Busting the Remain-inspired myths about trade on WTO terms

Busting the Remain-inspired myths about trade on WTO terms

Among the most vividly distressing of the post-Brexit images we have been exposed to by the Remain-dominated media is that of the mile-long queue of lorries at Dover, effectively shut out from the EU’s market because of its incompatible regulations and time-consuming inspections.

That British products will somehow be subjected to a battery of new rules and tests on Brexit Day, delaying or even prohibiting their entry into the EU, ignores the rights the UK is entitled to as a member of the World Trade Organisation (WTO), which it will re-join as an independent member following its departure from the EU next year.

The EU is also a member of the WTO, as are most countries in the world, meaning that it is bound by the WTO’s rules. Several of these render the infamous lorry-queue scenario highly implausible.

First, the WTO’s Agreement on Sanitary and Phytosanitary Measures (SPS), dealing with food-related products, provides that WTO Members must ensure that regulations and inspection procedures must be applied only to the extent necessary to protect health and cannot be maintained without sufficient scientific evidence. If there is no risk from British foods today while we are still in the EU, then there is no risk the day after we leave, as long as the products themselves do not change.

Furthermore, WTO Members must ensure that their food regulations do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail, including between their own territory and that of other Members. Since the UK does not intend to implement a wholesale change to its regulatory standards immediately after Brexit, the EU cannot treat products from the UK differently than they did before Brexit.

Second, with regards to safety standards for all other types of goods – like furniture or kettles – the WTO’s Technical Barriers to Trade (TBT) Agreement likewise states that technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, such as consumer safety, taking account of the risks non-fulfilment would create. Moreover, conformity assessment procedures should not be prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.

This means that product safety testing procedures cannot be more burdensome or be applied more strictly than is necessary to give the importing Member adequate confidence that products conform with the applicable technical regulations or standards. This means that the EU cannot impose regulatory barriers on UK goods without justification after Brexit as long as product and safety standards between the two jurisdictions remain aligned.

If the UK seeks to modify its own regulatory procedures regarding health and safety of products going forward – perhaps with a view to eliminating some of the laws that have made the EU uncompetitive – the EU may at that point be entitled to request additional testing or inspection at the border. However, the TBT Agreement provides that under such circumstances, WTO Members shall give positive consideration to accepting as equivalent technical regulations of other Members, even if these regulations differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations.

In other words, a potential new UK regulatory scheme would effectively need to ignore consumer safety in order for any additional testing procedures at the EU border to be allowed under WTO law. It is unlikely that this will occur in the near future, if ever. Even if it were to happen, such conformity assessment procedures would still need to be no more burdensome than necessary.

Lastly, on the formalities of customs procedures at the border, the WTO’s General Agreement on Tariffs and Trade (GATT) recognises the need for minimising the incidence and complexity of import and export formalities (for both tariff and non-tariff barriers) and for decreasing and simplifying import and export documentation requirements.

This is further enshrined in the new Trade Facilitation Agreement, which obliges WTO members to minimise customs formalities through technology, including many of the features discussed in relation to the maximum facilitation strategy for the Northern Ireland frontier. The new UK-EU border must adhere to this high standard of frictionless transit precisely for the purpose of avoiding long delays caused by needless red tape of the kind we have been told to fear.

Contrary to what many doomsayers may wish the public to believe, UK goods will not suddenly become hazardous to the health and safety of EU consumers the day after Brexit. There is no way that the EU could get away with placing additional arbitrary restrictions on goods imported from the UK after Brexit, either with respect to the content of the regulations, the testing procedures or customs formalities. New UK-EU non-tariff barriers would be illegal under WTO rules immediately after exit, even in a no-deal scenario.

Were the EU to impose such barriers anyway – possibly with an agenda of punishing the UK for daring to leave or to give their own suppliers an unfair advantage – the UK would be able to bring a claim against the EU through the WTO dispute settlement procedure, which it would almost certainly win.

It is worth adding that the WTO courts are far from toothless, as is sometimes suggested, enjoying an excellent compliance record among its many hundred rulings over decades of practice. Winning a case before the WTO forces the losing country to remove the illegal measure, which the EU would be expected to do promptly or else suffer retaliation in the form of tariffs on its goods, along with the acrimony of the rest of the world.