The Possibility of Indonesia and United Kingdom to Form Free Trade Agreement After Brexit
Endah Ayu Ningsih (a*), Fithra Faisal Hastiadi (b), Risna Triandhari (b), Leo Mualdy Christoffel (a), Fitri Tri Budiarti (a)
a) Trade Analysis and Development Agency, Ministry of Trade of Indonesia;
(a*) ayuningsih.endah[at]gmail.com
b) Faculty of Economic and Business, University of Indonesia
Abstract
On June 23, 2016 held a referendum which resulted decision that United Kingdom or Britain determined to exit the European Union membership that we call Brexit. The exit of UK will absolutely impact UKs trade with its trading partner including Indonesia. In connection with this issue we conducted a study to evaluate the possibility for trade cooperation between Indonesia and the UK with assumption that UK had officially left the European Union. By having the Game Theory model, the best strategy for Indonesia is by forming FTA with UK. Meanwhile for UK, based on the simulation, the alternative in forming FTA with Indonesia is the dominant strategy with positive output. The trade cooperation implication is not too significant for UK, so to drive the trade cooperation must be initiated from Indonesia.
Keywords: Brexit, Computable General Equilibrium, Free Trade Agreement,Game Theory
Topic: Trade policies strategic Responses