Trading on WTO terms under a no-deal Brexit is pure fantasy – and this is why

It seems utterly absurd that the prospect of the UK crashing out of the European Union without a deal and then trading with other nations on World Trade Organisation (WTO) terms is even being entertained.

Dominic Grieve’s amendment being passed shows there is no way MPs will ever let it get to that point and they are absolutely right not to. So let’s stop wasting time thinking about it as a viable option.

This week I spoke to Anand Menon, a professor of European politics and the director of The UK in a Changing Europe, and he described WTO rules as setting a “baseline”. WTO terms essentially work as the minimum you can’t go below but do not serve as a workable final destination.

Menon says that “countries who trade a lot with each other say it is a start but need to go further” and he is exactly right. There is a reason why every other country on earth negotiates more extensive trade terms with their neighbours – WTO is not enough.

As it stands there isn’t a single country that trades simply as a WTO member with no other agreements in place. It would be totally unprecedented, and the UK would suffer greatly.

WTO terms are comprehensive on goods but far less so on services, which make up a significant part of the UK economy.

Barriers to trade in services will increase substantially and it would have a serious negative impact on the economy. There are some commentators who seem to believe that the UK currently trades with the US on WTO terms and use that as proof that the UK can thrive in these conditions – this is false.

The EU has more than 100 separate bilateral agreements with the US spanning several sectors and industries. Under a no-deal Brexit the UK would find itself in a position where these agreements are no longer in place and it would lose similar arrangements with most of its trading partners. Quite frankly it isn’t feasible, and estimates suggest that trading on WTO terms would significantly damage the economy.

It’s an incredibly important time in parliament as MPs debate about the future of the country. Time is of the essence so let’s not waste time on fantasy and only discuss the realistic options.

Yours,

Shehab Khan

Political commentator and news reporter