- 6th Sep 2019
- Posted by: Marc Bandemer
- Category: In The Media
What is wrong with using WTO rules as the basis for Brexit? The majority of the world trades this way, so why is the trade with Europe so different?
Here are a few points which are in the ‘Common Sense’ domain
If the UK end up solely on WTO rules, then there is no need for a hard border in Ireland. That risks peace, stability, and the Union, and there will be no time to build the infrastructure required. Just nowhere NEAR enough time, and there aren’t any “alternative arrangements”, either. They simply don’t exist.
If the UK rely on WTO rules for trade, then they need to apply tariffs to imports and expect that other countries will apply tariffs to UK exports too. That makes things more expensive to buy and makes UK businesses less able to compete, which is in no way a ‘win’ for the UK.
If the UK decide they are not going to apply tariffs to imports at all, then they lose all leverage for negotiating future trade deals. How would the UK even offer them, as they have already given them free access to the UK market.
If the UK decide they are not going to apply tariffs to imports at all, then they destroy their own producers. Why would you carry on trying to run a farm produce business when the market is flooded with much cheaper products from abroad.?
If the UK decide to only reduce tariffs on products from the EU, then the ‘Most Favoured Nation’ (MFN) clause (WTO rules) becomes applicable. This says that you cannot offer more favourable terms to one bloc, and not everyone else. So, no tariffs from the EU, means no tariffs from anyone. See points 3 and 4.
If you were looking forward to getting your ‘bendy’ bananas back, then sorry for you. This rule didn’t come from the EU (no matter what Boris told you), it came from the WTO, specifically, the Codex Alimentarius. So, no change there. Except now bananas are extortionately expensive, because, well, tariffs.
If you’re relying on the idea that there’s an obscure WTO rule that says we can just carry on trading with the EU on the same terms we have now for 10 years, then again, sorry for you. This isn’t correct. The “rule” is Article XXIV of the GATT, and is specifically an allowance for deviating from the MFN (see 5) because you and another bloc are working towards implementing your bilateral trade deal. It requires an end point, a fully thrashed out trade agreement. It is specifically NOT a clause that comes into play when you decide to drop out of a trading arrangement.
If one of the benefits of “going WTO” is that the UK can make their own rules, then I can understand that. They could decide, unilaterally, that it’s too expensive for them to produce electronics with an earthing wire, so they not going to insist on that anymore. Okay, but then we can’t sell our products to our closest trading neighbours. If the UK want to sell their goods and products to the EU, they need to follow their rules. Except now they don’t get a say in what those rules are.
Having a ‘World Trade Deal’ sounds quite attractive, and somehow quite romantic. The idea of Britain going out on her own, bravely forging links with faraway lands, sounds quite appealing. Except trade doesn’t work that way. There’s a gravity towards your closest neighbours where proximity is important.
I’m more likely to sell something to France than I am to Australia. For example, I can get it there quicker and for a much lower cost. There is no nation on earth, none, that have prioritised trading with distant countries instead of those geographically closest, and the UK is about to be the first which will involve a pretty brutal lesson in the realities of logistics.
If the UK go the WTO route, then they need to check goods coming into our internal market including those from the EU. Neither does the UK does have the infrastructure to do this, and nor do they have the manpower and nor the time, and, this is deeply ironic, as once the UK leaves the EU, the pool of people from which they can recruit to do this essential work becomes much, much smaller. Does the UK even have enough vets to perform the necessary checks on livestock coming into the country, for example? No. Where do they normally recruit them from? The EU.
A ‘No Deal’ exit was never on the cards during the campaign. It is simply all that is left, once logic and reality strip away all the lies and misrepresentation that the UK public were told and sold about Brexit by Cameron and Johnson.
No, German car manufacturers haven’t been knocking on Merkel’s door demanding a trade deal with the UK.
No, the EU doesn’t need us more than we need them.
No, we don’t hold all the cards. None of that was true. It was never going to be true, but rather than facing up to reality, the rhetoric has just become more and more extreme. If you’re dealt a bad hand in a game of poker, if the river turns against you, you don’t HAVE to go all in. There are other options. You don’t need to claim that was what you intended to do all along.
All of this, all the above, is what Donald Tusk was talking about. People who either ignored the above or did not even bother to find out about what, even at a surface level, it was all about, but sold us Brexit anyway. The people who even now print banners that say, “LET’S GO WTO!” as if it’s the easiest thing in the world, and without consequence.
Well, today even Jo Johnson, Boris Johnson’s brother has resigned from the Conservative Party and parliament in final recognition that this path leads to economic suicide, and cannot be part of the madness of the intent.
Forty-nine days to go. Just forty-nine…