Trade, WTO, Brexit and the EU perspective

Brexit

Peter Ungphakornformer senior information officerWorld Trade Organizationpmungphakorn@gmail.com

https://tradebetablog.wordpress.com/

ClientEarth | Institute for European Environmental Policy IEEP | Third Generation Environmentalism E3GBrussels, 15 December 2016

Trade, WTO, Brexit and the EU perspective

Trade and environment

• Environmental goods agreement

• Fisheries subsidies (not ag in WTO)

• Other environmental issues

Trade in general

• UK-EU trade relations• UK in WTO• EU in WTO• Trade policies in general

Trade in general — UK-EU relationsPresent situation UK is EU member 

Single marketFree movement of: goods services capital people (labour)

WTO (UK and EU are members)UK’s WTO rights and obligations As EU

 UK’s relationship with EU Subject to WTO rules on “regional

trade agreements” and “Integration”GATT Art.24 (goods)GATS Art.5 (services)

 UK’s relationship with rest-of-the-world Free trade agreements — via EU,

also subject to GATT Art.24 and GATS Art.5

Standard tariffs and access to services markets — EU ‘schedules’ of commitments apply

   

Trade in general

Which model should UK and EU choose?

Trade, WTO, Brexit and the EU perspective

Brexit 1 UK has full access to EU market

Single marketAs EEA (Norway, Iceland, Liechtenstein), Switzerland* — free movement of: goods services capital people (labour)

 

UK as WTO memberWTO rights and obligations Negotiate own ‘schedules’ of

commitments UK and EU WTO rules on “regional trade

agreements” and “Integration”GATT Art.24 (goods), GATS Art.5 (services)

 UK and rest-of-world Free trade agreements — also

subject to GATT Art.24 and GATS Art.5

Standard tariffs and access to services markets — UK has to use own commitments for goods, services

  

* Switzerland’s access is via separate bilateral agreements

   

Brexit 2 UK in EU customs union

Customs unionAs Turkey — free movement of goods (some rules-of-origin, other customs requirements). Services, capital, labour have access to EU single market according to other negotiated arrangements 

UK as WTO memberUK’s WTO rights, obligations — Negotiate own ‘schedules’ of commitments UK and EU Goods: WTO customs union rules —

GATT Art.24 Services: UK’s/EU’s WTO

commitments or WTO integration rules — GATS Art.5

 UK and rest-of-world Free trade agreements — also

subject to GATT Art.24 and GATS Art.5

UK uses EU commitments for goods, but has to have own commitments on services

   

Brexit 3 UK-EU free trade agreement

Free trade agreement (FTA) Wide variety of types Different coverage, depth,

exceptions UK, EU negotiate access to each

other for goods, services (under WTO disciplines)

Possibly capital, people/labour Modern FTAs: regulation, mutual

recognition, dispute settlement /arbitration, etc 

UK as WTO memberUK’s WTO rights, obligations — Negotiate own ‘schedules’ of commitments UK and EU WTO rules on “regional trade

agreements” and “Integration”GATT Art.24 (goods), GATS Art.5 (services)

 UK and rest-of-world Free trade agreements — also

subject to GATT Art.24 and GATS Art.5

Standard tariffs and access to services markets — UK has to use own commitments for goods, services

   

Brexit 4 None of the above

UK-EUThe same as with all other WTO members (except those with a free trade agreement or preferential access).

UK as WTO memberUK’s WTO rights, obligations — Negotiate own ‘schedules’ of commitments UK and EU Standard tariffs and access to

services markets — UK and EU have to use own commitments for goods, services

 UK and rest-of-world Free trade agreements — also

subject to GATT Art.24 and GATS Art.5

Standard tariffs and access to services markets — UK has to use own commitments for goods, services

   

Post-Brexit UK-EU relationship, GATT Art.24, GATS Art.5, or their WTO commitments

• WTO rules not just default

• Any special UK, EU bilateral relations subject to Arts.24 and 5

— grey areas, both UK and EU

have to be clever

(not handful of sectors)

• UK and non-EU countries

(FTAs, WTO trade).

Can CETA be trilateral?

Trade in general

Trade, WTO, Brexit and the EU perspective

UK establishing WTO status. More than just legal or replication.

• UK schedules, the main post-Brexit negotiation in the WTO — tariffs (including oranges, processed foods), TRQs, ag subsidies, taking account of UK-EU trade in these

• Participation in WTOgenerally, (committees,disputes, ministerialconference, negotiations)capacity question

EU has to revise ownschedules too— involved in all negotiations

Trade in general

Trade, WTO, Brexit and the EU perspective

Tariff rate %

Quota limit tonnes

20%

80%

In-quota imports, charged 20%

Country A

Country B

Country C

Rest of the

world

Out-of-quota imports,

charged 80%

Imports tonnes10,000 t

An imaginary tariff-rate quota (TRQ) EU28

Tariff(-rate) quotas (TRQs)

• EU 10,000–tonne TRQ divided UK:EU

• UK and EU shares subdivided between exporters

Trade in general

Trade, WTO, Brexit and the EU perspective

Tariff rate %

EU27 quota limit tonnes

20%

80%

In-quota EU27 imports, charged 20%

Country A

Country B

Country C

Rest of the

world

Out-of-quota imports,

charged 80%

Imports tonnes10,000 t

UK quota limit tonnes

Country ACountry B

Country CRest of the

world

In-quota UK imports,

charged 20%

Haggle-points (1) UK + EU27 still fixed at 10,000 tonnes

Trade in general

Trade, WTO, Brexit and the EU perspective

EU27 quota limit tonnes

20%

80%

In-quota EU27 imports, charged 20%

Country A

Country B

Country C

Rest of the

world

Out-of-quota imports,

charged 80%

Imports tonnes?

Haggle-points (2) UK + EU27 TRQ size also under negotiation

UK quota limit tonnes

Country ACountry B

Country CRest of the

world

In-quota UK imports,

charged 20%

Tariff(-rate) quotas (TRQs)

• Total 10,000–tonne UK+EU TRQ — also re-negotiated?

Tariff rate %

Latest EU certified WTO schedule, WTO document WT/LET/666 (for the EU–15) of 22 February 2010Description of products Tariff item

number(s)Final quota quantity and in-quota tariff rate

Other terms and conditions

Meat of sheep or goats, fresh chilled or frozen 0204

283 825 t(Carcase-weight)0% 

Allocated to supplying countries as follows: Argentina 23.000 tAustralia 18.650 tChile 3.000 tNew Zealand 226.700 tUruguay 5.800 tIceland 600 tPoland 200 tRumania 75 tHungary 1.150 tBulgaria 1.250 tBosnia Herzegovina 850 tCroatia 450 tSlovenia 50 tFormer Yugoslav Republic of Macedonia 1.750 tGreenland 100 tOther 200 t Qualification for the quota is subject to conditions laid down in the relevant Community provisions.

Lamb/mutton — the ‘legal’ quota from EU’s ‘schedule’

Trade in general

Trade, WTO, Brexit and the EU perspective

2015 UK exported to EU ~75,000 tonnes duty-free

Commission Implementing Regulation (EU) No 1354/2011, 20 December 2011Description of products Quota quantity and

in-quota tariff rateCountry allocations (and use Jan–Aug 2016, not whole year)

Meat of sheep or goats, fresh chilled or frozen0204

285 910 t(Carcase-weight)0% 

Argentina 23 000 t (797 t)Australia 19 186 t (9 286 t)New Zealand 228 254 t (143 794 t)Uruguay 5 800 (1 020 t)Chile 7 400 t (1 939 t)Norway 300 t (1 t)Greenland 100 t (1 t)Faeroes 20 t (0 t)Turkey 200 t (0 t)Others 200 t (0 t)“Erga Omnes” 200 t (186 t)(= all origins including the countries mentioned in the current table) Iceland* 1 850 t (750 t)

Lamb/mutton — the quota in practice, from EU regulation

Trade in general

Trade, WTO, Brexit and the EU perspective

2015 UK exported to EU ~75,000 tonnes duty-free

Agricultural support — plenty of room for manoeuvre

Trade in general

Trade, WTO, Brexit and the EU perspective

EU Japan US Russia Switzerland Canada Norway Brazil0

10

20

30

40

50

60

70

80

Water Actual AMS ($bn)

$79.7bn

$37.5bn

$19.1bn

$8.1bn$4.3bn $3.2bn $1.3bn $0.9bn

8.2% 14.5%

36.2% 0.6% 60.0

%19.5

%85.3

%0%

Sources: Latest information notified by WTO members. US, Russia, Brazil notified in US dollars. Others in own cur-renciesUnofficial conversions to US dollars, using IMF Representative Exchange Rates, July 22, 2016, for indicative compar-isons only

% of trade-distorting domestic support (AMS) entitlements used, most recent information

UK policy considerations:How liberal?— tariffs, TRQs, ag subsidies (also with environmental impact)

www.economistsforbrexit.co.uk/

Trade in general

Trade, WTO, Brexit and the EU perspective

EU policy considerations:

• Budget, policy impact on CAP / CAP reform

• UK-Ireland border, market access

• Others

http://ec.europa.eu/budget/figures/interactive/index_en.cfm

Trade in general

Trade, WTO, Brexit and the EU perspective

BE4%

BG0%

CZ1% DK

2%

DE20%

EE0%IE

1%EL1%

ES7%

FR15%

HR0%

IT12%

CY0%

LV0%

LT0%

LU0%

HU1%

MT0%

NL6%

AT2%

PL3%

PT1%

RO1%

SI0%

SK1%

FI1%

SE3%

UK16%

UK share of EU budget revenue 2015

EU policy considerations:

• Budget, policy impact on CAP / CAP reform

• UK-Ireland border, market access

• Others

http://ec.europa.eu/budget/figures/interactive/index_en.cfm

Trade in general

Trade, WTO, Brexit and the EU perspective

BE5%

BG2%

CZ5%

DK1%

DE8% EE

0%

IE2%

EL5%

ES11%

FR11%

HR0%

IT9%

CY0%

LV1%

LT1%

LU1%

HU4%

MT0%

NL2%

AT1%

PL10%

PT2%

RO5%

SI1%

SK3%

FI1%

SE1%

UK6%

UK share of EU expenditure 2015

• Environmental goods (free trade negotiations)

• Fisheries subsidies (not ag in WTO)

• Other environmental issues

Trade and environment

Trade, WTO, Brexit and the EU perspective

Environmental goods negotiations duty-free/low duty for productsbased on 54-item APEC list

Deadlock over list:— bicycles?

The Australian government says …

http://dfat.gov.au/trade/agreements/environmental-goods-agreement/Pages/environmental-goods-agreement.aspx

Trade and environment

Trade, WTO, Brexit and the EU perspective

Fisheries subsidies negotiations

• Transparency• Disciplines• Exceptions — developing countries,

artisanal fishing

Members ‘sharply divided’

• www.wto.org/fish• www.wto.org/english/thewto_e/minist_e/mc10_e/briefing_notes_e/brief_antidumping_e.htm

Trade and environment

Trade, WTO, Brexit and the EU perspective

Other environmental issues …

Trade and environment

Trade, WTO, Brexit and the EU perspective

… over to you …