There has been some recent disenchantment across the Channel regarding the United Kingdom's ability to trade under post-BrexitWorld Trade Organisation (WTO) rules. While the risks of pitfalls are not insurmountable, they are quite real.
However, following the Brexitreferendum, the EU and the United Kingdom have worked together to determine a strategy to enable London to regain control of its trade policy.
A two-step strategy
Before 29 March 2019, the United Kingdom and the EU are working on defining the EU's place in the WTO. As the United Kingdom is a full member of the WTO, it is therefore 'sufficient' to identify UK schedules of commitments for goods and services at the WTO and to allocate tariff quotas between the EU and the United Kingdom.
“[The UK] will have its own separate schedules of commitments for goods and services, to take effect immediately upon leaving the EU”, notes a joint letter sent to WTO members in October 2017. "By providing its own lists before leaving the EU in March 2019, the United Kingdom intends to replicate its obligations under the EU's current commitments as much as possible. ”
More easily said than done. “We always knew it would not be a technical fix, we always knew it would be a problem,” said Julian Braithwaite, Ambassador and Permanent Representative of the United Kingdom to the WTO, who appeared before the House of Commons International Trade Committee on Tuesday 13 November. Indeed, even if it is possible to use a simple reproduction of the European schedules to create its tariff schedules, this is not the case for products subject to tariff rate quotas.
The EU and the United Kingdom have chosen to allocate them on the basis of their respective uses (see EUROPE 12130, 12027). In doing so, the EU and the United Kingdom are twisting the arms of WTO members, imposing their method of allocation on them, even if only temporarily. Several major trading partners have expressed their dissatisfaction (see EUROPE 12136, 12114).
Then, from April 2019, the European Commission and London will start negotiations, separately, under Article XXVIII of the General Agreement on Tariffs and Trade (GATT) on the modification of Members' commitments. However, until negotiations with these members are concluded, the lists cannot be certified, i.e. approved by the 163 WTO members.
In itself, the lack of certification is not insurmountable. But if members feel aggrieved and the negotiations are not successful, they could choose to suspend some tariff concessions, or even enter into a dispute with the EU and/or the United Kingdom.
Mr. Braithwaite attempted some reassurance: “We are where we expected to be” However, he conceded that, for WTO Member States, the Brexit approach has a negative result. Firstly, because they are losing flexibility, with access to two smaller markets. Moreover, contrary to the spirit of the WTO, the Brexit approach aims to erect trade barriers, rather than eliminate them.
What about the agreement on public procurement?
While the United Kingdom is a full member of the WTO, this is not the case with the Agreement on Government Procurement. In fact, London has failed to ratify this plurilateral agreement, which has been in force since 1981. “Going through an accession does mean that, in theory, any country can just veto” Braithwaite admitted.
At the EU's request, the method followed is the same as at the WTO - and it is also causing dissatisfaction. However, the British ambassador hopes to convince the United States to overcome its reluctance, which could at the same time appease other countries with concerns, such as Japan or South Korea. (Original version in French by Hermine Donceel)