The Boot’s on the Other Foot

European ParliamentOn 19 January this year BrexitCentral published an article by David Campbell Bannerman, who was an active MEP for nearly ten years.

Campbell Bannerman argues that “there is a way forward for the Government which allows a smooth transition into a No Deal scenario…and then allows the UK to negotiate its desired comprehensive Free Trade Agreement with the EU without having to impose tariffs or quotas in the interim. There is a mechanism to ‘manage’ a No Deal scenario; one that works within existing WTO rules”. [1]

Bannerman is referring to GATT24 which permits countries to avoid the Most Favoured Nation (MFN) requirement if they are in the process of negotiating a free trade agreement. (The General Agreement on Tariffs and Trade, GATT, preceded the World Trade Organisation, WTO, and its requirements were carried over.) [2] So there is a way of continuing to trade without tariffs on goods after the UK leaves the EU and Single Market that doesn’t require dropping tariffs to all other WTO nations under MFN (most favoured nation) rules. A single-page document is all that’s necessary, not another 545 pages (see A Withdrawal Agreement), provided both sides agree. [3] Mark Carney, Liam Fox and other luminaries have ridiculed Boris Johnson for suggesting it, they should turn their mockery on the EU.

If the EU were to refuse a GATT24 process because a deal can’t be reached by October 31st this year then it would be responsible for undermining the Belfast Agreement, not the UK. It would be responsible for wrecking the Irish economy, not the UK. It would be responsible for damaging several Continental industries such as Spanish tomatoes, German cars and French wine; the UK would not accept blame for such outcomes. [4]

So it takes two to apply GATT24 in this way but if the EU refuses to tango it might be possible to invoke a unilateral reason for avoiding WTO rules. What we have in mind is zero tariffs on EU goods without triggering MFN elsewhere on security grounds and letting the EU do what it likes, including tariffs and border checks. The rules are very vague and Donald Trump uses or threatens tariff impositions on security grounds against Iran, China and the EU. The USA is a superpower and throws its weight around even without such an erratic president in charge. Other cases have been about unilaterally imposing tariffs but perhaps the reverse can apply to the Irish border problem. Why not? The ‘rules’ are unclear and untested and if contested would take quite a while to settle (a transition period!)

Other countries use devious methods to protect their interests or to gain time (the EU is adept at this) and the UK should not be over scrupulous or legalistic in facing an implacable and aggressive adversary. If the Swiss can retaliate, why shouldn’t the UK?

Security rulesIn 1975 Sweden (yes, law-abiding Sweden) imposed an import quota on certain footwear, claiming that it had to maintain its own industry or its soldiers might not be able to march if foreign supplies were cut off. Sweden claimed that:

“[D]ecrease in domestic production had become a critical threat to the emergency planning of Sweden’s economic defence… The policy necessitates the maintenance of a minimum domestic production capacity in vital industries. Such a capacity is indispensable in order to secure the provision of essential products necessary to meet basic needs in case of war or other emergency in international relations.” (Campbell Bannerman)

This would probably have been a bit much for the GATT Council to approve so in 1977 Sweden revoked the measure itself. But this did amount to a ‘transition’, or at least an interregnum, so there is a precedent for such a subterfuge to avoid a post-Brexit ‘cliff edge’ should it be needed, especially where the threat of renewed terrorism could plausibly be invoked.

Addendum

In 2005 ResearchGate published a report [5] discussing the implications of this vague GATT article. We offer a few quotations from their research:

The drafters of Article XXI understood the extremely broad scope of the exceptions they were creating. The debates on the ITO Charter reveal concern about the critical balance required between national security and national sovereignty on the one hand, and the need to promote commerce and to protect an open trading system on the other. One of the drafters of the original ITO Charter described the care that the Contracting Parties took in fashioning this critical exception:

We gave a good deal of thought to the question of the security exception, which we thought should be included in the Charter. We recognized that there was a great danger of having too wide an exception and we could not put it into the Charter, simply by saying: ”by any member [sic] of measures relating to a Member’s security interests,” because that would permit anything under the sun. Therefore we thought it well to draft provisions which would take care of real security interests and, at the same time, so far as we could, to limit the exception so as to prevent the adoption of protection for maintaining industries under every conceivable circumstance… [T]here must be some latitude here for security measures. It is really a question of balance. We have got to have some exceptions. We cannot make it too tight, because we cannot prohibit measures which are needed purely for security reasons. On the other hand, we cannot make it so broad that, under the guise of security, countries will put on measures, which really have a commercial purpose.

Nothing in this Agreement shall be construed to:… (c) prevent any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.Army boots

One of the most influential GATT experts, Professor John Jackson, has argued that Article XXI is “so broad, self-judging, and ambiguous that it obviously can be abused. It has even been claimed that maintenance of shoe production qualifies for the exception because an army must have shoes!” [6]

[1] https://brexitcentral.com/managed-no-deal-wto-option-using-article-24-gatt-can-avoid-raising-tariffs-quotas/

[2] This and GATT (26/03/2019)

[3] WOT, no Trade Deals? (21/04/2017)

[4] “All you need is love” (27/03/2017)

[5] https://www.researchgate.net/publication/225851159_The_National_Security_Provision-GATT_Article_XXI

[6] WTO rules – OK? (18/11/2016)

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6 thoughts on “The Boot’s on the Other Foot

  1. “I have written a basic UK-EU FTA (in my personal capacity) to show what minimum one needs to satisfy Art XXIV GATT. It does not of itself guarantee frictionless trade. And not all PEM rules of origin will be suitable. But it works as an emergency measure.”
    Lorand Bartels,
    International Law Reader, University of Cambridge; Companion, Trinity Hall, Cambridge.

    For the Transition Period (at least until the end of December 2020), I consider that Article XXIV of the GATT is an adequate proposal to avoid the No Deal Brexit.
    Europe deserves it.

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  2. In my opinion, nationalism is today the biggest threat to European citizens.
    Then, the most sensible would be an agreement for the “Transition Period”, to continue the trade of zero tariff and zero quota on both sides.

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    1. I don’t agree that nationalism is a threat to European citizens; it is, however, a significant threat to the EU project, which is not the same thing. Nationalism is feared and hated by EU mandarins because it is deep-rooted and threatens their wish to rule over us. We, Nick and I, are not strongly nationalistic and would turn your argument around and say that the EU is the biggest threat to European citizens, because the EU despises them (us) and wishes to rule over us without giving us a say in who they are and how they rule. Democratic nation states do give us such a say, however weakly, and that is why citizens prefer our nations to a united states of Europe.
      On the other hand, I do agree that a transition period under a free trade arrangement (i.e. as we are) would be a good thing. I think the UK government would accept such a transition but I’m afraid that the EU would not.

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      1. Since the United Kingdom voted in favor of Brexit, the European Union has expanded, with Canada, Mercosur and Japan, its free trade zone in almost 500 million inhabitants.

        In the new multipolar world in which we live, we can achieve great trade and cooperation agreements. The key is to be visionaries and take into account new variables, new ideas and new economic actors.

        In this geopolitical and commercial reconfiguration that we are living, the values that unite us are more valuable than the interests that separate us.

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      2. I agree that free trade agreements are good, but as an EU member the price is too high. The price includes: the loss of democratic accountability, the ideology of the federal agenda, the disdain for member nations and their citizens, the multiple failures to achieve their own goals, the incredible riskiness of the Eurozone and its single currency, the damage to smaller and weaker member states, the dreadful politicking, deceits and propaganda, the regularity with which they break their own rules, the bullying of neighbours (e.g. Switzerland), the protectionism against ‘outsiders’ (third countries). And on the list could go.
        An agreement to collaborate without the ideology of federalism (for example, the Council of Europe – now 47 countries with observer status for many more) would be worth joining, but the EU is not, and can never be, such an organisation. It will fail and bring down some of its member states with it.
        To be visionary might be good, if the vision were more than a cover for the real agenda, which is a federal government at any cost. And huge pensions for its self-selected ‘leaders’. (See our post Only Believe for our view of the EU’s goals and values, as they really are not as they are proclaimed to be.)

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