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

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.

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.