Sunday, 26 November 2017

"No EU-UK deal? It is not the end of the world", says WTO chief

From The Telegraph, via @montie:

Roberto Azevedo is not your typical Brazilian. Quietly spoken, and instinctively cautious, the director general of the World Trade Organisation is a career diplomat to his well-manicured fingertips. While a highly effective communicator – fluent in four languages – he belies the national stereotype for flair and flamboyance...

A bit of unnecessary stereotyping there to start the article, here's the relevant bit...

So what of the UK? If Britain fails to strike a free trade agreement (FTA) with the EU ahead of March 2019, when we’re scheduled to leave, then UK-EU trade reverts to WTO rules. While some claim this would be a disaster, not least parliamentarians determined to frustrate Brexit, Azevedo disagrees.

“About half of the UK’s trade is already on WTO terms – with the US, China and several large emerging nations where the EU doesn’t have trade agreements. So it’s not the end of the world if the UK trades under WTO rules with the EU. 

Acknowledging that an FTA would be best, with WTO rules involving reciprocal UK-EU tariffs, Azevedo still gainsays the gloom-mongers. “If you don’t have a fully functioning FTA with the EU, there could be rigidities and costs – but it’s not like trade between the UK and EU is going to stop. There will be an impact, but I suppose it is perfectly manageable.”

He points out that to maintain current levels of access in nations where the EU has already struck FTAs, the UK will need to negotiate new agreements with such countries after Brexit. But won’t the fact that EU agreements already exist with such countries help the UK to reach such deals?

“Trade deals are always complex,” says Azevedo. “But it may be helpful as some of the trade harmonisation is already there – that could act as a shortcut...”

AFAIAA, that's a non-issue, those trade terms will more or less automatically be replicated with new agreements between the UK and the other countries.

While the EU has cut around 50 FTAs, most are with very small countries. Despite 60 years of trying, Brussels has failed to strike deals with the US, China, Brazil, India and almost all other large economies. Why is this? “Trade deals are difficult but there is an additional complicating factor for the EU, which is agriculture,” says Azevedo. “Once you start negotiating with a big agricultural exporter, they want market access – and, for the EU, that’s a sensitive sector, both politically and economically, a sector that makes itself heard..."

After Brexit, Britain can be “more flexible in its approach and quicker to react within the WTO, as you don’t have to coordinate with all the other members of the EU”, observes Azevedo. “You will lose the weight of the EU as a market, but the UK is by no standards a minor economy or a minor player in the multilateral system.”

All good stuff. The article does not point out that adopting unilateral free trade is perfectly compatible with WTO membership, but maybe that's just taken as given? On a practical level, the UK doesn't really have the time and manpower to have anything else in place by 2019 (or whenever).


Shiney said...


No comments here from the remainers I see.

Shiney said...


This would be hilarious if it weren't so true

Mark Wadsworth said...

Sh, tee hee to both.