Is the UK’s 'no-tariff' plan for the Irish border incompatible with WTO rules?
Opinions differ on whether the UK government's proposal not to collect import duties on goods crossing the Irish border violates the WTO's non-discrimination policy
The UK’s intention to simply refrain from collecting import duties on goods entering Northern Ireland across the Irish border, as announced earlier today (March 13), has sparked some lengthy debate among trade lawyers about whether, and if so how, this might violate World Trade Organization (WTO) rules.
This seems to boil down to two questions:
whether doing so would violate the WTO’s non-discrimination principle (known as most-favoured nation treatment) since goods imported into the UK at its ports would face customs clearance and in many cases tariffs
or whether the problem is the inconsistent use of tariffs around the UK’s borders
Legal opinion seems to be that by not collecting import duties on goods crossing the Irish border, and by not requiring those goods to be cleared by customs, the UK might not be violating the letter of WTO law.
For example, apples from the US or Ireland would be treated equally when they cross the Irish border, so there is no discrimination between the two products.
Where opinion differs is whether a supplier like the US could complain that this was discrimination in practice because it’s less convenient for American apples to be imported into Ireland and transported north across the land border than for Irish apples just to head north.
US apples would normally have to go through customs clearance and processing for food safety and plant health when they arrive at UK ports.
Some lawyers, such as Holger Hestermeyer of King’s College London, argue that a case could be made that this is discrimination in practice, opening the door to a legal challenge in the WTO.
Wonderful discussions going on concerning MFN. My argument: Yes, you do formally treat all goods alike, but you target a border with much higher Irish content than all other borders and you explicitly do it to grant benefits to Irish goods. De facto MFN violation. https://t.co/fDyGLM84rf— Holger Hestermeyer (@hhesterm) March 13, 2019
Others reject the argument.
On the inconsistency question, some lawyers have raised the possibility that the UK might be violating Article 10 of the General Agreement on Tariffs and Trade (GATT, the main WTO treaty covering trade in goods).
Paragraph 3 of the article says: “Each [WTO member] shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings”, including its tariff rates.
Again, it’s uncertain whether a legal challenge in the WTO would succeed in showing the UK was violating the requirement to be “uniform”. But some lawyers see this as potentially a more serious violation than discrimination, even in practice.
One is Lorand Bartels of Cambridge University.
The estimable @Lorand_Bartels directs us to GATT Art X 3a. If the UK is charging one tariff at it's NI border & a different one at other borders can it be said to be administering its regulations in a 'uniform, impartial and reasonable manner'? https://t.co/7VyrSAWjqC— JPCampbellBiz (@JP_Biz) March 13, 2019
Concern about this has even been raised by the EU since products crossing the Channel from France would not be treated the same as products crossing the Irish land border.
“We take note of the UK’s plans for temporary tariffs in the case of no deal. We will carefully analyse the compliance of the UK plan with WTO law and the EU's rights thereunder,” European Commission spokesperson Margaritis Schinas said earlier today.
“The differential treatment of trade on the island of Ireland, and other trade between the EU and the UK, raises concerns.”
Meanwhile, a well-known trade lawyer has questioned whether the UK can, under WTO rules, continue to apply the EU’s anti-dumping and other measures against imports considered to be traded unfairly.
“Among the other WTO violations in this plan is the U.K. keeping in place anti-dumping [AD] and countervailing duties [CVD] based on investigations done by the EU. Countries can only impose AD/CVD duties if they have done their own investigation and proven injury to UK businesses,” tweeted Georgetown University professor Jennifer Hillman, a former WTO Appellate Body judge, 2007–2011)
Among the other WTO violations in this plan is the U.K. keeping in place anti dumping and countervailing duties based on investigations done by the EU. Countries can only impose AD/CVD duties if they have done their own investigation and proven injury to UK businesses https://t.co/iIlw7X46gg— Jennifer Hillman (@JAHillmanGULaw) March 13, 2019