Brussels, 27/05/2016 (Agence Europe) - In addition to the substantial costs to consumers and British business in terms of customs duties, the United Kingdom leaving the EU or, what is now commonly known as a Brexit, would force the country into complicated negotiations for setting the terms of its accession to the World Trade Organisation (WTO). The director-general of the WTO, Roberto Azevêdo made this warning this week in an interview to the British newspaper, The Financial Times, on Thursday 26 May.
Mr Azevêdo said that a British exit from the EU would lead to unprecedented negotiations between the United Kingdom and 161 other members of the WTO. The country joined under the auspices of the EU and its accession conditions have been the subject of two decades of debates carried out by the Commission. If the United Kingdom's citizens were to vote for leaving the EU, the country would not simply be allowed to make a "copy and paste" of its accession terms, he warned.
The United Kingdom would be obliged to reach another agreement on everything: thousands of tariff lines covering its products, quotas on agricultural exports and subsidies to British farmers, as well as access to third countries, of which the British banks, companies and services are currently benefiting. Mr Azevêdo said that "Pretty much all of the U.K.'s trade (with the world) would have to be negotiated".
The WTO has never experienced this kind of re-negotiations with an existing member and even the procedures for carrying these negotiations remain vague, emphasised Mr Azevêdo, who explained that the likely complexity of these negotiations would be as torturous as the negotiations experienced by a country seeking to join the WTO.
The Brazilian diplomat insisted that "It is a very important decision for the British people. It is a sovereign decision… But it is very important, particularly with regard to trade, which is something very important for the British economy, that the people have the facts and that they don't underestimate the challenges".
A Brexit would lead to the United Kingdom losing is preferential access to markets covered by 36 trade agreements negotiated by the EU with 58 third countries. In order to still comply with the WTO rules, the United Kingdom would therefore have to impose higher "most favoured nation" duties on imports from these countries and impose its own surcharges on British exports, he explained.
A WTO analysis evaluates the costs of additional customs duties for British imports of goods at £9 billion and £5.5 billion for the costs of supplementary customs duties that would be incurred by British exports of goods. Mr Azevêdo warned that British consumers would have to pay these costs.
The only other option possible for the United Kingdom would be to get rid of all the different barriers to WTO members by transforming its economy into a franchise, like Singapore, and removing protection on politically sensitive national industries that benefit under EU conditions, explained Mr Azvêdo but he concluded that this, although possible, is very unlikely. (Original version in French by Emmanuel Hagry)