A common meme floating round the eurosceptic “community” is that trade with the EU would continue in the even of the UK leaving the EU. Thus, the Eurozone, led by Germany, would not discriminate against British exports, says Global Britain in its latest Briefing Note.
This is because, says Global Britain and many more: “Any such discrimination would be illegal under the provisions of the World Trade Organisation (WTO), of whose predecessor the UK was a founder member in 1948”.
And referring to the WTO website, which can reasonably be taken as an authority on this issue, it does tell us that, under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products), it says, and you have to do the same for all other WTO members.
However, it goes on to say, “some exceptions are allowed”. For example, we are told, “countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside”. This could not be clearer. Countries within a free trade area (for instance) can have preferential arrangements between themselves, which are not available to countries outside the area.
This, the WTO site tells us, is accommodated by an updated “understanding” to the original GATT Article XXIV, agreed in 1994, a provision which covers “Regional Trade Unions”, of which the EU’s customs union is one.
What this means is that the EU can – and does – have preferential arrangements which apply only to member states, and which do not apply to countries outside the EU – unless they too have a free trade arrangement with the EU. The meme about the EU and “Brexit” simply isn’t true.
Should the UK leave the EU, without negotiating a new agreement, perforce we would no longer be part of the customs union, nor part of any free trade agreement. Thus, the UK would no longer benefit from any of the preferential arrangements which applied to members of the respective “clubs”.
Outside the EU, the UK would be treated exactly the same as any other country which was not part of the customs union, or member of a free trade agreement. Our exports would be subject to stringent controls at the point of entry to the EU (and the EEA generally), tariffs would be payable, where applicable, and non-conforming products would be rejected.