1/ There has been lots of talk in the UK about the choice between a Canada-style FTA or an 'Australia-style' WTO-based relationship with the EU. But EU diplomats are privately preparing for a third eventuality, in which the two sides get locked in decades of fierce wrangling.
2/ If the UK and EU manage to agree on an FTA, then there will still be significant trade hurdles to overcome but at least the questions of tariffs and quotas applied to goods travelling between the two will be dealt with (and largely to totally eliminated) in one neat package.
3/ But if Britain opts for WTO terms, EU diplomats are warning things get much more complicated. 'There's no Australia model, the EU trades with Australia on WTO terms' says one. A relationship on this footing is dubbed the Mauritania model by some. It is seen as unsustainable.
4/ So in the medium to long-term, they see a situation in which the two sides would look to negotiate preferential access for strategic goods to each other's markets. Without an FTA this would involve going through tens of thousands of tariff lines one by one and agreeing them.
5/ This would be an extremely laborious process. Quite apart from the talks between the UK and EU, there would also have to be internal negotiations within the EU27, which would all have competing demands, and within the UK Government too over regional interests.
6/ Both sides would have 'offensive and defensive tariff lines' and would need to barter them off against each other for market access for individual sectors. EU diplomats reckon that to get to anything like a satisfactory state of affairs would take 'an enormous amount of time'.
7/ So as the EU sees it, opting for WTO terms is unlikely to settle the issue of Britain's trading relationship with the continent any time soon. Instead, the two sides will simply end up locked in a very lengthy series of talks to build up a piecemeal partnership over time.
