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Expert View

EU in no position to give Johnson smooth trade after no deal

by David Hannay | 27.06.2019

David Hannay is a member of the House of Lords and former UK ambassador to the EU and UN.

The debate rumbles on over Boris Johnson’s mistaken belief that the UK could leave with a no-deal Brexit, remain in a full free trade relationship with the rest of the EU, and all without transgressing any WTO rules. One can still be astonished (well, just about) that someone who spent two years in the cabinet discussing Brexit weekly could make such an elementary error.

Johnson has now been flatly contradicted by international trade secretary and fellow Brexiter Liam Fox, by the director-general of the WTO, and by the governor of the Bank of England. Yet he persists in his contention that this course of action remains an option. 

Presumably Johnson regards all these contrary views as “fake information” even when they are based firmly on the text of the General Agreement on Tariffs and Trade (GATT), to which this country is a party, and on the many instances when waivers from the WTO’s most-favoured-nation rules have been given over the last 70 years.

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At least Johnson does now recognise that just getting to first base on his proposal would require the full cooperation of the EU in a joint notification to the WTO. Here are some of the reasons why that cooperation will not be forthcoming:

  1. There are major legal obstacles. The EU cannot begin trade negotiations with the UK until after we have left and a new negotiating mandate, under a different treaty has been agreed. That cannot happen until (well) after October 31. The relevant provisions of the Political Declaration – however imaginatively tweaked – are completely inadequate to form the basis of a notification to the WTO under Article 24 of the GATT, as Johnson wants.
  2. The EU is not going to head off down a path which could lead to the requirement to dismantle all its tariff protection vis-a-vis third countries.
  3. Nor will the EU contemplate a move which would leave it open to massive compensation claims – or retaliation – by third countries like the US if it continued to charge tariffs on their trade while allowing zero tariffs on trade with the UK without the underpinning of a free trade agreement.
  4. And finally the EU will not contemplate a move which would grievously damage the credibility and effectiveness of the WTO just when they (and we) are desperately trying to shore them up in the face of the onslaughts of the Trump administration.

All this means that the current debate is being conducted on the basis of a proposition which has no chance of being realised. Better surely to focus on the costs and negative implications of leaving without a deal and avoiding that trip down a blind alley.

Edited by Luke Lythgoe

5 Responses to “EU in no position to give Johnson smooth trade after no deal”

  • The way things go at present, the only issue that can be distilled from looking at the “hard Brexit” side is that a bunch of financial wide boys are doing their utmost to create a safe haven for dodgy money. Precisely as they always said they would. And if a Brexit cabal of Brits believe that they also want trade and manufacturing to flourish, then that is going to be a big disappointment. Anyone can see that coming on, which makes Johnson’s present run of lying, openly lying that it is, a matter of national inflicted self-harm of massive proportions. Good luck!

  • Thank you David Hannay. We have, unfortunately, moved into a fantasy realm where reason no longer prevails. Johnson can say what he likes and still Conservative members will vote for him. This country needs a sharp dose of ‘reality medicine’ after we have ‘crashed out’. I fear that then things will degenerate into a destructive game of blame. Welcome to the world of Dolchstoßlegende!

  • Look, the kids voted for a 2 week camping holiday in Fukushima, and that’s what we will do!!

    True, only 51% of the school voted for it, and they were the ones least likely to be able to spell “radioactive”. Largely because we’d skimped on the funding for their education, and future, but hey ho.

    And no, we CANNOT ask everyone again, it would be undemocratic to hold a vote!!

    (Also, I have shares in a radiation-treatment centre that will benefit tremendously, but keep that under your hat.)

    Thank god our informative media is all owned by off-shoring billionaire oligarchs, at least THEY will be honest to the Public!

    Radiation? What radiation?