Johnson’s WTO Brexit plans ‘naive’, says UK trade chief

British Secretary of State for International Trade Liam Fox, Foreign Secretary Boris Johnson and Brexit Secretary David Davis leave after a first cabinet meeting at Downing Street in London, Britain, 6 September 2016. [EPA/ANDY RAIN]

The United Kingdom’s trade minister has dismissed as “naïve and unrealistic” the prospect of the country being able to use World Trade Organisation rules to continue trading with the EU after Brexit, in a rebuke to the plans of Boris Johnson, the likely next prime minister.

“The idea that you could invoke Article 24 (of GATT) and continue to trade (with the EU) on the same basis is unrealistic,” International Trade Secretary Liam Fox told UK lawmakers on Wednesday (3 July).

“We can’t have a trade agreement with ourselves,” he told Brexiteer lawmakers.

“It doesn’t matter how many proposals we have if the EU says they won’t go into an agreement. These options are not in the table if the EU doesn’t want to take them”.

The idea of invoking Article 24 of GATT is at the heart of how many Brexiteers want to plan for a No Deal Brexit. Johnson, the front-runner in the Conservative leadership contest, has said that the UK would be able to continue trading with the EU on unchanged terms after a no-deal Brexit by invoking Article 24 of GATT.

However, invoking Article 24 would require the EU’s agreement, which it has repeatedly ruled out in case the UK leaves the bloc without a deal

Fox is backing Johnson’s opponent Jeremy Hunt in the contest.

With the Conservative party in the process of electing a new leader and prime minister, and UK lawmakers still opposed to both the draft Withdrawal Agreement and a No Deal Brexit, UK trade officials have been seeking to get countries to roll over their trade deals with the EU so that they continue to apply with the UK after Brexit.

Fox said talks with Canada, the Southern African Customs Union and Mozambique were at “an advanced stage,” but conceded that several governments, including Canada, were waiting to see how the Brexit confusion would play out.

Canada was one of a number of countries “hedging their bets” on future trade relations with the UK, said Fox, by hoping to take advantage of the temporary tariff rates published by the UK government which would grant tariff-free access to 87% of imports in the case of a no-deal Brexit without requiring similar arrangements for British exports.

The EU has said that it intends to apply full ‘most favoured nation’ tariffs on UK products in the event of a No Deal. The average EU tariff is about 2.8% for most non-agricultural products – but tariffs on cars would stand at 10% when they cross the UK-EU border, and higher for most agricultural produce.

The UK government says that once a provisional agreement is finally signed off with Korea, the UK will have signed roll-over agreements with countries that account for 63% of trade currently covered by EU agreements.

Fox pinned the blame for the delays on UK lawmakers for sending “mixed signals” about Brexit.

“When these countries hear mixed messages from the government that they are prepared to leave with no deal but Parliament says they will frustrate that… it makes things very difficult to negotiate those continuity agreements,” he told MPs.

The UK’s trade team is expected to be overhauled in the weeks after Boris Johnson or Jeremy Hunt assume the premiership on July 23.

Olly Robbins, the UK civil servant who led negotiations on the Withdrawal Agreement for Theresa May’s government and has been widely criticised by Brexiteers, is leaving the government for the private sector.

[Edited by Zoran Radosavljevic]

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