A Hard Brexit

A Hard Brexit

I have just watched a video of Trump trying to answer the question put to him about a hard brexit. Well, that video itself is worth a whole article about it! However, besides stating that Ireland was part of the UK, he obviously didn’t know what a ‘hard brexit’ meant! The man is unbelievable!

OK, so just what does a ‘hard brexit’ actually mean?

Generally speaking, it is used to mean leaving the EU with no deal. But what could the consequences of that be?

When asking the question, leavers have told me that it means we will leave with no deal, we will not have to pay the £39 billion and that we will be able to trade with all non-EU countries through the WTO. But is it really that simple?

We will save £39 billion

This is the amount that Westminster and Brussels both came to in order to cover outstanding contributions that the UK committed to in 2013 in a budgetary framework. Now, there is actually some dispute as to whether or not we are legally bound to pay this if we leave without a deal. But disregarding that point, surely it then boils down to an ethics issue; if the UK signed an agreement committing to monetary payments, SHOULD they renege on the payment, thus giving the UK a reputation that they can not be trusted in future negotiations not just by the EU but all around the world? What sort of footing would that leave us with when it comes to negotiate trading with anybody?

We can easily trade with country

If leaving the EU with no deal then ALL agreements will be null and void. Whilst the UK is a member of the WTO in our own right, all current agreements were made through the EU, so we will have to begin to trade under basic WTO rules until we are able to negotiate and agree new deals with individual nations. Negotiating individual deals is a long process and could take a number of years. This will, of course, cause a lot of disruption and problems for export companies, due to the higher tariffs and quotas they will be subject to.

However, the first step was that the UK must come up with a new plan/schedule of tariffs, quotas and subsidies, which all 164 countries of the WTO (136 of which are outside the EU) then need to agree with.

The UK made an application to do this in July 2018. The schedule that they drafted basically replicated the EU plan, with just a few technical changes. However, after submitting this to the WTO, by October 2018 at least 20 countries had objected to it. Now starts the difficult and lengthy process of coming up with a solution, which could dissolve into WTO dispute settlement proceedings. The trouble is that this situation is unprecedented, so nobody knows how long or exactly what will happen.

The ‘good’ thing though, is that the UK will be able to continue trading until our schedule is certified, but only by using the WTO’s basic rules.

I haven’t gone into much detail here due to all the complications and rules of the WTO, but there is a video of James O’Brien interviewing Bryce Baschuk, a Bloomberg Correspondent who specialises in the World Trade Organisation, in which he explains the process for trading on WTO rules

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