UK to enter into negotiations with WTO partners on Goods Schedule after TRQ objections
Trade secretary Liam Fox has confirmed that the UK will enter negotiations on its proposed post-Brexit Goods Schedule with World Trade Organisation (WTO) members under the body’s GATT Article 28, after a number of countries objected to its initial preferred treatment of Tariff Rate Quotas (TRQs).
“As expected, some trading partners have expressed reservations about our proposed treatment of Tariff Rate Quotas,” Fox said in a statement to parliament today (October 25). “I am therefore announcing today that the UK intends to enter negotiations with relevant partners under Article XXVIII of the General Agreement on Tariffs and Trade.”
The deadline for WTO members to put their reservations to the proposed Goods Schedule in writing was yesterday (October 24), which is three months after the draft UK and EU proposals were circulated on July 24. The EU's draft only concerns splitting existing TRQs, while the UK's includes its commitments and TRQ plans as a single package.
As previously reported by IEG Policy, up to 20 countries including Argentina, Australia, Brazil, Canada, China, India, Japan, New Zealand, Russia and the US have raised objections to the proposals presented by the UK and EU, 15 criticising the EU’s draft and 19 objecting to the UK’s.
The UK had initially wanted to follow a simple process of "technical correction" to the commitments it currently has in the WTO as an EU member, although it had recognised it might have to bargain over TRQs.
Britain will now launch a new process (under GATT Article 28), which would lead to negotiations in the new year, and could take the talks right up to March 29, 2019 when the UK leaves the EU.
“The notification to formally invite claims in [the GATT Article 28] process is now being prepared,” Fox added. “Through the Article XXVIII process the aim is to reach a mutually satisfactory conclusion that maintains the balance of rights and obligations for the UK and our trading partners.”
The GATT Article 28 route will see the UK embark on a “modification” of its Goods Schedule. That means opening up another 90-day period for comment, and the possibility that the UK’s talks might not start until late January at the earliest.
If the UK and the EU have a withdrawal agreement by then, the UK is expected to stay in a customs union with the EU during a further transition period. That would allow more time to sort out the commitments.
If they don’t, the UK crashes out of the EU with 'no deal'. Not only will its WTO commitments on tariffs and tariff quotas be uncertified, but talks on sorting out differences with other WTO members will have barely begun.
When they do take place, they will not be single talks over the whole schedules of commitments. The UK and EU will meet individually with countries that have interests in specific quotas.
A quota open to all countries will involve discussions with principal suppliers and whoever was involved in the original negotiations for that product.
While this may seem a serious matter for the UK at this point of the Brexit process, particularly with so many questions left to answer about its future relationship with the EU, things may not be as bad as they first appear, according to WTO expert and IEG Policy contributor Peter Ungphakorn.
"The delays with the EU's revised goods schedule show that trade can continue even while schedules have not been certified," he explained.
"For the UK, the majority of regular [MFN] tariffs have gone through without objection. They are uncontroversial because they mean no change. So the negotiations will be over around 100 TRQs and the principles behind establishing the UK's farm support entitlement."