Can the WTO solve Brexit trade headache?

14th October 2016, Comments 0 comments

Want to leave the European Union without a new trade deal in place? No problem, just use World Trade Organization rules for a start and figure the rest out later.

That scenario has been advanced by some in the so-called “hard Brexit” camp of British lawmakers who want a swift break from the EU.

Whether it is a viable option for the British economy is far from certain, partly because with respect to the Geneva-based WTO, Britain finds itself in unchartered waters.

Here are some key questions facing Britain’s status as a WTO member during and after Brexit.

– Will Britain have to leave the WTO when it leaves the EU? –

“No. It remains a full member,” WTO spokesman Keith Rockwell told AFP.

Britain joined the WTO within the EU when the trade body was established in 1995, although London had been an independent member of the WTO’s ancestor organisation — the General Agreement on Tariffs and Trade (GATT) — since 1948.

Rockwell noted that the WTO — which seeks to establish a level playing field for global trade — has no formula to deal with a case like Brexit.

“It is an unprecedented situation,” he said.

Britain re-establishing itself as independent WTO member would not involve a formal membership procedure, he explained, because the country already belongs.

“We don’t know what to call it,” he said.

He stressed that whatever emerges from Brexit talks, Britain will still be bound by the rights and obligations of all WTO members on subsidies and tariffs.

“Even if they leave the EU without reaching a (trade) deal… their rights will still be guaranteed,” he said.

But that only applies to the general rules that apply to all WTO members.

Britain’s case becomes complicated when it turns to what the WTO calls a “schedule of commitments”: essentially, the individual deals members secure for themselves through talks with the whole body.

These schedules are vital because they are tailored to each nation’s economic priorities.

– Can Britain negotiate its own WTO ‘schedule’ before Brexit is complete? –

Again, the answer is no.

“The United Kingdom cannot launch negotiations with other WTO members until it has left the European Union,” Rockwell said.

Until Britain’s EU divorce is final, London’s only representative at the WTO is the European Commission, he said.

But informal talks about a possible future British “schedule” are allowed, Rockwell noted, meaning London could seek to carve out a tentative identity as a solo member while Brexit talks are ongoing.

– How long will this all take? –

That will depend on the nature of a Brexit deal, as Britain’s trading relationship with the EU moving forward will heavily shape its status within the WTO, Rockwell said.

Britain could decide to “just duplicate” its current EU schedule that includes, for example, a guarantee to import a minimum amount of lamb from New Zealand each year, the WTO spokesman added.

London could then ask the full WTO to accept it as an independent entity abiding by the EU schedule.

“What will the other 163 WTO members say…who knows?” Rockwell told AFP, noting that there would need to be consensus approval of Britain’s commitments before it could be regularised as an independent member.

If Britain wants develop an entirely new schedule of commitments, the path would become more complicated and it might take years before a deal is reached.

© 2016 AFP

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