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Let's be clear, a #NoDealBrexit is NOT a #CleanBreak. It's a #DirtyBreak that resets the clock on negotiations + will cause chaos as we immediately have to comply with WTO rules, lose the exemptions from the MFN clause which we currently enjoy.
#WTOrulesNotOK
#WTOrulesNotOK
2) WTO rules basically mean giving every other WTO member the same level of access to your market, "Most-Favourite-Nation" status.
The MFN clause forbids countries from offering preferential trade terms to another country unless these terms are offered to all other members.
The MFN clause forbids countries from offering preferential trade terms to another country unless these terms are offered to all other members.
3) WTO members are only permitted exceptions from the MFN clause if they are i) a less developed country, or members of ii) a Regional Free Trade Area or iii) a Customs Union.
At present the UK enjoys such an exception + preferential trade with many countries by being in the EU.
At present the UK enjoys such an exception + preferential trade with many countries by being in the EU.
4) Should the UK leave without a deal, WTO rules immediately come in force.
With no FTAs or CU deal, the UK is no longer exempt from the MFN clause = it must give all countries the same tariffs. The choice is raising tariffs on EU goods or lowering them on goods from elsewhere.
With no FTAs or CU deal, the UK is no longer exempt from the MFN clause = it must give all countries the same tariffs. The choice is raising tariffs on EU goods or lowering them on goods from elsewhere.
5) If it raises tariffs on EU goods, this immediately leads to a price rise for consumers making everything more expensive. The vast bulk of our food is from the EU27, so a family can expect a 10-15% rise in its shopping bills, which would hit the poorest in society the hardest.
6) If it lowers tariffs for other countries to those of EU countries, 2 things happen:
i) Prices fall making UK farming + fishing unprofitable
ii) Incentives for trade deals disappear. Why should other countries give the UK access to their markets if they already access the UK?
i) Prices fall making UK farming + fishing unprofitable
ii) Incentives for trade deals disappear. Why should other countries give the UK access to their markets if they already access the UK?
7) On 1 November, the UK would therefore find itself in the position of immediately having to change its tariff regime to one that is less advantageous for now.
As setting up new trade deals takes years, it would be stuck in that position for years.
As setting up new trade deals takes years, it would be stuck in that position for years.
8) This then leaves the UK in a far weaker negotiating position than now:
1) it has the pressure to make deals very quickly,
2) it has losts its stake in the EU and will be negotiating for the return of benefits from the outside,
3) it has lost good will of the EU27.
1) it has the pressure to make deals very quickly,
2) it has losts its stake in the EU and will be negotiating for the return of benefits from the outside,
3) it has lost good will of the EU27.
9) Far from being a #CleanBreak, the UK is stuck with a very messy #NoDealBrexit that will take years to resolve.
Moreover, as there still is no agreement over what the UK's future relationship with the EU should be, Brexit continues to dominate all public life for years to come
Moreover, as there still is no agreement over what the UK's future relationship with the EU should be, Brexit continues to dominate all public life for years to come
