ANDREW FARRAN. Brexit: Calamity awaits the world trading system.
September 21, 2018
The route to overcoming any impasse in the UK/EU Brexit negotiations may involve riding roughshod over their respective obligations under the global trading system, in particular the WTO. This, together with President Trumps on-going assault on the system, threatens to bring it down altogether with nothing better in its place.
While there are still many unknowns in the secretive negotiations between the UK and the EU Commission, the parties that will decide theeventual outcomeare themselves much in the dark. Theyare, of course,the 27 other EU member states (including Ireland), the British Parliament (all parties), and the Northern Ireland Unionists notleast.
This week the British Prime Minister (TheresaMay) has been meeting with EU leaders in Salzburg where she was permitted aten minutespeech over dinner in which to sum up her case, which in essence was the Chequers proposal in relation where numerous ’no-goes’ and red lines remain.She was told the following morning by the EU Council President Tusk that her Chequers proposal would not work and by the French President Macron that it was unacceptable. She was also left in no doubt that a credible solution to the Irish border problem was not within sight.Mrs May acknowledged that Brexit was a “uniquely complicated” challenge but could be completed on time. Her three priorities, she said, were protecting Northern Ireland’s place within the UK, safeguarding trading links with the EU and maintaining a close security relationship with the EU.
Well and good. But there is no shortage of devils waitingto run among the details. And details there will be aplenty. Taken in clusters these details will be insurmountable in terms of keeping faith with the fundamental principles of the global trading system and compliancewith its legal obligations. Aresponse to difficulties of this nature is to call forpolitical solutions- in the same vein as President Trump justifies his trade wars with China, the EU and anyone else in defiance of WTO rules and his virtual call for its abolition -starting with his refusal to approve new appointments toits appellate bodies torender them unworkable in due course.
Which brings usto the issues that will destroy the WTO as an effective vehicle for safeguardingthe rulesand obligations ofthe trading system.
Were the UK to crash out of the EU there are those, both within Britain and the EU, who say “So what”, it can always fall back on the WTO and the global trading order, free to negotiateFree Trade Agreements (call them what you will)with the US, Australia, and with the EUitself. However, as pointedout very clearly by Professor Gary Sampson in_Pearls & Irritations_recently (see https://publish.pearlsandirritations.com/gary-p-sampson-brexit-a-pandoras-box-awaits-the-uk-at-the-wto/)it cannot be as easy as that.
Britain would first have to negotiate its membership of the WTO_ab initio_.Currentlyits membership is subsumed within that of the EU and is subject still toall theundertakings and concessions (i.e. embodied in the Schedules) made on its behalf, and on behalf of all EU members. As a separate member of the WTO, adjustments would need to be made to those undertakings and concessions to rebalance their respective positions and relationships_interse_, andhaveallthat incorporated and formally certified in a new Schedule (a condition precedent to membership). To achieve this, as noted by Professor Sampson, 164 countries would have to agree on 9,379 individual product lines. Britain believes, apparently, that it could simply present the existing EUScheduleand nothing would have changed. But the fact is that it would represent a significant changeoveralland each WTO member affected would demand a renegotiation of the Schedule as it affectsthem. That is, Britain would have to pay for these changes. The effects may not be felt overnight but when members experience the imbalances and inequities of their of treatment andseek redress, they will findthe WTO impotent because of the breakdownof itsenforcement procedures, and sooner or later that could be the end of the WTO.
Even if Britain and the EU were to settle for a Free Trade Agreement without crashing out, this too would bebetween separate statesand the WTO issues would come into play similarly, as theywould in any future FTA between the UK and a third state. And the arrangement regarding a virtual or contrivedIrish Border would attractWTO attention also. The latter really requires the UK to remain in a Customs Union and Single Market with the EU - which would suit its traders, whether of goods, services, or agricultural products, but not the hard line Brexiters. The question thenwould be whether the latter would hold the country to ransom over an ideological obsession.
The EU Council will meet in October to assess the negotiations with a view to finalising the terms of the Withdrawal Treaty at a summit on 17/18 November. By then the lines of the UKs future relations with the EU are expected to be drawn.
Realistically, ifthere is to be a political solution, a number of legalred lines are bound to be crossed. The concern for the wider world is that the UK and the EU may ride roughshod over their global obligations to suit their respective situations and, in doing so, together with President Trump, will opportunistically put at serious risk the one-time orderly global trading system painfully evolved over the past seventy years - with nothing better to take its place.
Andrew Farran is, inter alia, a former diplomat, law academic,and international trade adviser.

Andrew Farran
Andrew Farran in his younger days was a diplomat, Commonwealth civil servant and law academic (Monash). His subsequent business interests included international trade, intellectual property and publishing, and wool growing. He was a regular contributor to Pearls & Irritations from 2017 – 2020.
Writes extensively on international affairs and defence, contributing previously to major newspapers (metropolitan and rural). Formerly director of major professional publishing company. Currently apart from writing he directs a registered charitable foundation with links in both Australia and overseas.