US-led group rejects EU-UK proposal on splitting WTO quotas after Brexit

US UK EU Flags

4 October 2017. By Joanna Sopinska.

A US-led group of countries has rejected a plan agreed by the UK and the EU to split their World Trade Organization quotas after Brexit, and instead suggested that full negotiations with other members were needed.

Brussels and London had agreed in principle to divide the EU's existing concessions and commitments under the WTO based on historical data, when Britain leaves the bloc in 2019. The deal proposes to maintain the current level of market access available to other WTO members, including the US.

But a US-led group of seven countries "cannot accept such an arrangement," they said in a joint letter dated Sept. 26 and seen by MLex — pre-empting the EU and UK's plans to present the proposal to the WTO members in the week of Oct. 18 in Geneva.

The disagreement shows the difficulty in establishing Britain's place in global trade after it leaves the EU. The two sides still haven't started talks on a trade deal between each other because the bloc has refused to approve such talks until other Brexit issues, which they regard as a higher priority, have been settled.

The UK-EU proposal to the WTO "would not be consistent with the principle of leaving other World Trade Organization Members no worse off, nor fully honor the existing TRQ access commitments," the group of countries said.

Besides the US, the countries are Argentina, Brazil, Canada, New Zealand, Thailand and Uruguay.

The UK-EU plan had envisioned a division reflecting the quantities of goods that had been imported by the UK and the EU separately over the last three years.

The US and other WTO members, including Brazil and Australia, have warned that they would challenge any proposal that in practice would limit their access to the UK market.

Tariff rate quotas, which set the limits for imports of goods with a lower or zero percent duty, are treated with particular care during trade negotiations because they apply to the most sensitive products.

"The modification of these TRQ access arrangements cannot credibly be achieved through a technical rectification," the seven countries said, suggesting a need for fully-fledged negotiations with other WTO members.

They said that the existing TRQs "were achieved through a delicate balance of concessions and entitlements that is fundamental to the global trade architecture today."

Brussels and London agreed to "informally" engage in talks with WTO members in a bid to prepare ground for the start of formal talks in early 2018.

The EU and the UK must divide quotas before the latter leaves the bloc at the end of March 2019.