What will happen if UK walks away from Brexit negotiations ?

Former WTO chief Pascal Lamy explained to Nick Ferrari what UK-EU trading would look like without a deal.

“This Australia-like deal is a nice way of saying this is WTO terms. Because as you rightly said a moment ago, Australia and the EU do not have a trade agreement.

“So for the moment Australia and EU trade together under WTO rules, i.e. the trade commitments the EU has with the WTO and the ongoing commitment Australia has with the WTO.”

Mr Lamy said at the beginning of a negotiation as both sides “put on their war paints”, however it must be acknowledged that “no deal is better than a bad deal.”

He continued that the key issue for the UK in the Brexit negotiations is whether there will be a divergence from EU regulatory standards.

Both negotiating parties have different but equally logical perspectives, he said; the UK have sovereignty so are within their right to diverge from regulatory standards but the EU does not want unfair competition “at their door.”

Brexit is the capacity for the UK to diverge, he said, but the crux of the matter is it is unclear “how much it will diverge and when.”

If the UK and EU do not negotiate a deal, the two parties will trade under WTO regulations; Nick asked the former WTO chief what this would look like.

The trading agreement would be “much less open” than it is currently, he said, and new tariffs that would be introduced, such as 10% on cars and 20% on cheese, would “hurt both sides.” “It will be a big impediment.”