Brexit: WTO rules on the cards?

Dr Jonathan Owens, Lecturer in Operations Management at the University of Salford Business School, and expert in supply chains comments on the huge uncertainty surrounding Brexit after Theresa May cancelled a planned vote on her deal. As a no deal scenario becomes more likely Dr Owens looks at what might happen under World Trade Organisation rules.

Dr Owens said: “There has been much talk that future trade after 29th March next year could revert to rules set out by the World Trade Organisation (WTO), and therefore suggests that’s how we currently trade with the rest of the world.

“If you are not sure how this applies to you, then look round your own home and see how many products you have bought that are not made in the European Union.  Some key government supporters of Brexit have suggested that failing to reach a deal wouldn’t be all bad. Indeed, it has been suggested that even if we left with a no deal position, we could still get a favoured nation status under WTO to trade with the rest of the world.

“However, regrettably this would not be as simple as it sounds to develop, i.e. new trading channels, routes, tariffs, supply chains etc. For example, if we consider tariffs, Britain currently trades with twenty-four countries and territories under the sole agreement of WTO rules. However, with sixty eight countries, it has either fully or partly in place the EU free trade agreement, that enables the UK to trade on better terms.

“Canada spent seven years getting in place its Comprehensive Economic and Trade Agreement (CETA) with the European Union. Though, as former UK Foreign Secretary Boris Johnson has claimed, whilst there would be inevitably some disruption, these issues are not insurmountable. It is a little difficult to go along with the government’s economic claims that fan the “Project Fear” flames, particularly as they are long term (15 years) forecasts.  For example, if you ran a business and it was predicted that your growth “would be reduced by 8 per cent with a no deal”, are you going to accept that or try and reduce this figure?

“Most businesses would make alternative arrangements, otherwise (unlike the UK Government) they may not have a business to run. UK businesses are resilient, resourceful and some become the envy of their competition, however what they do struggle with is being out of control, which is where they find themselves today.

“What UK businesses crave on the Brexit question is a decision; the PM’s deal or No Deal. Presently the UK Government appears to be lacking in clear and unequivocal direction to provide the UK businesses and population with this key decision, this would enable them to regain control once again.”