DEBATE: Will plans to divide existing WTO quotas into the EU put other members at a disadvantage?

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Even if in material terms the disadvantage is small, the perception in these countries that they have been disadvantaged is significant (Source: Getty)

Will plans to divide existing WTO quotas into the EU put other members at a disadvantage?

Emily Redding, director of think tank platform Smart Thinking, says YES.

Of course certain WTO members are going to feel that they are disadvantaged by plans to simply divide the existing quotas with a method based on current trade flows.

On the surface – and no doubt to the UK and EU – this seems an equitable way forward, but in practice it is likely to lead to a reduction in the number of predominantly agricultural products that can find their way into the EU and UK. What was previously one large bloc is now two, with an inability to make up any shortfall in the EU with increased demand from the UK and vice versa.

But even if in material terms the disadvantage to the US, Canada and others is small, the perception in these countries that they have been disadvantaged is just as significant, because they are the ones that the UK is particularly keen to line up for the post-Brexit free trade deals consistently touted as one of the main benefits of leaving.

Read more: The UK and EU just explained to the WTO how trade will work after Brexit

Shanker Singham, director of economic policy and prosperity studies and chairman of the Special Trade Commission at the Legatum Institute, says NO.

The UK and EU’s desire to apportion tariff-rate quotas (TRQs) would not disadvantage non-EU members. It aims to ensure a smooth transition, which minimises disruptions to trading relationships with WTO members.

The legal rights of non-EU members would change under this agreement, as producers from these countries wouldn’t have the flexibility to exhaust their TRQs through exports solely to France or solely to the UK.

However, in practice these countries should see little difference, because the TRQs are intended to be set at a level that reflects existing trade flows to the UK and the EU.

In order to achieve this outcome, it is crucial to undertake robust and thorough analysis by product and country, as well as historical trends. Any further future market access can be discussed separately as part of the UK’s bilateral trade negotiations.

This needs to be within the context of the UK’s future role with the WTO and proposals regarding domestic agricultural support.

Read more: British business leaders join Fox to launch new board of trade

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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