Brexit: Is there a 10-year-rule to sort out trade?



Chris Morris | BBC News

A number of obscure pieces of trade law have taken on near mythical status in the Brexit debate.

One of them is Article 24 of the General Agreement on Tariffs and Trade (Gatt).

Supporters of a no-deal Brexit say it would allow the UK to continue to trade with the EU without tariffs (taxes on goods crossing borders) for up to 10 years, while the two sides negotiated a permanent future trade agreement.

Brexit Party leader Nigel Farage told BBC News: “Under Article 24 of the original Gatt treaty we can apply, and the European Union have to join us in this, to have a two-year period of no tariffs, no quotas, during which we can sort out a trade relationship with the EU. It could be up to 10, but two years is standard.”

So what is this all about?

Choosing tariffs

The key point is that you need a trade agreement in order to make use of Article 24, and the EU would be under no obligation to agree anything with the UK in the aftermath of a no-deal Brexit.

In other words, if the UK leaves the EU with no deal, and therefore no trade agreement, it will not be able to use Article 24. Instead it will fall back on the basic rules of the World Trade Organization (WTO) – the building blocks of international trade.

The WTO has 164 members and each of them has a list of tariffs and quotas (limits on the amount of goods traded) that they apply to other countries.

In the event of no deal, the UK could choose to continue applying zero tariffs to goods being imported from the EU in order to minimise disruption to trade and prices.

But under rules set out in Article 1 of Gatt (which are commonly known as Most Favoured Nation (MFN) rules), it would have to offer the same terms to the rest of the world.

So what is the problem with that? If no-one had to pay anything to get goods into the UK, it would certainly mean cheaper imports. But it would also put a lot of British companies, that were unable to compete with cheap imports, out of business.

It is also worth remembering that there would be no obligation on other countries to offer the UK the same tariff-free access in return.

Need a deal

There are of course ways to bypass MFN rules and do specific deals – and this is where Article 24 comes in.

It allows countries or trade blocs to agree lower (or zero) tariff rates with other countries or blocs, if they set up a customs union or a free trade area, or if they have an interim agreement – which acts as a stepping stone to a permanent agreement in the future.

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