A hard Brexit and a return to UK customs duty would contribute to a drop in demand for Polish goods on the British market, leading to a fall in Polish exports of over EUR 1.5 bn, (11 percent), analysts at the Polish Economic Institute (PIE) announced.
PIE's calculations show that if Britain adopts customs duties at the currently proposed rates, then given the current export structure, the average duty on Polish goods would rise from 0 to 7.3 percent.
"In the group of agri-food products it could even reach 25 percent and the highest duties would apply to tobacco products, dairy products, meat and meat products," PIE experts wrote in the latest issue of the PIE Economic Weekly.
EU relations with the UK are on the agenda at a two-day EU summit in Brussels, which started on Thursday. Among the topics for discussion is the current state of negotiations on the future partnership between the UK and the bloc. EU leaders are also to discuss preparations for various scenarios after January 1, 2021.
Prior to the summit, it had not been possible to reach an agreement on the main points of dispute that have hampered talks since the start, among them different approaches to company competition principles and discrepancies regarding the overfishing policy.
In PIE's assessment, it is "almost impossible" for a deal regulating EU-UK relations to come into force from the start of January 2021. If the parties do not agree on an extension to the transition period, the UK will become a 'third country' in EU relations.
"This would mean a return to customs duty and customs, phytosanitary, veterinary and product safety controls, which would increase costs and extend the delivery time across the English Channel," PIE wrote.