Unicorns are still running free in the Tory leadership contest and some candidates seem determined to keep chasing them — particularly when it comes to how the U.K. would fare in a no-deal scenario.
A line from front-runner Boris Johnson during the leadership debate on Tuesday was a case in point. He was challenged by Rory Stewart — who was knocked out of the race Wednesday — over colossal tariffs on lamb if the U.K. leaves the EU without a deal. Johnson resurrected a WTO myth that has had trade wonks pulling their hair out for months.
“There will be no tariffs and there will be no quotas,” Johnson declared. “What we want to do is get a standstill in our current arrangements, under GATT 24 or whatever it happens to be, until such time as we have negotiated the FTA.”
There’s no disputing that Article 24 of the World Trade Organization’s General Agreement on Tariffs and Trade exists. Jacob Rees-Mogg, Nigel Farage and other Brexiteers have touted it as a way to keep tariff-free trade flowing across the Channel even if the Withdrawal Agreement is never ratified by the British parliament and there is therefore no Brexit transition period. According to Brexiteers, the legal text keeps tariffs at zero for several years when a free-trade agreement is being negotiated.
However, Article 24 only applies to countries who are on the verge of finalizing free-trade agreements with each other — a situation the U.K. would certainly not be in on November 1 this year, whether there is a deal or no deal.
Pro-Brexit group Lawyers For Britain is now making a somewhat fanciful call for a mini-FTA in order to pave the way to using Article 24.
And there’s another massive stumbling block to all of this: The EU would need to be on board, too.
European Commissioner for Trade Cecilia Malmström told Reuters less than a week ago that the idea is “completely wrong” and that no deal would definitely mean tariffs. EU chief negotiator Michel Barnier has set out weighty conditions for trade talks to begin if there is no deal.
Trade experts who spoke (with audible exasperation) to POLITICO also roundly dismissed the idea.
David Henig, director of the U.K. Trade Policy project at the European Center For International Political Economy think tank dismissed Johnson’s assertion as “wrong.” Under a no-deal, “You’re right into tariffs and quotas,” he said.
Dmitry Grozoubinski, a former Australian trade negotiator to the WTO and the founder of Explaintrade.com, said: “It’s saying there’s a legal way we can do this if we can just get the EU to drop everything they care about in this negotiation.”
The head of the legal service of the Council of the EU, Jean-Claude Piris, wrote in an email: “This is a wrong interpretation of Art 24 WTO. No possibility to escape tariffs other than agreements with partners … Unicorn again!”
This insight is from POLITICO‘s Brexit Files newsletter, a daily afternoon digest of the best coverage and analysis of Britain’s decision to leave the EU available to Brexit Pro subscribers. Sign up here.
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