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'A viable alternative to an EU trade deal is ready and waiting' by David Collins (article dated 04/08/2018)
"Warnings by Remainers about the consequences of a ‘no deal’ Brexit are beginning to resemble a game of oneupmanship worthy of Monty Python’s Yorkshiremen. Not content with claims that the M20 to Dover will be gridlocked with lorries waiting to undergo customs checks and that the North Ireland peace process will break down, Doug Gurr, Amazon’s chief in the UK, apparently told Dominic Raab at a recent meeting that there will be ‘civil unrest’ within a fortnight of Britain leaving the EU without a deal. Next, they will have us living 150 to a shoebox.
Those who peddle this relentless doom-mongering fail to understand the protections which will remain in place for the UK under international law. Far from ‘crashing out of the EU’, failing to secure a free trade deal with the EU simply means that the UK will trade with the EU on terms set out by the World Trade Organisation (WTO).
The pundit class tends to scoff at the WTO option. They dismiss it as a recipe for chaos. But that is to ignore the huge progress that this body has made in promoting global trade over the past two decades. The government should from the beginning have presented the WTO option as a viable counterpoint to the EU’s hardline, all-or-nothing stance.
The WTO oversees a system of trade rules for its 164-member countries, which together account for no less than 98 per cent of all global trade. Under the WTO General Agreement on Tariffs and Trade (the GATT), tariffs on most manufactured goods between the UK and the EU would stay quite low, averaging around 3 per cent.
While EU leaders like to threaten us with hints that our exports would be unsellable in the EU, the fact is that non-tariff barriers such as arbitrary health and safety inspections and borders would be prohibited under the WTO’s Sanitary and Phyto-sanitary (SPS) and Technical Barriers to Trade (TBT) agreements. The UK intends to retain conformity with EU regulations following Brexit, at least for the time being, meaning that the existing low levels of health and safety risks to the public in UK products will not change in the days after Brexit. There would, as a result, be no grounds for the EU to exclude our goods from its markets.
The WTO’s new Trade Facilitation Agreement obliges the EU to maintain borders which are as frictionless as possible, using modern technologies such as pre—arrival processing of documents and electronic payments. Discrimination against foreign products through all sorts of internal regulations is forbidden. These rules are enforced by a well-respected international tribunal which has a high rate of compliance and cannot be overruled by the European Court of Justice.
While tariffs on some EU goods – agricultural goods and automobiles in particular – would be higher than 3 per cent, economic gains secured from an independent trade policy and a more pro-competitive environment should compensate UK consumers.
The WTO’s coverage of services is incomplete and would not grant UK firms the level of EU market access they enjoy under the single market, but the UK is well placed to take a leading role in developing the new Trade in Services Agreement, due to resume over the next few years, as well as multilateral negotiations for services at the WTO. Roberto Azevedo, the director general of the WTO, announced that he is looking forward to having the UK back as an independent champion of free trade.
Breaking free of the EU customs union will enable the UK to boost trade with other countries around the world, taking advantage of WTO rules which allow countries to offer preferential trading arrangements to nations with which they negotiate a Free Trade Agreement (FTA). In charge of its own trade policy, the UK should be able to roll over many of the EU’s 60-plus FTAs with third countries, some of which have already indicated that they intend to offer the UK terms as good as they did to the EU.
Canada has even suggested that the UK may get a better deal than that which was offered to the EU under the Comprehensive Economic and Trade Agreement (CETA) two years ago. The UK Department of International Trade has already begun discussions with several countries with which the EU has failed to do trade deals, most notably the US. Since 90 per cent of world GDP growth in the coming decades is expected to be outside the EU, it makes sense that the UK looks beyond this region, which now accounts for less than half of its overall trade. The UK will no longer be required, as it is at the moment under EU rules, to impose tariffs on products which it does not produce, such as tropical fruit – reducing prices for consumers and giving us leverage when it comes to negotiating trade deals. The country will be in a strong position to do trade deals faster than the EU has managed because it will not be encumbered by a long-winded ratification process involving 27 member states.
Why, then, has the government damaged its negotiating position by seeming to exclude the WTO option and giving the impression that it is desperate to extract a trade deal with the EU at all costs? The UK has approached the EU as a supplicant, or worse, a wounded animal. Theresa May’s Chequers deal would have us clinging to a weak version of the single market and customs union, which would deprive us of the freedom we ought to win through Brexit. Even that is not enough for Michel Barnier.
Yet it is the EU which has more to fear from these negotiations, being nervous about having a large, liberated, pro-competitive economy on its doorstep. The government should have initiated this process, proposing an FTA based on CETA but better, with deeper access for services such as finance, and lower tariffs on a broader range of products. At the same time, the government should have been making parallel arrangements for a no-deal WTO option.
Thankfully, there are signs that UK negotiators are now moving in this direction. The UK government announced recently that it has submitted its schedule of tariff commitments for certification by the WTO. The UK’s new Trade Remedies Authority – set up to regulate international trade disputes – will shortly be up and running and the ports are being built up to handle the minimal extra customs checks which will be needed.
In any negotiation, there is no strategy worse than giving the impression that you are desperate for a deal at all costs. With the WTO option as an entirely acceptable, workable alternative to a trade deal, the UK is truly in a position to walk away. And that’s a good place to be."
David Collins is a professor of International Economic Law at City, University of London.
Hhmmm. Have a feeling we will never find out if no deal could or would work.
[Post edited 28 Jan 2019 11:59]
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
"Yet it is the EU which has more to fear from these negotiations."
Sure they're terrified with all those large firms relocating to continental Europe and a de-regulated Britain being far easier to take advantage of by, say, a massive trading bloc.
footers QC - Prosecution Barrister, Hasketon Law Chambers
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:09 - Jan 28 by footers
"Yet it is the EU which has more to fear from these negotiations."
Sure they're terrified with all those large firms relocating to continental Europe and a de-regulated Britain being far easier to take advantage of by, say, a massive trading bloc.
Another person brainwashed by business leaders who are only interested in their bonus not the good of the country.
-5
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:19 - Jan 28 with 4215 views
Begs the question - so why does the world agree trade deals if the default system is so good?
The answer is that WTO isn't as "frictionless" as he's pretending. In practice, there are non-tariff barriers that cause hassle and delays that add cost, risk and uncertainty to many businesses' operations particularly if they're involved in supply chains with the rest of Europe.
These things will cause short-term "chaos" for many. But we're talking long-term about margins being wiped out and a lack of investment towards the UK where barriers become a factor.
With economic growth at around 2% it doesn't take a lot for us to head into a recession. A no-deal starts to trigger a lot of decisions that make that entirely likely.
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:18 - Jan 28 by BloomBlue
Another person brainwashed by business leaders who are only interested in their bonus not the good of the country.
As a general rule, what is good for businesses is usually(with the appropriate checks and balances) good for people, what with them providing jobs, goods and services and all.
[Post edited 28 Jan 2019 12:26]
I'm one of the people who was blamed for getting Paul Cook sacked. PM for the full post.
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:18 - Jan 28 by BloomBlue
Another person brainwashed by business leaders who are only interested in their bonus not the good of the country.
Let's say for instance that that is true and that business leaders are indeed only interested in their bonus and following that, that bonus is only available in the EU. That means Brexit is a bad idea doesnt it? We surely cannot continue to thrive as a country if all the best business leaders and businesses leave the UK for the continent.
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:26 - Jan 28 by chicoazul
Let's say for instance that that is true and that business leaders are indeed only interested in their bonus and following that, that bonus is only available in the EU. That means Brexit is a bad idea doesnt it? We surely cannot continue to thrive as a country if all the best business leaders and businesses leave the UK for the continent.
I'm reliably assured that blue passports and Getting Your Country Back are not only edible but able to sustain you for YEARS.
I'm one of the people who was blamed for getting Paul Cook sacked. PM for the full post.
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:26 - Jan 28 by chicoazul
Let's say for instance that that is true and that business leaders are indeed only interested in their bonus and following that, that bonus is only available in the EU. That means Brexit is a bad idea doesnt it? We surely cannot continue to thrive as a country if all the best business leaders and businesses leave the UK for the continent.
But business leaders told us if we didn't take the Euro as our currency and stayed with the £ all businesses would be leaving the UK and moving to other countries in Europe because staying with £ would slowdown the supply chain and increase costs. They even talked about long queues/delays at the ports. As we know that didn't happen, they lied.
"Why a no-deal Brexit is nothing to fear" - Spectator (not necessarily my view!) on 12:09 - Jan 28 by footers
"Yet it is the EU which has more to fear from these negotiations."
Sure they're terrified with all those large firms relocating to continental Europe and a de-regulated Britain being far easier to take advantage of by, say, a massive trading bloc.
We are the Black Knight, and the EU is King Arthur
If WTO only is so good why does no other country trade that way? It's because it is a baseline, that trade deals seek to improve. The EU Single Market being the most integrated version of that not just in terms of a Customs Union reducing time at border crossings but common standards reducing non-tariff barriers.
The article is another example of Brexit-unicornism pretending that nothing will change but all these benefits will suddenly occur for the UK. The reality is somewhat less favourable:
If WTO only is so good why does no other country trade that way? It's because it is a baseline, that trade deals seek to improve. The EU Single Market being the most integrated version of that not just in terms of a Customs Union reducing time at border crossings but common standards reducing non-tariff barriers.
The article is another example of Brexit-unicornism pretending that nothing will change but all these benefits will suddenly occur for the UK. The reality is somewhat less favourable:
Check out the number of trade negotiations the EU has started, but not yet completed since the Brexit vote.
Trade deals take years to negotiate as they tend to be rather complicated with lots of competing interests. That should be a bigger concern for anyone who thinks the UK can rapidly negotiate lots of new trade agreements on terms no less favourable than current EU ones very quickly.
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Nowt like a bit of gallows humour on a chilly Monday morning in Janubrrry! 
