What Would Trading On WTO Rules After Brexit Really Mean?
28 November 2018, 16:23 | Updated: 9 December 2018, 13:40
You’ve probably heard the term “WTO rules” bound around the Brexit debate if Britain leaves the EU without a deal - but what would that mean? We asked an expert to explain.
Today, the government’s latest economic analysis showed Theresa May’s Brexit could reduce the UK economy by the 3.9% over the next 15 years.
A no-deal Brexit, however, could deliver a 9.3% hit compared to staying in the EU, according to the figures.
The Prime Minister’s withdrawal agreement will be put to a vote by MPs next month.
If it’s voted down in the Commons it could potentially pave the way to Britain leaving the EU without a deal on March 29th 2019.
This would mean Britain reverts to World Trade Organisation (WTO) rules - but what would that really mean?
We asked David Henig, UK Director for European Centre For International Political Economy to explain.
“It is a very basic framework for which trade is conducted between members,” he said.
“It means you can’t discriminate, you can’t charge one member higher tariffs than another but you can still have tariffs.
“You can’t discriminate between different countries in terms of rules and regulations but you can have lots of rules and regulations and barriers to trade.
“It means a lot more barriers and tariffs to UK trade with the EU - essentially none of the agreements that we have now to allow us to easily export.”
So could we not replicate all our current trade deals we have through the EU?
“Yes, but that would take several years to do,” Mr Henig added.
“One of the really big issues with no-deal is doing it by March when we are really not ready.
“It sounds like a big step, if we did it in five or 10 years when we would have had time to go through and replicate all these agreement then it may be a different story.”
What Is The World Trade Organisation?
Shanker Singham, the director of international trade at the Institute of Economic Affairs, said that the World Trade Organisation was "not some faceless bureaucracy" as some people have suggested.
"It is actually a group of member countries which is almost all of the world," he said.
"These members essentially agree the terms of trade between them, and they have very successfully lowered things like for example the industrial goods tariff.
"The whole purpose of it is to make trade flow more easily."
Watch the full explanation of WTO is and what a no-deal Brexit could look like in the video above.
