms of labor and enforced by the European Court of justice, something the british after the referendum indicated they didnt want. It is very important that the eu is a legal order, something that will not allow britain to cherry pick and you make that clear in the distinction is important in choosing these options and the report tells me something i thought was obvious but not talked about very much in advanced industrial economies which is carrots. We dismiss them as small. We often said tariffs are small, only 2 but now that this is opened up one of the eus commitments, one of the restricted quotas, like agriculture. As you point out 34 of uk exports to the eu are tariff free, a lot more, 70 plus, are now at risk. For me, attention is not just needed on the uk and eu negotiating tariff rate quotas in dealing with the tariff issue, not just let us divide what this is, they are starting to realize others will be affected by this are the wto states who wont say this is just a uk eu deal. This will broaden the debate about tariffs. The second issue is this report brings home that this is not just about trade. There are many many unintended consequences or issues at the uk and eu will have to deal with beyond the scenarios. I was struck by the range of issues we do not even comprehend yet. Just because we may or may not have a new border it wont be just about customs clearance and the irish tell me 80 trucks go back and forward per day. It will not just be about customs clearance but one of the most messy trade issues which is rules of origin. The second issue, the british will be subject to eu competition policy, mergers and acquisitions, outside dumping and so forth, the british will not be allowed to undercut because then they would be subject to antidumping issues. Thirdly, the eu has a lot of trade remedies and the british will be subject to some of the trade remedies they participate in. The budget is not just a bill for the prior commitments through the budget cycle of 2020 that this report indicates. 12 to 15 of that budget is paid for by the uk. What happened to the subsequent redistribution, which of the Member States subsequently are going to pick up the british bill . Finally, the issues that we dont think about because we focus on trade but the british are part of the economy with Nuclear Fission and nuclear materials, what are the costs of moving those . How will britain get access to Nuclear Cooperation . Lastly,