UK must sort out WTO relations before sealing post-Brexit trade deals, former negotiator says

31 January 2017 9:57am

19 July 2016. By Sille Ruubel.

The UK needs to sort out its relationship with the World Trade Organization before it can make “much progress” in bilateral and multilateral trade agreements with countries worldwide, says Geoff Raby, a former ambassador to the global trade body for Australia.

Britain should try to do preparatory work for negotiations with WTO members while still legally an EU member, Raby says.

But it’s unclear whether WTO states would be willing to engage in “a delete-and-replace exercise” that would see every mention of the EU replaced by the UK in trade commitments, he said.

The UK, whose citizens voted on June 23 to leave the bloc, benefits from trade agreements struck by the EU as one of its 28 member states. Over the past five years, the bloc has agreed to open its markets to Canada, South Korea and Vietnam, among other countries.

When the UK ceases to be an EU member, it will have to negotiate new deals with the bloc as well as with 50 to 60 non-EU countries that have trade agreements with the EU.

‘Major bearing’

“The sort of relationship the UK establishes with the EU will have, obviously, a major bearing on UK trade relations with other countries and, of course, with the WTO,” Raby told an conference* in London yesterday.

“However, working out the UK’s relations with the WTO will be essential to UK negotiating trade deals . . . with other countries,” he said. The US, for example, doesn’t negotiate free-trade agreements with countries that don’t have legally binding WTO schedules, he said.

“In the WTO, the UK doesn’t have its own schedule of commitments on trade in goods and trade in services,” Raby explained. “The UK’s commitments are those of the EU.”

“This is going to be key issue to resolve in the coming months,” he said.

Timing, legality

“Legally, it would seem unclear at what point in the Brexit process the UK could enter into these negotiations with other WTO members,” Raby said.

“Indeed, UK officials should be trying, if they aren’t already, to reach an understanding with Brussels, that while still legally a member of the EU, the UK could commence preparatory work for negotiations with WTO membership as a whole,” he said.

UK government ministers have already indicated they are in contact with trading partners to explore new deals.

Raby said the process of negotiations with WTO members should, in principle, be “relatively straightforward,” as the “UK economy is largely open” and already complies with WTO agreements.

“The question then arises whether the UK can negotiate an EU-plus agreement in the WTO on its own,” he said. An EU-plus agreement could involve the UK taking a deal the EU has as a template and adding better and more ambitious clauses.

“To negotiate an EU-plus agreement will take longer than simply adopting the EU’s schedule of commitments,” Raby said, but it would “confer a lot of advantages on the UK.”

‘Delete and replace’

Raby said there was the option of “a delete-and-replace exercise” that would see every mention of the EU replaced by the UK in the schedules of trade commitments.

“But it is not clear, at this stage, whether such an option is, in fact, open to the UK,” he said.

“Presumably, most members of WTO would go along with this in principle,” he said. “Whilst it seems fair and reasonable, some members might, however, take the view that the extent of the EU benefits also relates to the size of its market, and hence the reciprocal benefit for the non-EU members.”

Raby said other WTO members might argue that they paid for their markets to be opened to the bigger prize of the EU’s markets, and not just to the smaller UK economy.

“That is why, I say, the delete-and-replace approach could be unlikely to get broad support amongst WTO membership.”

“The UK then could be looking at a protracted negotiation as it tries to strike a balance between rights and obligations with all WTO members,” Raby said.

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