Brexit: the WTO option

by Lorand Bartels, Faculty of Law, University of Cambridge

In this Centre for Business Research, University of Cambridge series of podcasts on the Post-Brexit Options for the UK: Combining Legal and Economic Analysis we take a closer look at how the WTO rules impact on the UK’s trading relationships.

Whatever happens with the Brexit negotiations, deal or “no deal” with the EU, the UK would still continue to be a member of the WTO. This would give it certain, more limited rights of access to overseas markets including the EU, and the obligation to observe rules of non-discrimination (the ‘most favoured nation’ principle).

The CBR’s recent workshop on these Post-Brexit Option for the UK heard from Lorand Bartels, Reader in International Law, Faculty of Law, University of Cambridge, that the economic effects of reverting to WTO rules might not be as drastic as some have though.

Bartels key quote: “I think legally nothing changes, in terms of the underlying rules and rights and obligations. At the moment the government’s position, and I think it is absolutely correct, is that the UK has existing rights and obligations in the WTO but you don’t see them at the moment because it is exercised via the EU. With the tariff rate quotas and the subsidies it might be a bit difficult to work out exactly what those rights and obligations are in certain very limited cases. But in other cases nothing really changes accept for the formality of coming up with a piece of paper that says the same thing as the existing piece of paper; it is just that it now has the United Kingdom at the top instead of European Union at the top. Where things will change a lot is with Free Trade Agreements. It is a bit of a shame that people have spent a lot of energy talking about the UK’s position in the WTO, it is important to know what that is, but it is relatively simple and it would be better to put all of that energy into talking about Free Trade Agreements where the UK’s positon is radically different and far more difficult.”

On the issue of the ‘most favoured nation rules’, Bartels says: “The most favoured  nation” obligation is fundamental to your membership of the WTO, which covers 164 members, the EU and the EU 28. It says whatever treatment whether it is under an obligation or whether you are doing something beyond your obligation – something voluntary – like a lower tariff than you are entitled to apply, you cannot discriminate between other WTO members, so everyone gets the same treatment. There are two exceptions but one is important now, which is Free Trade Agreements. If you have a FTA or Customs Union you can give better treatment to the other parties to those arrangements than you need to, with other WTO members.  The most favoured nation principle means that whatever the UK does it has to give to all unless there is a FTA or a Customs Union.”

Listen to the podcast

Post-Brexit Options for the UK: Combining Legal and Economic Analysis

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