James Delingpole, noted Leaver, was on Andrew Neil’s show last night. Neil decided to lay into him a little on the whole idea of the UK trading on WTO rules only (slight aside here: I really hate when people lay into Neil as being impartial given he is pro-Brexit when in fact, he’s been one of the best journalists in the country in terms of having a go at Brexiter lazy assumptions). Neil put it to Delingpole that if you want to offer the EU tariff free access to the UK market, you need to offer the same terms to everyone else in the entire world. This is one of the many reasons why trading on WTO rules alone is a bad idea, and conversely, why trade deals are important. Trade deals allow you to free up access to your market for foreign goods and services where you want it and protectionism where you prefer it, subject to other countries agreeing terms, obviously. Under only WTO rules, you just have to offer the same stuff to everyone.
Neil asked Delingpole if, given under WTO rules America would get tariff free access to Britain, why they would ever sign a free trade deal with us. It’s the old, why buy the cow when you can get the milk for free analogy, and it’s a perfect fit for the scenario described. Dellingpole said he couldn’t answer that question.
I am not here to give Delingpole or indeed any WTO-er a go. Rather, I would like to point out that if the UK really ever did find itself trading on WTO terms alone, without any trade deals whatsoever, then I think rejoining the EU someday (on whatever terms they will allow, mind) will become inevitable. This is because the only way out of the terrible dilemma offered by trading on WTO terms alone is someone allowing you into their trade bloc for reasons other than the purely commercial (given you have removed any commercial leverage). The only trade bloc that would consider letting a WTO only UK into its orbit would be the EU. Thus, I can only see it as a matter of time.
Hold on, some of you might say, so we trade on WTO rules only for the rest of time. What’s the big deal? Well, if you are in an industry that doesn’t need any special access to anything that usually requires a trade deal, or more pointedly, anything that requires any protectionism of any sort to function (so, almost all of the UK agricultural industry, for example) then you might, and I want to stress, might be okay. But lots of businesses will struggle for a variety of reasons under a system in which every single country in the world has tariff-free access to the UK while every other country in the world is under no obligation to reciprocate, at least in the same way. Add to this, non-tariff barriers to trade faced by UK firms wishing to trade outside the UK and this becomes very significant.
Of course, we don’t need to offer tariff free access to the EU and thus everyone else. Well then, what tariff barriers should we offer instead? Again, trading under WTO rules alone gives you very little room for finesse.