The World Trade Organisation (WTO) regulations on free trade agreements (and interim arrangements on the way to such agreements) do not support the claims of those who shriek that leaving the EU without a deal would lead the UK over a disastrous cliff edge. That is a choice, which can be made or avoided by the EU.
It seems that WTO rules would allow the UK and EU plenty of time to make an interim agreement to continue trading much as they do now until a free trade agreement (FTA) can be formally agreed. There is no need for a cliff edge, which is a negotiating strategy by the EU and a lie by Remainers. It is fairly clear that if the EU and UK agree that they are in the process of negotiating a trade agreement they have up to 10 years to operate under an interim agreement that does not require Most Favoured Nation terms (for more details see https://briefingsforbrexit.com/the-mystery-surrounding-gatt-article-xxiv-the-crash-proof-exit-option/)
But this is still controversial and it may be that there will be a cliff edge if the Commission and Council (and, possibly, the UK Government) wish to create one for political reasons, but there is no economic justification. It is a frightener to discourage others from following the UK’s example – very revealing of the EU’s malign purposes to trap rather than encourage members to remain.
The EU need not make drastic impositions on the UK, even if no deal is struck before 29 March. Whatever form of Brexit occurs both the EU and the UK have committed themselves to negotiating a mutually beneficial relationship (but see Négociation sur le Brexit and Negotiating – really? and Negotiations).
However, we know that ‘need not’ does not imply ‘will not’; we also know that the EU is driven by political pressures that trump economic and commercial priorities, so they may well decide that their remaining members should take a hit “to preserve the integrity of the single market”.
The rest of this post offers some evidence from the WTO that ‘need not’ can be strengthened to ‘should not’.
The WTO took over as it stood the mandate of the General Agreement on Tariffs and Trade (GATT) in 1995: from the WTO website ( https://www.wto.org/index.htm ) we have this:
On 1 January 1995, the WTO replaced GATT, which had been in existence since 1947, as the organization overseeing the multilateral trading system. The governments that had signed GATT were officially known as “GATT contracting parties”. Upon signing the new WTO agreements (which include the updated GATT, known as GATT 1994), they officially became known as “WTO members”.
Next we quote from the relevant GATT/WTO material, which can be found here:
The heading is: Territorial Application — Frontier Traffic — Customs Unions and Free-trade Areas
The contracting parties recognise the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements. They also recognise that the purpose of a customs union or of a free-trade area should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories. (our emphasis)
There is a need, and an apparent desire, for the EU and UK to agree how the future relationship will work. The often-repeated statement from the EU that the UK will be a “third country” after Brexit does not imply all that they wish us to believe. Contrary to the WTO regulations, the EU has raised barriers to other WTO-signatory countries and declares that it will do the same to the UK.
Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area; Provided that:
(a) with respect to a customs union …
(b) with respect to a free-trade area, or an interim agreement leading to the formation of a free-trade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable at the formation of such free–trade area or the adoption of such interim agreement to the trade of contracting parties not included in such area or not parties to such agreement shall not be higher or more restrictive than the corresponding duties and other regulations of commerce existing in the same constituent territories prior to the formation of the free-trade area, or interim agreement as the case may be; and
(c) any interim agreement referred to in subparagraphs (a) and (b) shall include a plan and schedule for the formation of such a customs union or of such a free-trade area within a reasonable length of time.
If the EU wished it, an interim agreement with the UK, while the negotiations on the future relationship are under way, could simply preserve the existing arrangements. There is no need – just a political desire – for the punishing regime that the EU is threatening.
Of course, “… shall not be higher or more restrictive than…” gives the EU plenty of scope to continue its unfair trade arrangements with third countries, and to include the UK, in defiance of WTO rules.
Then from Article XXIV:
The “reasonable length of time” referred to in paragraph 5(c) of Article XXIV should exceed 10 years only in exceptional cases. In cases where Members parties to an interim agreement believe that 10 years would be insufficient they shall provide a full explanation to the Council for Trade in Goods of the need for a longer period.
Ten years gives plenty of time to produce an agreement on future trade relations.
The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding may be invoked with respect to any matters arising from the application of those provisions of Article XXIV relating to customs unions, free-trade areas or interim agreements leading to the formation of a customs union or free-trade area.
If necessary, the UK could call on the dispute settlement procedures to get WTO support for reducing trade barriers.
The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding may be invoked in respect of measures affecting its observance taken by regional or local governments or authorities within the territory of a Member. When the Dispute Settlement Body has ruled that a provision of GATT 1994 has not been observed, the responsible Member shall take such reasonable measures as may be available to it to ensure its observance.
Conclusion: In the run-up to Brexit what we are seeing is a massive exercise, in which UK Remainers are participating wholeheartedly, to hide the truth and to win backing for what they hope would be a successful second referendum.