A No-Deal Brexit may allow us to adopt WTO rules!

WTO In the last few days the profile of the World Trade Organisation (WTO) has been raised on social media and broadcasts as the prospect of a No-Deal Brexit is growing. The points of reference I refer to below were interviews broadcast on World at One on Friday by Jonny Dymond followed by a piece in the Spectator Magazine, published yesterday. The likely catalyst for both of these was an interview early on Friday by Mark Carney who has a tendency to wind up the Brexiteers every time he raises concerns about Brexit.

As part of his #WATO interview, Iain Duncan Smith claimed “No deal doesn’t exist because it would be a deal under the WTO, we already operate under the WTO as does the EU….under those circumstances it is wholly up to the UK as to whether they set any tariffs at all to the EU or not and the same for the EUHe then stated “those who want to remain in the EU have constantly talked only about trade as though trade was what the EU was about, and the truth is it has never been about trade, trade was always a mechanism to drive nations closer together… if [the EU] is for jobs, livelihood, for making sure that peoples welfare and lifestyles improve then they will want to do a deal with us very quickly, we are their largest trading partner and their most profitable one but if not…. moving to the WTO ultimately will be the strongest safeguard we have”

The second #WATO interview was with Catherine Barnard, Professor of European Union Law at University of Cambridge who stated. “if there is nothing at all in place on 29th March 2019….we know that the Government is doing preparations for no deal but they are not far enough advanced and what will happen if there is genuinely no deal … our EU trading partners would have to put up customs controls at their borders and levy tariffs on UK goods in the same way as they do with goods coming from other nations that do not have a trade arrangement…which would lead to significant congestion at the border“….. “WTO is not a comprehensive regulatory system in the way the EU is, so for example take air transport, there is not that much covered by WTO on air transport particularly in respect of operating licences for aircraft and for air safety certificates and if there is no deal on 29th March that means that all of the air safety certificates issued by UK authorities no longer become valid for aircraft operating within the EU

The piece in the Spectator it is written by David Collins, Professor of International Economic Law at City, University of London. David begins his piece by  belittling claims he blames on remainers that Kent will be full of lorries trying to cross into Europe and that the Irish border will create problems for the UK and Eire so he clearly believes that there will be no border problems for us to worry about. What he does not touch on is the issue regarding problems with our Aircraft.

David claims “failing to secure a free trade deal with the EU simply means that the UK will trade with the EU on terms set out by the WTO” If WTO rules are so positive, one wonders why politicians such as Liam Fox emphasise that our departure from the EU will enable us to create free trade agreements with other nations. However David answers this “Breaking free of the EU customs union will enable the UK to boost trade with other countries around the world, taking advantage of WTO rules which allow countries to offer preferential trading arrangements to nations with which they negotiated a Free Trade Agreement (FTA)”. However David also states “the UK should be able to roll over many of the EU’s 60-plus FTA’s with third countries and of course bearing in mind that there are the 27 member states within the customs union, this makes a total of 87 nations to achieve a FTA with before we are back at a status quo position.

David then explains “The WTO oversees a system of trade rules for its 164 member countries, which together account for no less than 98% of all global trade……under the WTO General Agreement on Tariffs and Trade (GATT), tariffs on most manufactured goods between the UK and the EU would stay quite low, averaging around 3%……while tariffs on some EU goods – agriculture and automobiles in particular – would be higher than 3%, economic gains secured from an independent trade policy and a more pro-competitive environment should compensate UK consumers” 

So the certainty and immediacy of the WTO arrangements are a bit vague and a long way from IDS’s idea of a zero tariff arrangement and if I understand matters correctly the reference to an average and then some goods that are outside this average, means that the only way for such variants to be clarified would be through some form of border check which will add to the lorry delays and Irish problems. This will also confirm Catherine’s view and back in August 2016 Chuka Umunna tweeted “trading under WTO rules with the EU means 10% levy on cars, 12% on clothes and more”! Indeed David appears to concede the issue of border problems when he writes “The WTO’s new Trade Facilitation Agreement obliges the EU to maintain borders which are as frictionless as possible

David also points out “The WTO’s coverage of services is incomplete and would not grant UK firms the level of EU access they enjoy under the single market, but the UK is well placed to take a leading role in developing the new Trade in Services Agreement, due to resume over the next few years as well as multilateral negotiations for services at the WTO” Which bearing in mind there are 164 WTO members, appears to be at odds with his argument The [UK] will be in a strong position to do trade deals faster than the EU has managed because it will not be encumbered by a long winded ratification process involving 27 member states

A final reason for questioning Davids piece is that he states “Since 90% of World GDP growth in the coming decades is expected to be outside the EU, it makes sense that the UK looks beyond this region, which now accounts for less than half its overall trade

Of course coming decades and expectations are wonderful aspirations but they do little to compensate for what may well have now fallen below the 50% mark of our trade, which is merely 1/3 of the 87 nations with which our current membership gives us Free Trade Agreements and they don’t help us resolve what will happen if we are not allowed to fly over EU airspace from March 29th, 2019 which is a matter that IDS and David Collins seem to be overlooking, at least at the moment.

About ianchisnall

I am passionate about the need for public policies to be made accessible to everyone, especially those who want to improve the wellbeing of their communities. I am particularly interested in issues related to crime and policing as well as health services and strategic planning.
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