01 November 2018

Financial Times: Britain faces a bumpy road ahead at the WTO

In the FT's View, Britain’s road to being a functioning independent economy in the global trading system will be long, arduous and to an unnerving extent dependent on the kindness of others.

[...] The reality of the world trading system, it transpires, is rather harder and more politically treacherous. Last week Mr Fox was forced to admit what grizzled old trade hands had long warned him. It would not be quick and straightforward for the UK to fully establish itself as an independently-acting member of the World Trade Organization rather than, as now, being represented by the EU.

A range of countries have objected to the UK’s plans to copy and paste its “schedules”, or commitments, of WTO goods tariffs from the EU. A dispute rumbles on about how much quota access Britain must allow agricultural exporters including Australia and the US after it becomes an independent trading nation. The urgency of getting over this particular bump in the road can easily be overstated. As Mr Fox has correctly pointed out, economies — including the EU — have traded for years without their tariff schedules being properly certified.

Yet some issues are more pressing. One is whether the UK can remain a member of the plurilateral government procurement agreement, which operates under the aegis of the WTO. Britain’s rights under the GPA will expire on Brexit day next March unless it can get the approval of all existing members of the deal for it to stay.

The US, among other countries, is asking for more information and potentially more market access before it consents.

Moreover, if and when the UK does leave the EU’s trade regime, it will need to try to replicate the dozens of bilateral trade agreements the EU has with third countries. Although those governments seem willing to roll over such deals for now, several have signalled that a permanent agreement will require renegotiation, and more concessions from the UK, down the line.

The underlying phenomenon here is one that appears to have been severely overlooked or misunderstood by the more gung-ho Brexiters. The governance of the global trading system, as well as being fiercely technical, is frequently brutal and unsentimental. The UK can forget the idea that it will get an easy ride even from countries with whom it considers itself to have historical and political affiliations, like the US and Australia.

American trade policy in particular is red in tooth and claw, and indeed has been since well before Donald Trump entered the White House. No amount of sentiment in Washington and particularly on Capitol Hill about an Anglospheric “special relationship” will get in the way of the US’s ferociously well-organised export lobbies.

Add to that Mr Trump’s carelessness about whether the WTO and indeed the whole liberal trading regime lives or dies, and it becomes clear that the UK has chosen to strike out with an independent trade policy just as the penalties for being isolated and vulnerable have risen sharply. [...]

Full article on Financial Times (subscription required)

© Financial Times