Thread by @anandMenon1

The #UK and #EU may not reach a trade deal by end of transition. What would ‘no trade deal’ look like?
NEW @UKandEU report tells you everything you need to know.
Spoiler alert: #WTO terms will make trade between the UK and EU more difficult. THREAD
ukandeu.ac.uk/wp-content/upl…

Before I get to the substance, I want to thank @CSBarnard24, @hayward_katy, @DavidHenigUK, @hhesterm, @EmilijaLeinarte, @SamuelMarcLowe, @StevePeers, @CoppetainPU, @jdportes, @jillongovt & @NLehl.
The report is an updated version of a version we first published in 2018.

The UK is a member of the @wto.
Post #Brexit, it must establish an independent presence separate from the #EU.
The UK’s commitments—pledges about the level of access it gives—are currently bundled up with those of the EU. The UK now needs to disentangle its commitments.

Unless an agreement is signed, trade between the UK and the #EU will be based on #WTO terms.
British imports from the EU and exports to the EU will face tariffs and non-tariff barriers.

UK goods exports into the #EU would be charged the EU’s tariff rates.
The av duty is 3.2%.
These are higher for agricultural goods: 8.7% on avg.
Duties exceed 25% for more than 1 in 10 agricultural products.

The UK could unilaterally scrap checks on imports from #EU, but it would have to do so for imports from everywhere under #WTO rules.
This would pose a serious risk that dangerous products such as animal and plant products carrying pests and diseases would enter the UK market.

The WTO’s Trade Facilitation Agreement would have no effect on how and whether the UK and EU check each other’s goods.
Those provisions dealing with streamlining at the border—such as electronic paperwork—generally ask countries no more than to do their best.

What about services?
Over 80% of UK economic output (& 45% of exports) comes from services.
#WTO rules contain only basic requirements on how governments set standards and regulations.
Provisions for trade in services are far less developed than they are for goods.

The main barrier to trade in services is differing national regulations.
The EU’s services regime is much more extensive than the WTO’s.
Immigration law is an important factor and is barely covered by existing #WTO agreements.

And of course #WTO does not enforce its rules.
It does not even enforce its dispute rulings.
Citizens and companies can only access WTO dispute settlement via their governments.
Companies and businesses must persuade governments to bring a claim on their behalf.

In any case, in December 2019 the US blocked the appointment of new judges to the WTO appellate body.
As a result, there is currently only one judge, leaving the WTO unable to adjudicate trade disputes.

We modelled the impact of trading on #WTO terms. We found that in 10 years’ time UK econ output would be 3.3% lower than it otherwise would be. Including the hit to productivity resulting from reduced international trade,figure is 8.1%. ukandeu.ac.uk/wp-content/upl…

Trade on #WTO terms is governed by a key principle: treating trading partners equally, or ‘most favoured nation’.
If the UK charges a 10% duty on car imports from #China, it must charge the same duty on all other WTO members, unless it has a free trade agreement with them.

When #WTO members want a deeper trade relationship, they can negotiate a free trade agreement with one or more countries.
FTAs are allowed if certain conditions are met, not least that they cover substantially all sectors.
FTAs break the non-discrimination principle.

If the UK and EU do not agree a trade deal, their trade would be on #WTO terms only.

But free trade agreements and WTO rules not mutually exclusive.

If there is a narrow UK–EU deal that only covers goods, then the rest of UK–EU trade will be carried out on WTO terms.

The UK is bound by the commitments it makes at the #WTO.
These include ceilings on tariffs, and the level of access it is prepared to give for services and procurement.
It can of course charge lower tariffs or open its markets more, but it has to maintain non-discrim.

Trade between the UK and EU is going to be more difficult after #Brexit.

How much more difficult depends on what can be agreed.

#WTO terms provide only a basic floor.

The WTO option would signif disrupt trade between UK and EU and even with other parts of the world.