Thursday, July 18, 2024
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Let’s go WTO


THE last few weeks have been frustrating for Brexiteers, so my MEP colleague Lance Forman seized the initiative and arranged for him, another Brexit Party MEP, Ben Habib, and me to go to Geneva to see the World Trade Organization (WTO) and examine the viability of a ‘GATT 24’ exit from the EU at this critical moment. GATT 24 or Article 24 is the clause in WTO rules that Boris Johnson, amongst others, believes would allow the UK to continue to trade freely with the EU in a no-deal scenario.

It is important to emphasise that a GATT 24 standstill arrangement should not be confused with simply leaving the EU Customs Union (CU) and Single Market (SM) and reverting to trading with the EU and the world on normal terms of trade, the way in which most trade is conducted.

John Longworth had visited the WTO before, last January, and much of what was learned then was pooh-poohed by the establishment and the government of the day – a common theme in the Brexit saga as factions pursue their special interests and do not want their particular apple cart upset.

Our reasoning regarding this reprise of discussions was that a last-minute deal may be necessary at the eleventh hour, one that could provide some comfort to those who fear the imaginary ‘cliff edge’. Leaving, but with a GATT 24 standstill whereby we continue as we are by mutual agreement, would potentially provide certainty and continuity while future arrangements are being ironed out.

We were fortunate to meet a senior director, Keith Rockwell, a jovial chap. Although it was a private meeting, I think I can reveal that his face lit up with amusement at the thought of people on the streets of Britain carrying banners saying ‘Let’s go WTO’. For what was once a largely anonymous organisation, except to those of us who have traded the globe, to have its name tripping off the tongue down at the Dog and Duck is an unexpected novelty.

It is certainly the case that we came away from the very helpful discussions, principally off the record, with absolute certainty that a GATT 24 arrangement is not illegal, does not carry legal impediments, despite the utterances to that effect from Barnier, Barclay or for that matter Andrew Neil.

The key thing however is that it takes two to tango: any arrangement within the WTO universe is an agreement between two parties (or more) and the remedies for resolving disputes are in the hands of the parties themselves. The WTO is a forum, and a facilitator should the parties require one, a sort of Queensberry Rules referee of the trade world.

For the UK and the EU to come to a GATT 24 arrangement they would both need to want it: there must be the ‘will’ to make it happen, and there is the rub. The EU do not want it just as they don’t want Brexit, because it would facilitate a smooth Brexit.

For the parties it is not just that. The nature of the standstill would have to be agreed. If we were to carry on as now with a standstill period of up to ten years, this would amount to the same as the transition proposed as part of May’s Withdrawal Agreement Treaty, albeit without the backstop. This would prevent an independent trade policy or regulatory divergence for up to five times longer than the proposed transition, likely with attendant payments to the EU. No doubt, in extremis, the EU might favour this if the alternative were simply leaving. For the UK it would be a disaster.

On the other hand a UK version of a GATT 24 arrangement might simply be that we carry on trading as we are but have the freedom of being able to make trade deals and to exercise regulatory divergence. In other words, licence to operate outside the CU and the SM.

There is also the possibility of third parties objecting to the arrangement, an arrangement which would be based on both parties committing to negotiate a future trade arrangement while continuing with all or some elements of the current arrangements. We learned that such objections are unusual but would be aired in WTO committees or through dispute procedures.

So, there is certainly a GATT 24 approach waiting in the wings for a last-minute solution should the current pugilists so wish. It would provide an alternative to a clean break Brexit, but it has the same difficulties attached that have dogged the last three years. Nonetheless, rather than the cage fight the parties are currently engaged in, they could swap this for Queensberry Rules in the tranquil corridors of Geneva, but the fight is the same, gloves off or gloves on.

This article is authored by the businessmen and entrepreneurs, John Longworth MEP, Lance Forman MEP,  Ben Habib MEP. 

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John Longworth
John Longworth
John Longworth is Chairman of the Independent Business Network of family businesses, a former Conservative MEP and was previously Director General of the British Chambers of Commerce.

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