Transcripts For CSPAN3 Global Impact Of Brexit 20171215

Corporation projects the u. K. Is likely to be economically worse off. This study explores the effect brexit will have on the u. S. Economy, politics. This is live here in washington d. C. On cspan 3. Ill introduce our expert panel. We will turn this over to michelle for some comment and then ask them to weigh in. Charlie reese, Vice President at rand. He is former ambassador to greece. In iraq he served as coordinator from 2007 to 2008. Fran is a distinguished fellow at the atlantic council. Until january 2017 she served as Vice President for special initiatives at the council. Howard is senior economist at the Rand Corporation and profess so er at the rand school. He has written on so many varied studies im hard pressed to find something he has not written on. Michelle is our nonrand oeexpe. She is professor at American University school of international as much as and door d coordinates their international program. Thank you very much. Robin didnt introduce herself but show is just lack from our top political jobs and knows ki quite a bit about this. I hope she will intervene in the discussion period. I look forward to our discussion aft afterwards. The mission is to improve policy and Decision Making. We are a nonpartisan research organization. By take to position on brexit itself. It is the british voters that decided to undertake this study. We provide evidencebased incites on what will be one of the biggest moments for the u. K. And europe after the end of world war ii. We a semiabssembled a team and already introduced with me today are fran and howard. Funding for this report was provided by donors in the independent of rands contracts for the department of defense. In addition it supported the work on game theory in relationship to brexit as well as some of the outreach activities we are undertaking. What we produced is a new piece of analysis under different trade sen ncenarioscenarios. It provides a thorough Economic Analysis but uses game theory incites. Through Economic Impact scenarios our study helps to explain the significance in the decision reach last week to move to phase 2, the discussion of the future economic relationship with the u. K. Let me begin by discussing the scenario. It could be considered the no deal case. It could be that they leave without reaching any agreement for trade with the remaining members of the eu. We call this wtl rules. In such a circumstance in every other country only under freights for goods and established market. We then compared the following four scenarios. First the successful negotiation of a u. K. Trade agreement which the u. K. Is seeking. Second the creation of a u. S. uk. Trade agreement. It was under negotiation between 2013 and 2016 but is now frozen. And an extended transition period which they do not change materially. Now, for the sake of completeness we also assessed the Economic Impact. It is unlike the hard brexit scenarios we assume they will maintain access and apply the external tariff towards the rest of the world. Three are one the norwegian model. Two the british model which would be based an a series of bilateral arrangements. And finally an euu. K. Agreement. Our study used gravity economic modelling to measure the monetary changes in gdp growth and per capital. We analyzed immediate changes in nontariff barriers including customs on another agreement and over time through the dis. The uk will be economically worse off under most scenarios. The key question is how much worse off will it be . The option of leaving it with no deal and applying the rules will lead to the greatest Economic Losses. It is clear no deal is the worst deal for the british economy post brexit. It would reduce the future gdp by 5 which is a loss of 140 billion. Under no deal the eu would lose out but by nowhere near the proportion of the uk. The Economic Loss would be about 0. 7. The uk would lose more absolutely than the eu under a kn nodeal scenario. Why would it be so damaging . Because they would face levels on the goods expert and would in turn apply them. Although the tariff levels are not so high we determined that the uk would have to inspect in value all cross border trade as would the eu country. They would result there significantly increased nontariff barriers. A mainstay of the british economy. As uk Service Exporters would have access to markets and not the Single Market enhanced virtually friction free access it has now. The uk would be worse off in nearly all of the trade scenarios as compared to the current status. A Free Trade Agreement with the eu, essentially the spoke trade agreement would be modestly better. So would a Free Trade Agreement with the u. S. Be able to substitute for the uks access to the eu . Our analysis suggests it would not. It would only be 2. 4 better than the no deal baseline. It would be significantly worse for the uk than the equivalent might be largely because existing levels between the u. S. And the u. K. Are substantially less than between the u. K. And european neighbors. So the only true would be a trilateral agreement, much like the ttip might have been. We found out it would be 7 Percentage Points better than the rules baseline, even better than membership alone. They would get access. One reason for this being so good is in addition the eu and the u. S. Themselves would also benefit economically. The effect would help the u. K. We understand that it is very unlikely in the current political environmenenvironment. We addressed other scenarios including the norway, swiss and turkish models. Economic uncertainty would hurt investors. The norway, swiss and turkish models would imply low are trade barriers would come with a significant loss of uc. K. Sovereignty and budgetary contributions. On those grounds these options dont seem politically viable in the u. K. Accompanying our analysis in this study is a new online calculator which is now live on our web site. It allows policymakers and economists to alter the key trade assumptions. It allows them as the brexit negotiations begin. Chapter 4 is based on an application of the social science of game theory. It was to create a better understanding of how they are influencing the contours and out dp outcome of the brexit negotiations. It explains why they sought first to settle the divorce settlement before discussing future relationships. From the stand buoyant tpoint i a strategy in which it wins when it can slow the uchl. K. Looses. Since all Member States have more than the u. K. Can offer to match and efrlt would be likely to backfire. It is also a sochbsable strategy for the u. K. To seek to broaden the negotiation as the more issues on the stable will help arrange positive tradeoffs. This explains why Prime Minister may to pay rather than put them on the negotiating table. Finally we assess finally in the study we assess u. S. Interests. Our most important is that core u. S. Economic interests are not at stake. The only scenario that we examined that had an impact was the the ttip outcome. It will miss the loss of the pragmatic voice in eu economic policy. As far as direct investment is concerned from the data it appears to be more motivated by domestic economic opportunities. We conclude that the bigger u. S. Stake in brexit is the potential impact on european Decision Making where they worry about political issues and on european cohesion. The worst impact would be if brexit lead to a greater broader which wouldnt be good for the uk either. It is to achieve some sort of the open trading post brexit. The big challenge around trade are likely to be the complicationsover complications of coming up with seech such an agreement. The agreement to move to phase 2 is so important. The nodeal option could be damaging to both parties. It would be at the top of the agenda as kplik talks begin. There is much more to our study. To me these are the highlights. Howard, fran and i look forward to our discussion and look forward to moving on to our discussion period. Thanks very much. I will give the nonrand member of our panel to give her impression of this. Did it align with your expectations . You have been talking ability this f about this for a while. Thats a great question. Besides recommending the report, because i would start off and say britain friends to have a very transactional review and this is a transactional report. No brexit outcome is the best scenario and no deal is the most costly. I think is british economy itself is heavily geared and weighted towards services. So within britain itself there is a did i have rfferential imp. I think we need to sort of the unpack the difference between trading goods versus trade and services. That is very very important here. I think the report tell us something very important that tends to be forgotten. The first thing is as the report points out the sequential nature of the agreement being in three phases puts the damage over the uk. They wanted things simultaneous. I would say first of all we need to terms of the uk exit which has just been agreed upon this week. The second issue, which is framed differently in the press but the second is the establishment of a framework. Thats not a trade deal. Thats framework. The third is the establishment of the transitional arrangements. This report really lays out clearly why that benefits them. It is a distinction between a Customs Union and market. It is about trading goods. It is about zero tariffs. You to have an identical trade policy. So the u. K. Doesnt get its own trade policy in that scenario. It is a very important choice. It doesnt get back sort of the trade sovereignty. It is about the uniformity and indy visibility of the four freedoms. It is something where the british try wanted and expected some sort of indy visibility and some i suppose opt outs in terms of Free Movement of labor. It will be enforced by the European Court of justice, something they indicated they didnt want. So i think its very very important that the eu is a legal ofrm order. It will not allow britain to cherry pick. The report also tells me something which i thought was very obvious but is not talked ability very mump, which is the tariffs. We often dismiss them as small. We often said the tar rafs are small. They only 2 . What are the high tariffs and things like agriculture. So as you point out, 34 are tariff free. That means a lot more, 70 plus, are now at risk. And so for me i think attention is not just needed on the uk and eu negotiating tariff rate quotas its not just let us divide what this is, i think they are starting to realize others who will be effected by this, other states who wont say this is just a u. S. A uk eu deal. I think it will broaden the debate about tariffs. The second issue is that this report really brings home this is not just about trade, there are many unintend consequences. Here i was struck by the range of issues that we do not even comprehend yet. First of all just because we may or may not have a new border it wont be just about customs clearance and the irish tell me that 80,000 trucks go back and ford wa forward per day. It will be one of the most messy trade issues. The second issue will be the british will be subject to eu competition policy, mergers and acquisitio acquisitions. So the british will not be allowed to undercut because then it would be subject to antidumping issues. Thirdly, the eu has a lot of trade remedies that it uses. The british will be subject to some of those trade remedies they often par tticipated in. Its not just a bill for the pry jor commitme prior commitments. 12 to 15 is paid for by the uk. What happens to the redistribution . Which of the Member States will pick up the british bill . Finally the issues that perhaps we dont think about because we so focus on trade but the british are part of nuclear materials. What are the costsov of moving those . And lastly, regulatory agencies. The europeans have created a large number of regulatory agencies and areas of interest to the United States to yecreata much easier access. Those regulatory ageneral scies now moved. Secondly, what kind of access will the british have . Finally the one that struck me as less salient in terms is that we will have border issues in spain and whether e will also h issues in cypress. The range of things we think about is interesting. For the british i think theres something different. In the United States you a nafta. The british will have a patchwork of trade agreements they have to any geshuate. And so i would say thats something that the british will have to confront. I think the report also tells us not just about tariffs but also about nontariff barriers. They are hard to quantify. They are hard to deal with. I think that the report gives us a kind of caution here which is very important in this debate. Overnight the British Regular la lregularlation regulations ae not going to diverge. I think it is an important Economic Impact. And the last two things would be that the eu is moving on. The eu is developing with eu japan, eu mexico but the british are not part of that. The question is those agreements that are not already signed, will the eu have to relook at them because the british are not part of them . And so i think this is very very important and i also think from the british point of view, you know, the scenarios you create that dont look terribly good, the eu is realizing how different trade and investment is. They are separating treaties. If i looked at highway political sized investment agreements are in the eu, they going to get a trade deal. Trade on goods but investments quite a long way off. Do you want me to continue or finish . I happen to know that in the audience there are a lot of people with very lively views. I think well turn to fran now and then to howard and then open it up. I am confident it will be generally lively debate going on here. I will turn it over to you. Michelle highlighted this range. We are in the next phase now. Tell us what that means and what other Strategic Policy consequences we may face. I think today is a great day to be holding this panel because just before we came in the room they concluded the their meeting and i was trying to find out if the guidelines had been published yet but they havent yet at least not as we walked in here. Yes. Its a summit. This is a summit of all of the ye european leaders. The british were not teresa may was in brussels at dinner and then left. We can move to the next phase. They have in the agreement that was approved this past week, the report that was approved this past week made some decisions and come to an agreement about Citizens Rights and about the financial settlement. There are still questions in both of those areas. These are not in significant accords. Where they have really kicked the can down the road is the agreement about ireland where you can see contradictory provisions. Some satisfy the irish who threatened to use the veto if there will be a border between the republican and north of ireland. That set of issues is going to go into the next phase even though it should have been resolved. I think we are now looking for the next few months to be focused on two things. One is the transition. I think its possible we will reach a relatively fast agreement. The british have slowly come to the realization you cannot negotiate a trade agreement even with best friends. Its not done. So the transition would be one in which the uk adheres to all of the financial responsibilities and obligations and adheres to jurisdiction. Thats one of the decisions, how long can it go on . Thats one of the negotiating points. So they will be a taker, a recipient of eu rules. One issue i can see coming up in this that is unclear to me is whether the british will continue to receive their rebate. I think it will be a problem or a Sticking Point as they work towards the transition. There were also comments as the leaders were leaving the summit today. There needs to be some kind of understanding. There is in the guidelines an agreement within the eu that the spanish will have essentially approval over an agreement. This could be a Sticking Point over the long term. Once it is done then one would move onto the future relationship. Here the Priority Issues are the trade agreement and indelucludi customs. The challenge is that the uk has been kind of schizophrenic. Schizophrenic might not be the right but but it has been uncertain. Cherry picking deciding you can have parts of the Single Market is not going to work out. So the other problem with these types of agreements is that depending on what is included the negotiation of a trade accord operates urnder qualifie majority voting or unanimity which is a much more difficult hurdle. If it includes things there is still issues to be worked out then everybody must approve. You can go through a situation where you were waiting for them to approve this. If you keep it to a more narrowly approved agreement it just gets approved at the eu level. Even if it is just the eu articles with agreements with third parties and britain will now be a third party which is a big mental leap. It will not be a moember. It will be just the same as we are, just the same as skbjapan terms of its relationship. If you an agreement with a third party under article 207, if it includes services and intelle intellectual property. Services is the major part of the uk economy. So we have proceedural issues that will play into what with type of agreement will be pursued. Let me say that one issue that charlie and michelle did not bring up so far is data. So the transfer of data which h. They will adopt it protects personal privacy and the transfer of data but it is unclear whether after they leave and as their own privacy regulations may start to diverge a little bit will they have to think about the amount of data that goes back and forth between Different Bank and all of the private areas. As they talk about the trade agreement including customs r, s that will again bring up the irish border question. I expect it will be one oft l t last things. It will be a determinant of what a border is. We will also have to see where Financial Services is. Is it a stand alone agreement . Is there an agreement . What regulations do they take to rule about euro clearing and whether it needs to be done in a member state. The other element of calculation is while this is going on between the eu and the uk as has already been brought up they starting to scope out what a Free Trade Agreement would look like. There will be pressure applied on the uk to not agree to certain things by the americans so that they can have a more positive agreement between the u. S. And the uk. So that will be in a sense a triangular negotiation without that being formally so. One of the things i think we all learned in writing this and in watching brexit is how the unpredictable becomes the norm and highway every day you learn theres some new complication that needs to be resolved. There is all sorts of stuff you dont anticipate that is going to come up. I think also we dont no, i how the personalities involved are going to get through this phase of negotiation. What we have seen over the last couple of weeks is the weakness andy visions within the government and ability i would say surprisingly so to remain united. There are little squabbled on the edges but they are staying pretty firm. So i think we have a difficult and uncertain road ahead to actually find out what will be the future relationship. I can stop there but i do want to say that president has outlined as other areas of negotiation in thinking about the new relationship, antiterrorism Police Cooperation and particularly defense and security. So we will see i think some negotiations along those lines. What access will they have to the European Defense fund . They did not join this but will they have relationships with it . I would point out that atlanta, which is perhaps one of the most successful Eu Military Missions is currently headquartered in the uk. There are all sorts of issues to be worked out as well. I will give howard a chance to come in here. Im confident well come back to the question of the security and defense implications as well. How baar howard, i was quite taken with the calculator, i must say. I was wondering if you could give us more on that and a little more on what you would program in there if you were going to come up with additional scenarios. Give us a little look into that if you. The calculator is designed to show the results of the sen n scenarios first. We chose eight scenarios to model. We chose really the most likely scenarios that the uk could face. The hard brexit scenario, this is the nodeal scenario. The other three of them make a tremendous amount of sense. In general countries trade with partners that are closest to them. Charlie mentioned we use to we used a gravity model. You can say what about a Global Britain . We took it very seriously, but we think that you might describe global bre tan a l britain a little bit. Sure. They can do multiple trade deals with amany partners at once. It can build a Free Trade Network that can be better than the agreement with the eu. By doing by modelling the uk ericuk uk eu we are showing the ground. Doing a one trade deal with the u. S. Is much easier than doing multiple trade deals with multiple countries especially with multiple large countries. I think we have seen an example of that with the trip to kichin. So a Global Britain idea would be many years and probably not really duplicate the size of the u. S. Economy. So we start with those scenarios and then we go into the calculator. It is assumptions what would tariffs look like in a uk u. S. Free trade agreement . How much higher would they be than they are now . We cant say our assumptions are correct. We make assumptions based on the data. It allows you to say okay, rand, i disagree with you that nontariff barriers will rise by 5 relative to what they are now. I think that we will have nontariff barriers that wont rise. They will be 0 . You can program that in and model will then calculate the results for different a. What will uk trade look like . You can look at nontariff barriers for services. Their trade surplus is in services, their trade deficit is goods. You can say what will the uk economy look like . What will the eu economy look like if service is frictionless . And in general what we find or what you will find is the you recollect the uk is slightly worse off than it would be under full eu membership. Now, i know many of you in the audience have questions. I know some of you to be very good questioners and talkers. I will open it up to the floor. I warn you, i start asking questions myself and then youre just hostage to me but i would rather that you all be engaged in this since we have our experts here. I will take a coupleov of questions at a time. Wait for the microphone and identify yourselfme. We want to know where youre coming from. Okay. So i open it up for you all. Okay. Gail. Im gail maddox and im at the u. S. Naval academy. I look at the Security Issues than the economic issues. There is an area that is overlap. I would be interested to hear your reactions. That is the ed ff, the European Defense fund. I thought oh, yeah, here is another attempt. I dont know. It seems to me we that the union has really been pacing itself and has seemed to at least want to appear that its really going to go down this path as well as with the. I would tlilike to hear your analysisov of how the edf and industrial industry, defense industries. I think there is a lot of overlap there with what you all have been looking at. Thank you. Terrific question. I am going to ask you to just go ahead and take it. Okay. You are right. The edf is and for those in the audience who dont know about the edf, the idea is that, for once, after a lot of efforts to build the more coherent eu defense policy that would then give the European Union a political and defense power base that would not only be linked to the United States and to nato. The edf, innovation of that is that it would allow for common acquisition of highpriced defense assets that then could be shared among eu Member States and dedicated to what contingencies that they might need. It is overperforming expectations, shall we say. This is a good thing, i think, for the what matters to the United States, which is that the European Countries collectively build more defense capabilities and thereby maybe a greater contribution to our common Security Issues. Now, keep in mind that many European Union countries not many but a handful of European Union countries are actually not members of nato. And so, to getting their contributions to building up defense capacities that would give more pause to adversaries on their borders and elsewhere in the world is a good thing. One impact that we didnt make much of in the chapter on this but is if our economic assessments are right, the uk is in for a period of Slower Growth than it would have had otherwise. And were already seeing some very serious budget austerity in the uk, and if we are right, it will only get worse as the uk leaves the Single Market and suffers the economic consequences that we are modeling, and that will affect the amount that the uk can put into its Defense Sector. And brexit itself will have an impact on the uks Defense Sector, the Companies Like British Aerospace that are Major Players in the defense supply, defense goods worldwide. How successful, what kind much access would they have to the spending on edfs if and the way the Defense Sector works, it is, in a sense, one of the more nationalistic sectors. There is a binational or at least bieuropean instinct. I know that many Major Companies in the British Defense business are worried about that. And so that is likely to be a consequence. I know you want to come in on this as well. I want to say its a broader discussion than the European Defense fund in that, a few years ago, the eu started passing legislation which is now on the books and implemented by the Member States, to not discriminate in defense procurement that did not involve Large Research projects, as in, air bus doesnt need this because their projects dont have a lot of research. If youre trying to buy boots, ammunition, uniforms. Youre not supposed to discriminate between eu members. Its always been very unclear whether there was then a possibility that you could discriminate against noneu members, such as the United States. And it has been a matter of concern, but i think the british are now going to find themselves on the other side of that. So, i think, along with the things that charlie said, there is a gradual move within the eu to bring the Defense Industry into the Single Market. It will be slow, it will be stop and go. There are very much nationalist impulses, so i dont expect that the big projects will be affected in the short term. But it is there. And the british will find themselves outside. It will be another trading issue. Yeah. Can i ask you a question on that myself . The last uk security and defense review was in 2015. Then the brexit vote was in 2016. Would you anticipate they need another defense review prior to five or ten years down the road . Prior to five or ten, i would imagine so. David may have something to say about that. But i but what i think and what would make logical sense is not necessarily what governments do. So i dont know whether they will actually take that strategic perspective. I think, given what charlie said about the budget which i very much agree with, its rather a divisive issue within the uk. Mmhmm. So i am not sure that doing something that clarifies that is necessarily what governments want to do. I think we face this larger question as well of the government stability, as we head towards 2022. I think london bridges haelecti held by 2022. If not before. If not before. Because the the elections we didnt really talk about the elections last summer, in june, in which Prime Minister may tried to increase the majority of the government in order to increase her negotiating situation with the eu. And lost that very seriously such that they are actually reliant on a support agreement with the dup, the nationalist party, for them staying in office. That could fall apart either just because of the passage of time and problems within the torrey party or because we get close to march 19th when the end of the first two years of negotiations about leaving the eu have to be resolved or extended and the irish questions that you referred to will come to the fore. And the ulster party has very firm views on the irish questions. And if they didnt if her ma jesstys government in london adopted an outcome which either majestys government i adopted an outcome which either that solved the problem on the island by establishing a hard border or inspection for goods back and forth between ulster, Northern Ireland and the rest of great britain, that would probably be a governmentending outcome. Wow. Okay. I am going to go over here to peter. Dont worry, yall. I am coming back to you. Steve. Steve, how are you . I teach at American University. I have a couple quick questions. They may entail longer answers. Following on what fran said about the unexpected becoming possible and what charlie just said. What do you think a corbyn government would do with brexit . A second one is to howard. Howard, did you consider any general Equilibrium Models when you were doing it . What would that have looked like as far as your calculator . Do you want me to answer that . Yeah, go for it. Jeremy corbyn, in the election last summer, was rather vague. They seemed to be tending a little bit towards softer brexit options that and in the continuum we tried to capture this in our scenarios but there is a continuum of options that are generally characterized as the soft brexit. And there is norway, turkey and swiss. Keith farmer, the deputy prime the shadow, shadow, yes. Thats what i meant. Shadow deputy Prime Minister candidate or the spokesman for the labor party on eu matters, has recently been talking more about how they the labor party would not want to leave the eu Customs Union. Now, maybe a little diversion for those in the audience who are not deep trade wonks. But a Customs Union is what the eu started out as being, which is there is a common external tariff that 28 members of the eu apply to trade with every other country in the world except the one country, turkey, which is in a Customs Union. Turkish goods turkish industrial goods enter into the eu duty free and turkey is obliged to apply the common external tariff to everyone. If the outcome of brexit were to be that the uk leaves the eu, so it no longer is a member of the Single Market in which its Customs Union plus. They have essentially adopted the same regulatory matters and they dont have any customs inspections. So they but they stay within the Customs Union. The result of that would be that they would give up the vision of a Global Britain because, in a Customs Union, if the uk stayed in a Customs Union they wouldnt be able to negotiate a Free Trade Agreement in the United States or canada or anywhere else. They would only take those agreements, like the canada one, that the eu has itself collectively negotiated. And my own guess is that, when labor really has to get serious right now theyre sort of against the and pointing out the conservative partys internal conflicts and taking advantage of difficulties as most opposition parties do. They point to the governments shortcomings rather than lay out in great detail what they would do. It does seem that what they are talking about is more on the Customs Union area rather than the Single Market because the a Single Market soft option would, like the norway option, would involve Free Movement of labor. And that is unpopular in the labor base the strong labor constituencies because the famous polish plumbers and other nationals that have moved to britain under Free Movement of labor have been unpopular with the labor base. So i think my own guess is that thats what theyre talking about, but they are trying to keep their options open. Steve, your question also included one for howard. Let me talk a little bit about the modeling. All credit due to rand colleagues who did most of the modeling. A good example of transatlantic cooperation. Seamless, no language barriers. Everything worked out well. Data transfer too. Exactly. Services trade at its best, i would say. We used a structural gravity model, also known as a new quantitative trade model. It allows us to use multiple sectors, multiple countries and intermediate goods. It gives end points. We could have chosen a general Equilibrium Model. We opted not to do that for a number of reasons. The structural gravity model was shown in the past to give good answers and we had a model we could use. Accurate answers. Not just good answers, accurate answers. Not just the answers you want. Right. Thats the first thing. The second thing is, because it had been it had been vetted and it was accepted in the profession. A general Equilibrium Model we would have had to program that from the start. We would have had to make several different choices. We would have had to have chosen the parameters for those an example of a parameter, we would have had to have chosen exactly how does trade respond to changes in prices. That would be how does trade respond to tariff barriers, changes in tariff barriers. There were a number of other modeling choices. The other issue against general model is its something of a black box. You dont really know how you get the answer. Its heavily dependent on a lot of model assumptions. There are advantages. Had we had more time. We could have seen the pathway of trade. So with the structural gravity model, we only see the end points. How do we end up . We end up this much poorer, with this much more trade, this much less trade. With general Equilibrium Model we would have seen how the trade evolved. Had we been able to include sectors we would have seen how different sectors changed over time. So modeling choices, we looked at that but we thought that the answers in the end, given the cost and effort, would really be not much different, not much better. And possibly worse. Thats the first thing. The second thing is, i should add we did model Foreign Direct Investment. There we used a simpler gravity model because, in general, Foreign Direct Investment data are not rich enough to use more complicated models. And the results of fdi were very similar to trade, which is that the uk just does not do as well as it does under any arrangement in the eu. I know youre going to be reading the appendices. There are some generally scary equations in there. [ laughter ] all right. Ill go first to moira and to you. Ill take two questions at a time. Hello. I am a former wilson fellow. My question is about ireland. Brexit has major implications for ireland. I was wondering, looking at your scenarios, did you look at the how each scenario might affect ireland and their economy and, also, do you have any thoughts on what the most likely or perhaps the well, most likely and perhaps also the best scenario for ireland and the uk on border and trade moving forward . We have the ireland question. Im going to take yours too. Garrett workman from the u. S. Chamber of commerce in the u. S. uk business council. I wanted to get into the eu uk assumptions a little bit more. As far as the fta goes, did you assume that the eu 27 will remain pretty aligned in their wishes for what that will look like . Because it seems like there may be some more divergences between the eu countries in the second phase than there were in the first phase. Similarly, did you look at any of the existing eu agreements, Free Trade Agreements with canada, japan, south korea, et cetera, and would the uk be able to accede as a third party. What about open skies and things like that . Will the uk be added to those ahead of brexit in your assumptions . Thanks. Terrific. Who wants to start with ireland . Let me make a couple of comments about ireland and the scenarios. You might want to speak a little bit to ireland. I on ireland, i mentioned this a little bit with respect to the common external tariff when i was talking about it earlier. The problem the good friday accord basically was an arrangement that was a political arrangement that took place in the context of the Single Market. So it was possible to achieve a settlement to the longstanding fight between catholics and protestants in Northern Ireland by having a sort of a one island solution. Critical to that is the fact that the citizens of the uk in Northern Ireland could choose to become irish citizens, and the irish agreed to have that happen, and that there was essentially a single ireland regulatory and trade arrangement so that there were no borders in the 80 8,000 trucks and so forth. Among the scenarios, if we if there were a Free Trade Agreement between the uk and the eu, this would mean that the two sides we can talk about this with respect to the second question but the two sides eliminate tariffs on industrial goods and make some arrangements and agriculture, between them. But the uk, in theory, would be able to change its external tariffs, and that would require a whole series of checks to make sure that chinese goods are not entering into the uk and then being transshipped into ireland and then on to other eu markets and thereby undermining the common external tariffs and Single Market. Thats what we talked about rules of origin and then there are standards issues and so forth. Those would progressively rise because right now the uk and the eu have the same external tariffs, uk being a member of the eu, and the same regulations. But that would that would mean, if just the fta, our second scenario, or the first scenario, for that matter, that the uk is only on wto rules, that would be bad for ireland because you would have to have some variety of a border. Now, the agreement last week to start phase two had an irish component in which the British Government committed to alignment of regulatory measures such that it would not involve a hard border. The problem with this is no one is quite sure and i think there is deliberate ambiguity of how you would achieve that, how you would maintain it, because if that means that the uk promises now and forever more to apply eu regulatory standards and, for that matter, external tariff rates, then one might ask the question, so what are they getting in terms of enhanced sovereignty by leaving the eu. There is another option which is you basically agree that the Northern Ireland, which is, after all, a very small part of the uk, would in large part function as part of the Irish Economy and you would have your customs checks over the irish sea. So, for transshipment of goods from birmingham to londonderry would be subject to the customs checks and so forth. Thats unacceptable to the dup. Those problems arise with the hard exit scenarios because they basically involve the uk out of the Single Market. If the uk were to be like norway, they would be in the Single Market but they still are responsible for their own external tariffs and, in principle, you would still have a little bit of that. The Customs Union options would be better for ireland and thats a little bit my reasoning of why labor may come down on that side as well. But its hard to know. I dont know whether you want to say anything more about ireland and the political side. A couple of things. First off, the situation is complicated by the fact that there is no Northern Ireland government. At the moment. Hasnt been for quite some time, right. I think the privileges the parties in westminster. There is a voice missing in this discussion. I very much agree with charlie when he lays out the problems that theyre facing. And the good friday accord includes a lot of funds from the eu and a lot of north south cooperation on the island of ireland. I actually think that those can continue. The eu can decide this as a zone of conflict prevention and put it in a different part of the budget, and it will all work out. The customs border, the border itself, this is goods and services, banks. Yes. But i mean, just trying to figure out where the border is going to be unless the uk stays in the Customs Union is really an issue. Right. And it affects all sorts of different industries. There is a great article i saw about the impact on the racing industry where, you know, horses are going back and forth all the time, and you cant make them wait eight hours on a van at the border. Theyll miss their race and its not good for them. There are all sorts of things weve not thought about. There are supply chains that take products back and forth across the border multiple times. People have invested in Northern Ireland on that assumption. So let me speak to garretts question about the question about how did we come up with the fta options and so forth. In large part we used the most recent european most recent and most modern European Union Free Trade Agreement, that is the canada one, as a proxy. This is before we had david davis, the negotiator for the uk, in the process, say specifically he wanted canada Free Trade Agreement plus, plus, plus. So it we were just modeling it from the standpoint of what would be the trade effects in our scenario. We assume zero tariffs for goods trade, some substantial agricultural access but no Financial Services access in an fta. There is a technical question for you. The same applies for the u. S. , the u. S. uk and, for that matter, ttip scenarios. We actually think that and the you could tell me if you think this is wrong. But if there were to be a uk eu Free Trade Agreement, which, of course, can only happen if britain chooses to do to be either under wto rules or in an fta. It cant happen in most of the softer brexit options. We are assuming that, even with the u. S. , the uk would not succeed in getting coverage of Financial Services. With the eu, the issue is really a competitive one. Euro zone countries have resented the fact that the uk which chose not to join the euro, managed through the power and efficiency of the city of london and its Financial Services sector to nonetheless become the center of euro clearing and all kinds of securities transactions related to the rest of the 28. And in once the british made the decision to leave the eu, paris, frankfurt, to a lesser extent, dublin, malta, is after investment by banks. And they are pretty clear that they will not be singlemarketlike, socalled under passporting access for ukbased banks in the european Financial Services market. So its a competitive issue, really. With the u. S. , there is that. But we have already had experience in ttip in which the europeans wanted to cover Financial Services. Largely put up by the british. And the u. S. Was firm. Even with the entire 28, the whole eu, that we were not interested in that. And largely, the motivations here and others you certainly know more about this than most would say that the motivations are part competitive but more regulatory. So we have a variety of regulatory approaches to our banks and securities sectors after the crisis, and even before, we have terrorist finance, antimoney laundering rules, and the Federal Reserve and the treasury, comptroller of currency, are unwilling to basically delegate those to even the United Kingdom regulatory agencies. And so we assumed we you may differ, but we assumed that, if there were to be a uk u. S. Fta, it would not include Financial Services. And let me just one other diversion here. One of the things that the uk is discovering in this Brexit Process is that, in the context of negotiating with the United States and the European Union, they are a small player. They are a small player in negotiating with the eu as we are seeing. Barnier is calling the tune and the 27 are sticking together. If they turned around and negotiated with us, they would similarly be a small player. We are relatively indifferent. There is not a big stake we would have economically. So we would look at this negotiation from the standpoint of our own principles and our own relationships. As fran mentioned with geographical indications, we have got feta cheese made in wisconsin and chablis wine made in california, and we would have our own reasons for wanting to make sure that the british committed to letting wisconsin feta and californian chablis to be sold in the uk, just as we were pushing for, and resisting the idea that we would protect greek feta or french chablis. The british would quickly find themselves in a choice between two powerful players who wanted to impose their own circumstances and their own negotiating approach on them as a price of the agreement. And i think this administration, even more so than past ones. Michelle, i want to may i add something . Yes, but then michelle because i also i note that you guys have dodged the question on eu cohesion and the fta. Never i want to give her a chance to come in on that and ireland too. Howard, first you and then michelle. I hope i say not what michelle was going to say and that i tee her up. We looked at cohesion within the eu as part of the game theory analysis. And we found we showed several cleavages, potential cleavages. I wont go into those because i assume that michelle will do a better job. What i will say is that, despite those cleavages, the eu has a very powerful tool to stay aligned, even if there is great disagreement within the eu, and that is that, as we discussed in the game theory section, after two years the uk is out. Right. That is and the eu, because there is not a large economic effect to the overall eu economy, there are large economic effects to particular sectors in particular countries the eu really can walk away. And so, doing some kind of internal negotiation to satisfy everybody is not necessarily a high priority for the eu. Just three very brief points. I think its forgotten that the trade patents that the uk have with Member States vary. And its something that the report really picks up on. And i think that, you know, this is really significant for ireland as its come up and malta, cyprus and the netherlands. Now that you have global value chains and issues of logistics and issues of integrated production, it has a much broader impact. The question becomes, if the malta and cyprus are so dependent on uk exports, whether there will be a sort of trade diversion effect if the uk is no longer a member. The second point going to garrett workmans point is that there are critical agreements in almost every international sector. You mentioned open skies and aviation. One of the things i would like to see policymakers look at is how many agreements are there when both the uk and the eu are signatories. Because there was a period of time when the eu was not a legal entity. And so there will be some agreements were not going to fall out of everything in the uk, but there will be ones that we will, in the uk, have to renegotiate. The fact that weve got 750 protocols and agreements, some of which the uk is an independent signatory, may mean that it will be less critical. The third point that candidate plus, plus bespoke agreements, i am just, you know, like everybody else, there is a whole new language going on here. And if i know anything about trade and i look and i actually read the eu canadian agreement, the eu japan agreement and the ms bespoke deal, there are implications, if you give it to the uk, i assume you have to give it as well to canada. Take a look at the text because its very finely grained. Only if its a this is really wonky, but if a Free Trade Agreement qualifies as a preferential trade agreement under article 24 of the wto, then they do not have to provide mfn treatment. If they went the swiss route and did a bunch of bilaterals and sectors, they would immediately be faced with demands for most favored nation treatment, which is the standard in the wto. Right. I know there are other questions. And then were going to go to the guy behind. Okay. I am casey mace. I am the deputy of the office robin just came from in the state department, the western europe office. We are very focused on brexit, needless to say. My thanks to you. This is a great resource as we think through how the United States should approach brexit. Thats the question i have. Were also focused on how u. S. Interests are at stake in this. What did your study either show or indicate for u. S. Interests under some of the other scenarios, the transition the transition, the swiss or norwegian model. And do any of those scenarios offer meaningfully better outcome for u. S. Interests than the others . Were going to take the question behind. Thanks. I am a fellow in transatlantic relations. It follows up on some of the other questions already and congratulations on this report. I am intrigued in particular by the trilateral arrangement that you mentioned. As you said yourself, its going to be very complex. I would be interested in some more details about that. Is there supposed to be a trilateral agreement, which would be very different from ceta and others. Even if theyre mixed, theyre still resting on two pillars. Or is it one where you assume the uk eu and two separate ftas but they have to be coordinated and how would you see that going. And do you look at the u. S. Appetite and agreement about that, as we talk about now, it doesnt seem to cover much. It excludes Financial Services. Sounds more like ceta minus, minus, and you would have to take up Investment Protection as well or institutional aspects. Because thats legally too tricky in europe right now. Does the u. S. Even want Something Like that . Let me tackle those two. Others can come in as well. Caseys question is about u. S. Interests in the other scenarios. From the standpoint of the u. S. Economic interests, all the scenarios except the ttip scenario have trivial impact on the u. S. Economy. The report has, for each one of the scenarios, theres a calculation of the gdp impact, the longterm tenyear gdp impact of each of the on each of the three. So we calculate it for all of them. But its trivial. The only one that makes a difference to the u. S. Economic interest is the socalled ttip scenario, which is a trilateral. To your questions about so what would that look like . We didnt we only modelled it. We didnt get into the structural aspects of it. My sense of it would be that it would particularly if it were done i dont know, in 2020 or 2022 at some point in which at a time in which the uk were already out of already out of the European Union as a member, perhaps having themselves in fta with the eu, it should be probably a trilateral or even a pluralateral involving the nafta countries as well and then in this way it would resemble the transpacific partnership, the tpp, is what President Trump withdrew from on the first or second day of his administration but is proceeding itself. There are 11 countries in the tpp now. And a number of them have various preferential trade agreements with each other. And the undertaking that is the tpp undertaking is one of all these parties as the contracting parties and its also open to accession by other parties i think that would be the pattern. I would obviously, there were three years of serious negotiations about a ttip in the last administration and with europe. It faltered on a number of grounds. Most important of which was the investment socalled investor state dispute settlement. Isds, which was very unpopular in europe. The president President Trump has criticized similar aspects to the nafta agreement. And so, if there were to be discussion of a trilateral or a tpp for the atlantic or you might even call it ttip 2. 0, i would think it would not have investor state dispute settlement, which i never thought really was an integral part of the ttip itself because we have a trillion dollars in transatlantic Foreign Direct Investment without such an agreement. And even if it were a mildly positive thing, it wouldnt be that big a deal. But, elimination of tariffs and consolidation of border controls and so forth across the atlantic would have big growth enhancing possibilities. Thats always been the case. It may be that in the future there will be a political environment for it. And that would be the best outcome for the uk. By far. As we established, because it gets the benefit of trade liberalization with the continent and with the u. S. And the trade liberalization that takes place between the eu and the u. S. All three entities grow faster. We will have to see what happens in the nafta renegotiation. If we still have a nafta it would make sense to have nafta parties also be a party to some bigger undertaking. Sounds like full employment for trade negotiators. Okay. Just very briefly. I think that what the study makes clear is that, if youre going to have a u. S. uk agreement, it is politically motivated and inspired rather than economically. The economic consequences are minuscule. For the u. S. Yes. Not as good for the uk as the eu as the relationship with the eu. Correct. The problem, i think, for the uk is that once the political decision has been made to launch such a bilateral negotiation with the u. S. , i fully expect that ustr will become very, very tough. And the British Government, or david davis at least, has been going around saying that all the eu bilateral trade accords he expects to be able to just renegotiate by crossing out eu and putting in uk and having the same terms, and i think thats a fantasy. I think that these countries that, the other trade partners, will look at the uk as a much smaller entity and look for more advantageous trade terms. Weve seen this in the eu and the uk put forward a list of wtos tariff schedules, and everyone thought this was going to be the easy part of the deal. They divvied it up. The u. S. , the the trqs. U. S. , australia, new zealand and others wrote a letter saying, sorry, you have to negotiate, you cant just present us with this deal and assume well agree. So that will be a challenge for the uk. Michelle, i see you nodding. Did you want to come in on that question . I concur with the trqs and the difficulties they will have. The other point, perhaps, to think about is the post2008 economic climate that the british are going to be negotiating in. They are talking about Global Britain open for business, but you know, the one sort of context to this is, if you look at other countries, extra eu exports have stagnated, and we have seen a rise of stateowned enterprises, bailouts. Localization initiatives, taxbased export incentives by other countries beyond europe. So the uk is trying to negotiate the new Free Trade Agreements in what i would say is an inauspiceous business and regulatory climate. The post2008 situation is a different one than perhaps they remember with negotiating in the Single Market in the 1980s. More questions. Kent hughes here at the wilson center. Two questions. One on the regulatory burden. My guess is that the u. S. And china, for whom europe is an enormous market, have to meet eu standards to send their goods there, which was one of the motivations for ttip. A lot of the standards didnt make functional difference, why dont we harmonize them. What about the internal reaction by great britain. My impression on the brexit vote, which had many elements. Part of it was an Income Distribution question. London, their version of wall street, got all of the goods, and here we, the rest of us, toil away and are left behind. Could it be that the end of this focus on london would end up with a lower gdp but a higher percentage of that gdp going to the nonlondon area . And would they, then, shift their own internal policies, so the research and Development Policy would focus on developing more competitive goods and also nonFinancial Services related exports. Let me start to tackle that. Its a good question, kent. The there is, for all of the talk of reciprocal negotiations, and we saw how difficult its been to try to, as you mention, harmonize or make compatible regulations across the atlantic in a variety of different sectors. Weve succeeded. We have agreement on manufacturing practices in pharmaceuticals, we have agreements in outboard engine, environmental controls. There are a lot of specific, relatively narrow agreements that have been achieved. But broadly speaking its been difficult. And the uk, once out of the eu, will face the problem that smaller economies have everywhere, which is the gravitational pull of the big economy, your big trading partner, on the regulatory side. Right now british industry meets all eu standards because they are members of the eu. Its a legal obligation. But when the uk if the uk succeeds in leaving the eu, it wont be a legal obligation, but it will be a commercial necessity. You are already seeing that. The british Chemical Industry came out very strongly to say that they didnt want any suggestion that the that the United Kingdom would cease to apply the socalled reach rules for chemicals, that the eu imposed. We didnt like reach. We are a big big economy, but the uk will have little choice but to meet whatever it takes to put those ce marks on their goods in order to sell them in the eu. Worth saying again, 50 of the British Trade is with the eu. And so it will require it will be it will be a necessity for businesses that are located in the midlands or wherever they are in the uk, to meet eu regulatory requirements and find ways to certify that they do so, in order to continue to export from britain to the uk. Same token, they have to meet u. S. Standards in order to send their goods to the United States. So the at the end of the day, the difference will be that they wont have any role in making the regulations, but theyll still have to follow them, despite the ideas that they will break free of the yoke of brussels regulatory policies. On the question of the intrabritish what the impact will be internal to britain. I mean, southern england versus the rest of less developed or less prosperous parts of britain. Yes, i imagine there will be changes based on what whatever kind of final arrangements they reach, but its kind of hard at this point to determine, and we didnt really seek to look into those sort of internal distributional questions within the United Kingdom. Mika here. Hello. I am the senior uk desk officer. Formerly working with robin. You mentioned that the locus is often with the larger trading partner. My question is sort of a followup on this idea of Global Britain. You guys have talked about it in the context of, you know, the uk having the ability to negotiate trade agreements around the world. We have also heard sort of political rhetoric around Global Britain in terms of Foreign Policy priorities, inability to sort of set direction. My question would be, you know, i mean, looking at sort of the edf issues. Defense, Security Cooperation with the eu but also the uks relationships through the commonwealth, bilateral relationship with the u. S. , do you see the uks locus or center of gravity shifting on those Foreign Policy priorities as they look to extricate from the eu and have this Global Britain focus . I dont really see a shift. And right now if you look at uk Foreign Policy, it is much more closely aligned with the continent with the eu 27 than it is with us. Climate change, iran, et cetera. I think the uk is going to be totally absorbed for the next two to three years in the set of issues that we have on the table here today with brexit. And so there will be little few resources available, both both monetary resources but also, shall we say, administrative resources for launching new initiatives or reordering Britains International priorities. I think the budget and the impact of brexit on the budget and the uncertainties that surround it are also going to be a very large a very large disincentive for Serious International initiatives. So i think the uk may even struggle to keep what its doing now. But certainly i think is the other element of this is that i think potential partners for the uk will look at it less as a window into the eu and more as a middlesized country with a global strategic perspective. I dont think thats going to change. But with fewer capacities for doing that. And i think, also, one of the things we have to figure out is a lot of this, if you are negotiating new trade agreements with other people, et cetera, there is a real pressure on the British Civil Service and i mean, there is a capacity issue here. Because they have to suddenly grow new trade negotiators and take on areas of governance that theyd turned over to the eu for quite some time. Okay. More questions . Here. Is there a dave nash, retired army. I dont represent anyone. [ laughter ] i think you have done a great job of proving what a bad idea this is. [ laughter ] youve done it with your european colleagues. My question is, how do they call you fake news, and how do they justify this as a way forward, and then the ambassador opened the door by saying, if they succeed, in his previous response. So what is the potential, if any, for rational regret . Walking it back. Well, thank you, dave, for that question. I presented this study in london on tuesday and in brussels that afternoon. And so, i got a variety of reactions. One reaction was, oh, 5 of gdp . Thats nothing. You know. Its worth it for our sovereignty. And others said, this is just project fear all over again. Project fear was the derisive nickname levied by the levers against the case that the government made, hm treasury study that was done in april, i think, of 2016 before the referendum. I think our study, what we decided to do at the outset, was to assume that brexit is happening. We didnt make it brexit or no brexit. We made it brexit happens but there are a lot of ways it could happen, and we thought it might be interesting to look at the possible economic consequences of each of those ways. And our study is a little bit novel in this field for modelling in the u. S. , what the u. S. Stakes are. There is a frequent visitor to london this time and a number of times during the Research Phase of this, as i mentioned, we have an affiliate, rand europe, in cambridge, so i am there often for that. There is quite the, shall we say, Cocktail Party chatter in london about how might it all go badly. Or how might it all fall apart, when faced with the consequences. And you may have seen that, on tuesday, had no relationship, i think, to the launch of our study, but the government lost a key vote that was all about whether or not the parliament would have the right or the opportunity to make a judgment about the brexit deal. And there are ways that it could fall apart, but most of them would involve either a new referendum, which no one is proposing, referendums in general are a bad way to make policy, i think. But or the government falls and there is either a new election or a new government put together that says to the 27, we would like to withdraw the article 50 notice. For those of you not steeped the article 50 notice ooartie 50 of the lisbon treaty sets out the procedures for a country withdrawing from the eu, which didnt used to exist before. And thats what set the twoyear clock going and so forth. Article 50 itself has no procedure for a country changing its mind and pulling it back. But there is the assumption, i think, in among, if you will, remainor circles in london and in, for that matter, in brussels, the where there are some who say, good riddance to the british, theyve always been trouble, theyve always been exceptionalists and so forth. But i think a broader sense across the eu is one of regret. I think Michel Barnier has suggested this. And if the british, in a new government that had been had an electoral mandate to take it all back and say, we want to remain good members of the eu it may be possible that the 27 council makes a decision that agrees that the article 50 notification is moot. However, thats only between now and march of 2019 when the two years expires. At the end of the two years, they are not members of the eu unless the there is unanimous decision to extend the transition period. If the remorse or buyers regret or levers regret comes into play in 2020 or 2021, then the british might actually have to apply to join the eu and they would have to go through an accession treaty negotiation. One of the consequences of that would be that the uk would lose its optouts, most importantly its optout from the euro. To the years 2022 and some government that wins the majority of the parliament, they apply to rejoin. The uk did this before. They applied in the 60s, were vetoed by de gall, joined in 73 and two years later had a referendum about whether to withdraw. It was won with the conservative partys support. It was the labor party at the time which actually sought to withdraw from the eu in 75. In this miraculous circumstance in which some subsequent government applies, they would it would be really a heavy lift, once they are out, to come back in, because they would have to not only join the euro. They would have to join schengen and allow Free Movement. And lose the rebate. The rebate provisions would be tough. It would be tough. But before march 2019 it might be easier. But its still a very small probability. I would think. I am going to have to remove the crystal ball from you on this one. Cloudy ball. Can i make a brief point. Absolutely. That is that i would caution not to look at some of the votes in parliament as antibrexit. There is a debate going on very strongly in the uk about whether the Prime Minister and the government is doing too much or not doing enough, without parliamentary oversight. And this is about the sovereignty of parliament. And its hard to say its hard to privilege the sovereignty of parliament and then give that sovereignty back to brussels. So i think, when you look at these votes, you will see as many voting against because against the government because they think may is not being tough enough with the eu, and as many voting because they have issues with brexit. So i am going to use the moderators prerogative to toss one last question out to each of you. And that is, if you had a recommendation to give to policymakers, whether thats here in the u. S. Or in the uk or the eu, what would your one recommendation be . Ill start with howard on the end. Hmm. So one recommendation is very difficult. But i will try to hold to that. Ill give a longer preamble. I expect you guys to challenge me on this. I gave you a narrow parameter knowing youre unlikely to stick with it. Ill try to give the customer what she wants. I want to return to a basis of kents remark. Trade between the uk and eu will go on. It will be a slightly lower level. The uk will be worse off. But, for example, Services Trade between the u. S. And the eu is enormous. Combined Services Trade is about 400 billion. So its not that trade will stop. There is also no doubt that that the u. S. The uk economy was somewhat unbalanced, more towards Financial Services, we had a similar situation in the u. S. There was a lot of analysis in the late 90s early 2000s about the expansion of the u. S. Financial sector. So the speculation about, you know, will income be distributed somehow more evenly within the uk is a good one. What the response to that would be is, first of all, its a problem that the uk could have addressed within the eu, and then you might say, well, you know, adherence to the prevented the u. K. From taking certain steps that could have made the situation better. So leaving the eu will likely shrink the Financial Sector a little bit. But the next question is the one recommendation for u. K. Policy makers is what exactly is your new scope, your new freedom of action that you can take outside the eu that might in fact spread benefits of Economic Growth throughout the population. That might be a very narrow set of policy options, especially if you want to maintain some regulatory harm aony with your trading partners. I dont think theres been much work or any work at all on really trying to understand what the u. K. s new freedom of action is, if any, in terms of their internal economic policies. Wow. I would preface it with speculation that i havent heard talked about. The speculation is that focusing on the council, the parliament, the Member States, but i think we need to pay very careful attention to the European Court of justice. The European Court of justice is being brought into the debate about Citizens Rights post brexit. It would not surprise me if they make a decision or consulted or have something to say about the withdrawal agreement. I would also say to you that as a policy making perspective, theres an assumption that regulation between the u. S. And eu will be a commercial necessity. But i want us to sort of broaden out and think of not just talking about this word regulatory alignment. But think about all the ways that the u. K. Engages with the eu and International Institutions through good manufacturing practices, international forums, standards versus regulation, regulatory dialogue, mutual recognition. Theres an awful lot more Technical Details that the u. K. And the eu will have to deal with beyond simply just the eu. I think the u. K. Is involved in a lot of different regulatory bodies. How many will they continue, how many will they be excluded. Since were in washington, i will make a recommendation for u. S. Policy. But i cant constrain myself to only one. The first ones easy. I think that the United States should resist all temptations to put our finger on the scale of the negotiations between the u. K. And the eu, because while we are friends with all sides and care about the outcome, to try to intervene is likely to turn out badly. Second recommendation is that in the light of the findings of our study and other things, that the United States should indicate an openness to actively considering new transatlantic marketplace opportunities in the post brexit environment, assuming brexit happen happens, they will work something out. But we can engage in a dialogue with the European Union and the United Kingdom and our own industry and social n dprgo sec and so forth about what kind of a transatlantic marketplace do we have to have and how can we do it in such a way that we actually get to this future in which were all better off . So i guess my recommendations are more for the u. K. And the eu. There is something weve not touched on a great deal here, but there are lots of agencies that are eu agencies that are certification agencies that very much control the movement of products back and forth between the two markets. The u. K. Is now faced with a decision about whether to buy into the existing agencies without having a seat at the table or to set up their own agencies, which could take several years, during which time the products that have to be certified could we would have to see what kind of transition would happen there. It could be rather a challenge. Theyd like to stay in the Student Exchange program. Theyd like to continue to have access to the vast University Research funds. The british are going to have to be selective in what theyre asking for in this regard, but i hope the eu will be generous for a longer transition than the main transition on these elements. But im not opt misthat i cimis eu will be generous. The other recommendation id have is to think about staying within the Customs Union. Just in how things move, because a lot of goods go from the republic of ireland through the u. K. And then to the continent. I heard one set of figures that trucks right now go through at 30 seconds each. If you put them up to 90 seconds each because you have customs procedures, you start backing up traffic to the m 25. I think that no one is really quite prepared for this. Even though i am not optimistic that the british will rethink and stay within a turkeylike arrangement in the Customs Union or something similar, a bespoke customs arrangement, i think that is one of the most damaging areas of brexit in terms of peoples lives and the availability of goods and opportunity to travel. I want to thank you for giving us so much food for thought. And for our audience too, for the fabulous questions that you have asked, youve held their feet to the fire. So i thank you for that. A round of applause to yourselves and to our distinguished panel. Thank you so much for joining us. [ applause ]. More live coverage today. On cspan 2 a day long forum. Its hosted on the council on competitiveness, again, live on cspan 2. Later in the day, attorney general Jeff Sessions will hold a News Conference on the justice departments efforts to reduce violent crime. Live coverage begins at 2 00 p. M. Eastern on cspan. This weekend on American History tv on cspan 3, saturday at 6 00 p. M. Eastern on the civil war. Generals we love to hate with author craig simons on confederate general joseph johnston. Johnstons critics argue that his timidity with the enemy and his combativeness with the confederate government sound undermined the war effort to make it a contributing factor in defeat. To these critics, john on the was the real mcclellan of the west. A man who lacked the moral will to commit troops to battle unless he could be absolutely certain of victory. And since those circumstances never obtained, he seldom, if ever, sought battle at all. Sunday at 4 00 p. M. Eastern on real america, the white house naval photographic units monthly reports on president lyndon johnson. Two days after his return to new york, the president s oldest daughter became the bride of captain charles rob of the United States marine corps. Historically, it was the First White House wedding in 53 years. At 6, the 200year history of the Willard Hotel in washington, d. C. , whose guests include abraham lincoln. Abraham lincoln conducted quite a bit of business while he was here. He stayed for ten days. In fact, the First White House levee was held not at the white house. It was at the wood hotel. When he introduced himself, he said i want to introduce you to the long and the short of new presidency. American history tv, all weekend every weekend only on cspan 3. After its november meeting, the Federal Reserve decided to increase the Interest Rate by a quarter of a point. Federal reserve chair janet yellen made the announcement during a News Conference in washington, d. C. She also noted this is our last News Conference as chair. Jerome powell is awaiting senate confirmation. Ms. Yellen good afternoon. Today the committee decided to raise the target range for the federal funds raised by point 25 of one percentage point bringing it to 1. 252 1. 5 . Our decision reflects our assessment that a gradual removal of Monetary Policy accommodation will sustain the strong labor market while fostering a return of inflation to 2 consistent with the maximum employment and price stability objectives assigned to us by law. Before