EU amends post-Brexit tariff split to address trading partners' objections

9 November 2018 9:23am

8 November 2018. By Joanna Sopinska.

The EU has amended its proposal to split out UK import quotas after Brexit in reaction to concerns expressed by dozens of World Trade Organization members, MLex has learned.

But the slight adjustments to import volumes are unlikely to satisfy critics including the US, Canada, China and Japan, according to EU officials familiar with the proposal.

In July, the EU and the UK notified the WTO of their proposals to divide up dozens of low-tariff quotas for agricultural goods according to trade flows recorded in recent years. They have coordinated to leave their combined import quotas unchanged after the UK’s departure from the bloc.

The proposals have prompted 25 of the global trade body’s members to seek full formal negotiations with the EU to secure potential compensation.

The methodology of the division raised concerns from the start among trading partners of the EU and UK, which have argued that using basic historic import volumes didn’t account for onward internal trade flows within the bloc.

In October last year, seven countries including the US, Australia and Brazil wrote a letter to the EU and the UK stating their opposition, saying the proposed split could hamper their flexibility in supplying goods to the EU after Brexit without compensation.

And last month, Russia issued a formal objection to the UK’s proposed post-Brexit list of tariffs, meaning the WTO can’t certify the proposal until the problem is resolved.

In recent months the number of objectors has grown to 25, including Canada, Japan, Argentina, Switzerland, Malaysia, Thailand and Singapore. These have all reserved their right to enter into negotiations with the EU to secure a more favorable allocation of low-tariff quotas or a compensation for lost market flexibility.

Quota adjustments

Between July and October, the European Commission held consultations with WTO members, and on the back of this it has introduced adjustments to quotas open to all WTO members to address some of the concerns, MLex understands. But some EU diplomats have called the changes “purely technical” and “cosmetic," suggesting they are unlikely to appease the critics.

Brussels has also consulted with London on an amendment to reflect updated data on historical trade flows between the EU and the UK, MLex understands.

The UK is likely to follow up with an amendment of its own tariff schedule proposal before opening full negotiations with objecting WTO trading partners in coming weeks, MLex understands. It had originally hoped to avoid full negotiations by using a “rectification” procedure, under which its proposal would be accepted if no WTO member objected to it within three months of publication. That hope was dashed by Russia’s objection.

The EU will consult on its new proposal with WTO members over a 90-day period, with a next meeting scheduled for Nov. 25 at the trade body's headquarters in Geneva.

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