If, however, the UK can’t negotiate a trade deal with the European Union within two years of triggering Article 50, it may have to fall back on World Trade Organisation tariff rates until an agreement can be reached.
World Trade Organisation tariff rates date back to agreements negotiated in the 1940s to prevent the escalation of trade wars. Tariffs give domestically produced goods an advantage in their home markets by making imports more expensive.
If the UK doesn’t manage to strike a separate agreement with the European Union, World Trade Organisation tariffs could add 10% to the cost of a car exported to Europe from 2019. UK based manufacturers will therefore need to make efficiency savings order to price their goods competitively. Predictive simulation analysis is one method that high value manufacturing companies can use to identify savings.
Paragon Simulation Director Vinod Bhatia explains: “If the UK has to apply the World Trade Organization general tariff levels to EU exports, UK based manufacturers will need to reduce their costs. Simulation can be used to model complex manufacturing processes and identify marginal improvements which can deliver efficiency savings.”