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1. I’m not an expert on the WTO, but this is what I understand about the schedules.
2. Tariff schedules define the different tariff levels placed on items
3. There are basically three types of tariff levels in the WTO. Applied, Effectively Applied, and Bound.
4. The applied is the level which our tariffs are set at. The bound level is the highest level we can apply to a tariff.
5. Effectively Applied is the Applied tariff paid when a product doesn’t meet the rules set out by the trade deal.
6. It is important to note that not every country’s schedule is the same in terms of what is bound.
7. For example, after a round of negotiations in 1994, it was agreed all manufactured items would be bound.
8. But even then, countries weren’t obligated to bind all their tariff lines, and some didn’t.
9. When the United Kingdom joins, they will not be afforded this luxury and they will be expected to bind all of their tariff lines.
10. This isn’t that controversial for a developed country, but equally, it means that some countries will be on a different footing.
11. The UK, therefore, cannot be like Australia who have bound 95% of their coverage. India (72%) or Singapore (70%)
12. This is also important information in working out what our businesses face if we cannot replicate our existing trade deals.
13. Some people have assumed that nation’s tariffs are those stated by the WTO, but it’s not necessarily the case.
14. If the EU-Bangladesh Co-operation Agreement is not carried forward, for example, Bangladesh binds just 15%.
15. Although this doesn’t affect a large number of countries, it is definitely over 20....
16. Another important point is we have to negotiate our bound tariffs on entry.
17. So the United Kingdom can’t just ramp its tariffs up to the levels of Bermuda to protect British industry.
18. The difference between bound and applied tariffs is called “tariff overhang”, or simply just “water”.
19. When Donald Trump said he would a put a 45% import duty on products from China, he couldn’t do it.
20. The US has a water shortage. The difference between its applied rates and its bound rate is less than 1% on most products.
21. It’s Trump’s protectionist talking, however, that have developing countries such as India thinking about their water.
22. Developing countries have more water than developed countries, giving them greater flexibility in a protectionist trading climate.
23. Significantly for the United Kingdom, some people in India are asking if they should start any more trade deals.
24. Every trade deal diminishes the effect of water and the negotiating position that it gives India in the WTO.
25. Although extremely unlikely, it could mean India’s existing trade deal negotiations (EU/Switzerland) are the last for a long time.
26. But more importantly than the UK missing out on the trade deal with India, is the UK trade deal policy
27. If the UK do a trade deal with every country (as pretty much planned), they almost completely diminish their water.
28. In the Uruguay Round developed countries negotiated their bindings and their tariff bindings.
29. If the UK has trade deals with everybody, they are basically can only negotiating their Effective Applied rate in a similar round.
30. The UK is currently talking about having lower restrictions on Regions of Origin, thus reducing even that negotiating position.
31. There are, I'm sure, other things to negotiate, Amber/Green boxes, for example. (As I said, I’m no expert.)
32. But when people talk about doing trade deals and taking our WTO seat, it sounds like they think we can have our water and drink it.
33. And while I’m talking about Effective Applied rate and Regions of Origin, let’s talk about that.
34. Region or Origin rules determine what percentage of a product must come from an exporting country to qualify under a trade deal.
35. Currently the UK’s region of origin (ROO) amounts to 28 countries in the EU trade deals it benefits from.
36. When the UK leaves the EU, its ROO drops to a single country, and the ROO percentage of its products change.
37. Meaning, even in the unlikely event of negotiating continuance of those trade deals, some may no longer apply to all of our exports.
38. Meaning some companies may now be facing WTO tariffs even with a deal in place that meant they weren't facing them before.
39. And in a world with complex supply chains, competing EU companies will always have this advantage over us.
40. I’m sure there are people who can give this greater depth, but this is my understanding. I'm happy to be corrected on any of it /End
Just some quick corrections. In 9. When the United Kingdom joins, it won't have to join, just renegotiate it's schedules.
It is almost impossible to unbind at this point and have that be accepted, and any perceived losses may face action.
If the schedules aren't agreed, then they become uncertified. The UK has argued that the EU has continued with uncertified schedules.
