Andrew Dismore

Writing about Brexit to a deadline a few days ahead is risky, but to quote Tancredi in Tomasi di Lampedusa’s wonderful book ‘the Leopard’, “For things to remain the same, everything must change“- and this could be applied to Brexit: Parliament and Government in reversed roles, MPs’ votes ignored, fruitless negotiations in Downing Street and Brussels, a stubborn Prime Minister,  timetable extensions- shifting sands of debate, and now an MEP election next month.

The ever present risk remains ‘no deal’ Brexit, with little attention to complicated details; but there is at least one fixed complexity- the World Trade Organisation rules, which ‘no deal’ Brexiteers would have us adopt.

Moving to WTO’s General Agreement on Tariffs and Trade (GATT) rules, is not as straightforward  as Brexiteers argue. This relies on the one thing that they don’t want – a deal. Moreover, London’s economy is 90% services business- which is not covered, as GATT’s article 24 only covers goods.  The EU is London’s (and the UK’s) main services trading partner. In 2015, London exported £43.9 billion in services, including financial, to the EU.

The UK could apply zero tariffs to imported goods, but the WTO’s Most Favoured Nation (MFN) rule (Article 1 of GATT) prevents discrimination between WTO members. So the UK would have to apply the same zero import tariffs to  all WTO members, worldwide.  And whilst we could implement zero tariffs ourselves, trading partners are not obliged to do the same in return, so prices consumers abroad pay for our exports will rise, risking more UK businesses  facing going bust.

Bypassing MFN rules requires specific deals. Article 24 permits countries and trade blocs to agree lower (or zero) tariff rates with other countries or blocs, if they set up a customs union or a free trade area: or if they have an interim agreement with a plan and timetable – a stepping-stone to a future permanent agreement. The WTO must be notified of interim agreements, though these rules are tougher: members can demand changes if they’re not convinced that the interim agreement will lead to full agreement within the proposed time frame -and this needs a deal, at least in principle. To have a deal, you need both sides’ agreement. Leaving with ‘no deal’ means no agreement.

This explains why a customs union is essential for trade in goods. But that still does not control trade in services, now covered by the EU single market, negotiated by then Prime Minister, Mrs Thatcher. This requires regulatory alignment removing non-tariff barriers, for example ensuring mutual recognition of qualifications, or avoiding differential rules affecting financial products. It is easy to see how new regulations passed by the EU in a ‘no deal’ Brexit world could work to London’s disadvantage, especially if ‘passporting’ (allowing service businesses to trade across Europe without a base in the country concerned) is denied to our service industries, consequent on ‘no deal’.

This is why we need a ’People’s Vote’- informed citizens deciding on real outcomes, not wild promises of sunny ‘no deal’ uplands, inhabited by unicorns.