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WTO Rules

Don’t leave the EU and rely on WTO terms and rules.

It is misleading to say “after Brexit” we can just trade on WTO rules or WTO terms. 


The World Trade Organisation is a real organisation located in Geneva. 164 countries responsible for 98% of world trade are members of the WTO. Like the United Nations it originated after the disaster of the wars with Germany and Japan. The UK is a member, but currently negotiates as part of the EU.


WTO rulesprovide for organised trading by requiring countries or groups of countries, to set import duties and quotas which encourage trade, but protect industry and agriculture against the imports which would damage domestic industry and agriculture. The most important of these rules is that they must apply equally to all countries.


WTO termsfollow from these rules. Every country has a schedule of import duties and quotas (terms), approved and enforced by the WTO. There are very many of these, but groups of countries, such as the EU and Mercosur which are part of a customs union can negotiate terms as a bloc. 

 

The WTO also encourages the negotiation of trade deals, in which pairs or groups of countries come to the WTO to negotiate tariffs and quotas lower than the common external terms. The EU has negotiated many trade deals, notably with Canada, South Korea, Japan and Mercosur. An attempted trade deal between the EU and the USA failed because, for example, the USA was not prepared to accept EU food standards. The UK currently trades with most of the world on the basis of these EU free trade deals.


If we leave the EU without “a deal” UK trade will no longer be on the terms which the EU has negotiated with the WTO, but be subject to the terms (tariffs and quotas) which every country applies to countries with which it has not negotiated a trade deal. 


The WTO terms which we will face include those established by the EU, which currently protect our economy, but which will protect the remaining 27 againstour industry and agriculture. The document outlining tariffs and quotas runs to 908 pages. Our exporters will need to know this document and others. It will cost £20bn a year to do the paperwork.


Outside the EU, the UK will need to establish its own terms for imports and has already submitted a schedule of terms to the WTO. It has not been approved because some WTO members have raised objections.

 

David Walker