23rd January 2017 Geneva, Switzerland
Ensuring a smooth transition in the WTO as we leave the EU
Last week the British Prime Minister Theresa May set out her plan for Britain’s orderly departure from the European Union. Britain’s transition in the WTO is an important and necessary part of this process. Ensuring that goes smoothly is one of the over-riding priorities of the Mission I lead in Geneva.
British ministers in fact took the decision to begin our WTO transition late last autumn. They concluded that establishing the UK’s independent position in the WTO would not prejudge what kind of relationship the UK and the EU would have in future. Nor would it prejudge when the UK would leave the EU. The timing of the transition in the WTO would be linked to whatever the UK and the EU agreed in the Article 50 negotiations. This WTO process was not an alternative to a negotiated exit from the EU, as some claimed. On the contrary, it was a necessary complement to it.
Given that was the case, ministers decided it was better for the UK to get on with it, and with reassuring our trading partners around the world that their trade will not be disrupted. The Secretary of State for International Trade duly notified Parliament in a Written Ministerial Statement on 5 December 2016.
So what does this WTO transition mean in practice?
The UK is a full and founding member of the WTO. We signed and ratified the 1994 Marrakech Agreement that established the organisation. But we are also part of the EU’s Common Commercial Policy. Under the EU treaties, Member States have agreed that the European Commission will represent them on most things in the WTO. As a full member of the WTO, the UK has its own seat. As the UK’s Permanent Representative to the WTO, I attend meetings along with my 27 other Member State colleagues. But for most WTO business, the Commission speaks for all of us collectively.
Establishing the UK’s separate position in the WTO is not simply a matter of starting to speak up for the UK from one day to the next. Every WTO member state has things called schedules, lists which set out their commitments – their rights and obligations – in the international trading system. These cover trade in both goods and services. WTO legal experts will tell you that, as a full member, the UK already has its own schedules. But at the moment these are shared with the other EU Member States.
Smoothly separating the UK from the EU schedules is the best way we can reassure our WTO partners that their trade with us will not be disrupted as we leave the EU. Once we have our own schedules in the WTO, the UK will be able to negotiate changes to the international trading system as well, whether multilaterally (with the whole membership of the WTO) or plurilaterally (with some of it). A country’s WTO schedules also provide the baseline for negotiating bilateral Free Trade Agreements.
There is a process in the WTO that allows the UK to submit new schedules. But they can only be adopted – or certified – and thus replace our existing EU schedules if none of the WTO’s other 163 members object to them. So to minimise any grounds for objection, we plan to replicate our existing trade regime as far as possible in our new schedules. Before we take any formal steps in the WTO we will hold extensive informal consultations with the WTO membership. Every member will have an opportunity to raise any issues or concerns with us before we proceed.
We intend to work closely with the EU during this process. In the meantime the UK’s WTO commitments will remain as they are, as set out in the schedules with share with the other EU Member States. While the UK remains a member of the EU we will continue to respect and uphold the EU’s arrangements in the WTO.
Replicating our current EU trade regime will help ensure that our transition in the WTO is as simple, technical and uncontroversial as possible. It by no means precludes the UK from taking control of its trade regime after we leave the EU, and shaping it in the interests of the British economy and the global trading system. Indeed, it is a necessary precondition for doing just that.
What the UK is planning to do in the WTO has no precedent. We want the membership to be comfortable before we proceed, and we know that will take time and patience. That is why we are starting now, so that we can ensure our transition in the WTO will be as smooth and seamless as possible, for everyone.