Plus: the director general contradicts claims that “Gatt 24” would kick in to helpby Alex Dean / July 8, 2019 / Leave a comment
The debate over the impact of a no-deal, WTO Brexit is one of the most fraught in British politics. It is now reaching a crescendo. In the run-up to the new Brexit deadline of 31st October hardline Leavers insist ever louder that Britain could simply walk away from the EU with no adverse consequences. They say the World Trade Organisation provides a perfectly good alternative framework and there is nothing to worry about. Boris Johnson, the frontrunner to be prime minister, has sided with them.
Mainstream economists, however, have spent years debunking these claims. They explain that WTO terms would in fact be a dramatic downgrade on the preferential deal we have with Europe. Crashing out would trigger serious economic disruption.
The question arises, what does the WTO itself think about all this? Few are better placed to assess the impact than those from the organisation itself. Having contacted current and former leaders, including Director General Roberto Azevêdo, it is clear to me that a WTO Brexit would present a very serious challenge indeed. These figures took it in turn to voice serious warnings. As 31st October fast approaches it is regrettable, to say the least, that they are still required to spell out essential facts.
Based in Geneva, the WTO has 164 members, of which Britain is already one. It establishes a “base level” trading framework across the world, which countries build on with their own preferential free trade deals (like the EU internal market). It has rules and a court system which member states can use to enforce them. But relative to the single market, and the deals with third countries we enjoy in virtue of membership, a WTO Brexit would not offer very liberal trade terms at all.
Azevêdo, arguably the most important trade official in the world, said “in simple factual terms in this scenario, you could expect to see the application of tariffs between the UK and EU where currently there are none.” He was at pains to remain neutral, and stressed the lack of detailed WTO forecasting, but those tariffs “would clearly have an effect.” Tariffs are by definition a hindrance to open and free trade.
For Pascal Lamy, Director General of the WTO…