Deal or no deal? If the UK comes out of Brexit with no deal with the EU, here’s what’s likely to happen
Some weekend reading about the WTO fall back for a Brexit no deal. The BBC have have thrown up a handy story on what the UK faces if it ends up with no deal and has to fall back on the WTO.
- The UK would automatically fall back onto WTO rules
- Many trade deals are already governed by WTO rules via the EU
- WTO rules would apply to UK trade with the EU and other countries the EU has free trade with
- Each country under WTO rules has a tariff list
- The UK could choose to lower or zero tariffs but would have to do so with every other WTO country. It couldn’t pick and choose
- The UK would need to have a system to recognise other country’s regulations and standards
- While the UK is a member of the WTO via being part of EU membership, it is also a member in its own right
- One big issue is that aside from the WTO, some countries have additional bilateral agreements
The bolded line is a key one. The UK could waive or lower tariffs to encourage trade but that would only be positive if that gets reciprocated by other countries. The EU are unlikely to do that and with 44% of UK exports heading there, it would damage exporters. The winners would be UK importers. It’s also a likely non-starter because if the UK did see reciprocation, those countries would have to do the same thing with other WTO countries.
On the plus side, it could match the tariffs the EU use with non-EU countries, meaning pretty much the status quo for those, until better/new trade deals could be struck.
The wide view of it all is that it would mean plenty more uncertainty dragging on well after Brexit, unless Theresa May has already been sending out envoys to all the countries we trade with, to knock up deals for when the exit happens. Personally, that would have been the first thing I’d have done the day after the vote but then I’m not a politician with my head up my…anyway, the story does a good job of setting out what life would be like under WTO rules, so if you want an idea of what might come if a no-deal looks more likely, have a read here.