Brexit news: Ex WTO chief warns of ‘muscular trade posturing’ as UK puts ‘war paints on’
FORMER WTO chief Pascal Lamy warned the first stage of the Brexit trade talks will include much “muscular posturing” from both UK and EU as he outlined how a no deal arrangement would work for both sides.
Brexit trade negotiations are due to begin on Monday after nearly three years of talks between the UK and the European Union to secure a withdrawal deal. Prime Minister Boris Johnson committed to striking an agreement by December 2020 but insisted he is ready to adopt an Australia-style deal should the British Government and Brussels fail to find common ground. Former World Trade Organisation (WTO) chief Pascal Lamy noted an Australia-style agreement would effectively mean there is no trade arrangement between the UK and the EU27 and new tariffs and quotas would have to be adopted to exchange goods between the two sides.
Speaking to LBC, Mr Lamy said: “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.”
European Commission President Ursula von der Leyen earlier this month pointed out there is no current free trade agreement between the European Union and Australia but noted Canberra and Brussels have agreed a more mutually beneficial deal should be put in place.
Reverting to WTO rules would see the implementation of a list of taxes on imported goods and limits on the quantity the UK is allowed to import and export to EU countries.
Under WTO rules, cars and car parts, as one example, would be taxed at 10 percent every time they crossed the UK-EU border but tariffs on agricultural goods are significantly higher – with taxes increasing to over 35 percent on dairy products.
Mr Lamy conceded both sides have been taking on “muscular posturing” before trade talks kick off on Monday and warned the mantra “no deal is better than a bad deal” would make a comeback in the early stages of the negotiations to put pressure on both sides.
He continued: “I hear all these noises, all this muscular posturing and I’m not surprised – it’s always like this at the beginning of a negotiation, both sides have to put on their war paints and definitely, definitely agree a no deal is better than a bad deal.
“We’ve heard that many, many times. The real key issue is whether or not the Uk diverges from EU regulatory standards.
“For the moment, the UK is saying, ‘we affirm we now have our sovereignty and we can diverge.’ And the EU says, ‘we know that but we don’t want unfair competition’.”
The EU has demanded the UK agree to establish a level playing field and included in its mandate a clause suggesting Britain continue using European regulation as “reference” at the end of the transition period in December 2020.
The Prime Minister however repeatedly rejected Brussels’ demands as he pointed out the UK is a sovereign nation and will not be forced into abiding by EU rules in the future.