It’s astonishing Boris still hasn’t grasped WTO basics

Either Boris Johnson is trying to bamboozle the public with jargon or he just doesn’t get the basics of how global trade works. Both are bad omens for the man who is likely to be our next prime minister and tasked with navigating a way through the Brexit mess.

“What we want to do (in a no-deal Brexit) is get a standstill in our current arrangements (with the EU), under GATT 24, or whatever it may be, until such time as we have negotiated the (free trade agreement with the EU),” Johnson claimed in Tuesday’s BBC debate.

His blase remarks have since been picked apart by numerous experts, including the governor of the Bank of England. Mark Carney told the BBC that, contrary to Johnson’s claims, a no-deal Brexit meant tariffs being slapped “automatically” on goods moving between the EU and UK.

It’s time Johnson took a lesson on how the World Trade Organisation, the international body which oversees global trade, actually works.

First up, there’s something called the “most favoured nation” rule, which is designed to ensure fair play in global trade. This means that if you give a concession to one WTO member country – for example a lower tariff on beef – you need to give it to all member countries. Unless, that is, you have a free trade agreement with that country.

So MFN rules mean we couldn’t crash out of the EU and still keep our favourable terms of trade with its 27 members. The only way to keep tariffs between us and the EU at zero would be to scrap tariffs with all 163 other WTO members – the US, China, Australia, etc. And even then the EU would not have to lower its tariffs with us.

Scrapping all our tariffs would also leave us with very little leverage in future trade talks with other countries after Brexit. Having already given potential trade partners tariff-free access to our market, there would be little incentive for them to open up theirs.

Johnson thinks we can get round this conundrum by invoking Article 24 of the General Agreement on Tariffs and Trade (GATT), a treaty under the WTO. But this wouldn’t work because GATT 24 requires a proper “plan and schedule” to be in place for reaching a trade agreement within a “reasonable length of time”. That clearly won’t be possible if we’ve just crashed out of the EU in chaos.

What’s more, to get a GATT 24 waiver on MFN rules, both parties – not just the UK – need to notify the WTO that they want one. It looks highly unlikely that the EU would do that. Last December, as part of its no-deal preparations, the EU notified the 27 member states that in the event of a no-deal Brexit they would have to charge third-country tariff rates on UK exports. That could be ruinous for UK businesses – for example, 10% on cars would devastate our car industry. But new customs duties are something the EU is prepared for and has already accepted as a consequence of no deal – what Johnson thinks should happen is besides the point.

Carney cited the opinion of both the director-general of the WTO and UK trade secretary Liam Fox, Johnson’s erstwhile ally on the Vote Leave campaign, to rebut the Tory frontrunner’s claims.

Johnson’s GATT 24 wheeze would meet instant and fierce opposition. If we were to attempt to use it we would, on the first day of our independent membership of the WTO, be transgressing its most fundamental rule. This international knock-back, not to mention the border chaos and price hikes resulting from a no-deal Brexit, would be a painful lesson in the realities of “taking back control”.