The UK is set to leave the EU in UK and EU law on 31 October 2019.
The current draft Withdrawal Agreement (dWA) and current Political Declaration are dead.
We will ask the EU to continue to trade with zero tariffs. The EU’s agreement would be necessary.
- This can be done via a basic zero tariff Free Trade Agreement (FTA) which could come into effect on 31 October (under GATT Art XXIV, the general WTO article permitting FTAs).
- This type of FTA could be agreed at EU level without individual EU states having a veto.
- Trade expert Dr Lorand Bartels of Cambridge University has already drafted a 1 page agreement.
We simultaneously work on an ambitious FTA based on Tusk’s offer of March 2018.
Should the EU refuse to agree to free trade we move to managed WTO terms where tariffs will apply. UK exports to the EU will face the EU Common External EU tariff and EU exports to the UK the UK’s published tariff schedule.
Three elements of Concurrent Activity:
- Visibly prepare for a managed WTO terms Brexit on 31 October in case the EU rejects free trade.
- Offer a basic FTA under GATT Art XXIV to come into effect on 31 October. The EU’s agreement would be necessary in order to ensure no EU tariff barriers or EU quantitative restrictions apply on 31 October 2019.
- Negotiate a permanent Comprehensive Free Trade Agreement as offered by Tusk in March 2018, for the whole of the UK.
1. Plan for managed WTO terms Brexit ‘no deal’ on 31 October.
The dWA has failed in Parliament. The EU has said it is non-negotiable. No extensions will be sought or offered. We therefore leave on 31 October in UK and EU law.
a) We continue to visibly prepare for ‘no deal’ and be ready for a managed WTO Brexit. We will prepare domestically and with other trading partners.
b) We will not place any new physical infrastructure on the NI border. We will, in any event, work expeditiously on Alternative Arrangements.
c) We will retain ‘the Money’ - £39bn and new tariff revenues - for UK domestic preparations.
d) Preparations to include support for sectors affected by high EU tariffs including the agricultural and motor sectors.
e) We will use our tariff schedules and Tariff Rate Quotas (TRQs) to avoid rises in food and consumer prices.
2. Offer a basic Free Trade Agreement under GATT Art XXIV to come into force on 31 October
Attempts to re-negotiate the dWA would be futile. The alternative is to offer a basic FTA which complies with GATT Art XXIV. This is a basic deal to retain zero tariffs. It will be the EU’s choice as to whether they wish to continue to trade without tariffs. We understand that they may need some satisfaction on citizens’ rights, money and the Irish border in order to gain agreement.
3. Develop text and negotiate a permanent in-depth Comprehensive Free Trade Agreement.
a) We will work on ‘Alternative Arrangements’ for the NI border to ensure no new physical infrastructure on the border. Elements available now will be implemented now.
b) Under the dWA ‘the Money’ is only payable (if at all) contingent on a deal. It is not legally due so is a negotiating tool.
c) Some elements of the WA could be reused (i.e Citizens’ Rights) but outside the scope of the ECJ. This is not the same as re-negotiating the existing text.
d) There will be arbitration but no ECJ jurisdiction over the agreement. Canada and Switzerland have no ECJ as a dispute resolution mechanism
e) Services will be a part of the future Trade deal but not on an EU harmonisation/rule taking basis but via mutual recognition or equivalence.