WTO will be just fine for UK? WTF!!

PUBLISHED: 14:00 07 September 2018 | UPDATED: 10:10 10 September 2018

Crowds arrive in Parliament Square in central London, during the People's Vote march for a second EU referendum.

Crowds arrive in Parliament Square in central London, during the People's Vote march for a second EU referendum.

PA Wire/PA Images

When trade expert Jason Hunter humiliated Jonathan Isaby in a radio debate with come cold, hard facts the encounter went viral. Here he outlines some more incontrovertible truths to further demolish the Brexiteers’ bluster

“Falling back onto WTO terms is nothing to worry about...” So say many Brexiteers. But is true? First, it’s helpful to explain a little about our relationship with the organisation. The UK has been a member since the late 1940s when the Global Agreement on Tariffs and Trade (GATT) was agreed.

However, since representing ourselves as a single country against 163 others wields less influence that being represented by the largest single market on the planet, the UK parliament nominated the EU to represent us at the WTO. As the UK is the third largest member of the EU28 – after Germany and France – the country punches above its weight inside the Union and therefore is also over-represented at the WTO – as things stand.

WTO members have agreed with each other how they treat imports from other nations with which they do not have any kind of free trade deal – these are what are commonly termed as ‘third country relationships’. It is not pretty, but it works: if you have no trade deal with a county, you apply a pre-agreed set of tariffs (usually some of the highest) on your imports from that country and these tariffs must be applied to everyone equally – no special treatment for one or you must offer it to all.

At 11.01pm, UK time, on March 29, 2019, the UK becomes a ‘third country’ to all 163 other members of the WTO and everything that we currently sell becomes more expensive for our customers to buy around the world. This includes the 46% of our exports into the EU27 and the 54% that goes elsewhere. It has been stated by Brexiteers that this 54% is currently traded under WTO rules. This is true, but thanks to our EU membership we currently have 34 trade deals with blocs and individual countries that allow the UK to export under preferential terms.

These 34 deals cover 60 countries outside the EU, giving us 87 countries where UK manufacturers can sell effectively. Currently, these markets cover 90% plus of our exports. The moment the UK leaves the EU legally our access to these deals terminates and everything we sell becomes more expensive for our overseas customers to buy. If your product costs your customer £100 today, and post-Brexit, it has a 10%, 20% or even 30% tariff applied to it by the importing country, and there is a stack of new export paperwork that you and your customer has to fill in, you have to wonder why your international customers will continue to buy from you.

There are currently 334,000 UK small and medium-sized enterprises trading inside the EU on a straightforward basis, which means it as easy to ship goods from Birmingham to Leeds, Liverpool or Newquay as it is to Lyon, Bratislava or Athens. After Brexit, every one of these companies must be prepared for the EU to treat the UK as a third country.

So, while your European customer must pay a higher price for your goods (or, perhaps, just go elsewhere), you will have to have your export documentation in order. That means: making sure you have your new Economic Operator Registration and Identification scheme (EORI) number; checking the International Commercial Terms (Incoterms) on all your contracts to show you are now and exporter and not a partner; and considering how you will submit export declarations – including whether to engage a customs broker, freight forwarder or logistics provider.

Businesses that want to do this last function themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC. And, of course, whether you engage a customs broker or acquire the appropriate software and authorisations from HMRC, it will come at a cost.

Oh, and you’ll probably want to ensure you’ve checked the tariff rate on all your different product types in all the various destination countries that you sell into. You also need to check if your products need an export licence on top of the new export declarations paperwork, make sure that you’ve submitted all the relevant forms before shipping your goods and check whether you need to pay the third country import duty before, or whether you are going to force your customers to pay the duty up-front.

This rough guide barely scrapes the surface of what is involved. If you would like more information on how to export, the government provides a raft of detailed information for you to get your head around on the gov.uk website. It is two years out of date at the time of writing, so good luck with that.

While online, you could also read the ‘Brexit preparedness notices’ published by the European Commission (ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en). And I would seriously urge every business person in the UK to do so.

If, having done so, you still think falling back on WTO terms is nothing to worry about, then read them again. Is your business safe from Brexit? Is your job safe? Are you sure?

Jason Hunter has negotiated trade deals both within the EU and without

You've seen the news, now discover the story

The New European is committed to providing in-depth analysis of the Brexit process, its implications and progress as well as celebrating European life.

Try 13 weeks for £13

Support The New European's vital role as a voice for the 48%

The New European is proud of its journalism and we hope you are proud of it too. We believe our voice is important - both in representing the pro-EU perspective and also to help rebalance the right wing extremes of much of the UK national press. If you value what we are doing, you can help us by making a contribution to the cost of our journalism.

  • Become a friend of The New European for a contribution of £48. You will qualify for a mention in our newspaper (should you wish)
  • Become a partner of The New European for a contribution of £240. You will qualify for a mention in our newspaper (should you wish) and receive a New European Branded Pen and Notebook
  • Become a patron of The New European for a contribution of £480. You will qualify for a mention in our newspaper (should you wish) and receive a New European Branded Pen and Notebook and an A3 print of The New European front cover of your choice, signed by Editor Matt Kelly

By proceeding, you agree to the New Europeans supporters club Terms & Conditions which can be found here.



Supporter Options

Mention Me in The New European



If Yes, Name to appear in The New European



Latest Articles

Podcast

ANTI-BREXIT EVENTS

Grassroots anti-Brexit campaigners are increasing the pressure on politicians ahead of a series of important votes this year. Here is a list of the events organised across Britain in the coming weeks and months.

Trending

Newsletter Sign Up

The New European weekly newsletter
Sign up to receive our regular email newsletter

Our Privacy Policy