Without a deal there will be very little trade
OUR visitors from our twin town in Germany have said that they are sorry that the UK is planning to leave the EU but are surprised that their British friends do not want to talk about it.
It is understandable. Brexit has become so confusing that people are getting bored and just want to “get on with it”. This is, and always has been, the plan of those who want to destroy the EU for their own benefit.
Part of the plan is to publicise misleading and confusing statements.
One of the most dangerous is “if we leave without a deal we can just trade on WTO rules or WTO terms.”
At the same time we hear that it will be a disaster if we leave without a deal. We need the facts about the WTO and to understand why it will be a disaster if we leave without a deal on trade. Without a deal there will be very little trade, far fewer jobs, a weakened economy etc.
The World Trade Organisation is a real organisation located in Geneva. 164 countries responsible for 98 per cent of world trade are members of the WTO. Like the United Nations it originated after the disaster of the wars with Germany and Japan. The UK is a member, but currently negotiates as part of the EU.
WTO rules provide for organised trading by requiring countries or groups of countries, to set import duties and quotas which encourage trade, but protect industry and agriculture against the imports which would damage domestic industry and agriculture. The most important of these rules is that they must apply equally to all countries.
WTO terms follow from these rules. Every country has a schedule of import duties and quotas (terms), approved and enforced by the WTO. There are very many of these, but groups of countries, such as the EU and Mercosur which are part of a customs union can negotiate terms as a bloc.
The WTO also encourages the negotiation of trade deals, in which pairs or groups of countries come to the WTO to negotiate tariffs and quotas lower than the common external terms. The EU has negotiated many trade deals, recently with Canada, South Korea, Japan and Mercosur. An attempted trade deal between the EU and the USA failed because, for example, the USA was not prepared to accept EU food standards. The UK currently trades with most of the world on the basis of these EU free trade deals.
If we leave the EU without “a deal” UK trade will no longer be on the terms which the EU has negotiated with the WTO, but be subject to the terms (tariffs and quotas) which every country applies to countries with which it has not negotiated a trade deal.
The WTO terms which we will face include those established by the EU, which currently protect our economy, but which will protect the remaining 27 against our industry and agriculture. The document outlining tariffs and quotas runs to 908 pages. Our exporters will need to know this document and others. It will cost £20bn a year to do the paperwork, and billions more to pay the tariffs to the EU. Many of our exporters may decide not to bother, some are already considering the possibility
Outside the EU, the UK will need to establish its own terms for imports and has already submitted a schedule of terms and quotas to the WTO. It has not yet been approved because some WTO members have raised objections. These tariffs and quotas will make our imports more expensive.
Leaving the EU without a deal will be a disaster!
David Walker European Movement Liberal Democrats