Reuters: World trade chief says post-Brexit 'WTO option' may be unfeasible for UK

06 June 2016

The idea that Britain could scrap all import tariffs to avoid long, messy trade negotiations after quitting the European Union is "almost theoretical" and probably not feasible, the head of the World Trade Organisation said in an interview.

While leaders of the so-called Brexit campaign have mainly advocated the forging of new trade deals with the EU, United States and China if Britain votes "Leave" on June 23, some economists have proposed the more radical zero-tariff plan. They call it the "WTO option" because Britain would rely on the basic rules of the 162-member organization to police unfair trade.

But WTO Director-General Roberto Azevedo told Reuters: "The example that we’re talking about is an extreme example, and I think it's very unlikely that politically this would be feasible.

"My experience has been that I haven’t seen a true free trader on this real earth yet. Everybody somewhere has some degree of protection or limitation in one sector or another."

Hong Kong and Macau offer duty-free models, but their economies are smaller and less complex than Britain's. And even if goods trade was totally liberalized, it might still be useful to have a written agreement on liberalizing trade in services, rather than a blank sheet, Azevedo said.

"The moment you want to write a limitation here or there, technically any member of the WTO may say 'I disagree with the limitation that you’re introducing'," he said. [...]

"All that I am saying is that unless you go for some kind of radical, almost theoretical, argument that no negotiations are needed, any other scenario would require some negotiation with all WTO members." [...]

"It is very likely that both the EU and the UK will have to negotiate with all WTO members," Azevedo said.

To disentangle themselves, London and Brussels would have to allocate Britain a portion of the agricultural subsidies and low-tariff quotas that currently come under the EU umbrella.

"Those are not easily sorted out when somebody enters the EU, or leaves the EU," Azevedo said. [...]

"I don't see how just negotiating with the EU is going to obviate the necessity to establish what the parameters are between the UK and all other WTO members," Azevedo said.

He declined to predict how long such talks could take.

"It could be a few years, it could be decades. But our experience suggests that to expect smooth sailing and quick results would be a high-risk bet."

"It is not far-fetched to imagine that some members may say that it's difficult to negotiate the Brexit terms with both the EU and the UK while the current status of the EU membership is not fully ascertained," Azevedo said.

Full interview on Reuters


© Reuters