Impact of the UK reverting to WTO trade rules with the EU
Dr Liam Fox who is Secretary of State for International Trade with the UK government and a high profile Brexiter recently spoke about an interesting position in the current UK – EU negotiations. One of the key sticking points is the final pay-out from the UK for the Divorce bill. This is one of the 4 key issues that the EU is insisting is finalised before the trade negotiations can begin.
Dr Fox stated that “It is very clear that we can only have that final number as part of a final agreement. We will want to know what the end state is“. When pushed to clarify this, he stated that the UK will need to know “what our trading agreement with Europe will be…we cannot come to a final figure until we know what the final package looks like”.
So, there would seem to be another impasse here. The EU or Theresa May could fudge it, and agree a divorce number without the trade deal. If both parties hold tough on this?
The trade deal at best estimate will take a minimum of 5-8 years to negotiate. Ambassador of the European Union to the United States, David O’Sullivan recently spoke of how long these comprehensive trade deals take.
If there is a ‘No Deal’ then the UK will trade with the rest of the EU on a WTO terms and that this is “not exactly a nightmare scenario” according to Dr Fox.
Bloomberg did a nice summary of what the UK falling back on WTO arrangements looks like:
Interestingly Bloomberg thinks it will be “trickier for Britain to work out new commercial relationships with countries such as the U.S., China, Japan, New Zealand and Brazil that have no free-trade accords with the EU”. Where the EU has agreements with those countries under WTO - those nations might have to renegotiate with the UK. Old grievances could easily come to the fore again.
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