Nations Seek Brexit Trade Compensation
Global trade is organised between nations via treaties between nations and between nations and blocs – for example the recent trade agreement between the European Union and Canada. These accords set out the scope of the agreement, how trade disputes are handled, what the obligations are and the relevant trade and environmental standards which will apply. They are complicated agreements which take years to conclude – seven years in the case of the EU-Canada accord. Where no such specialised agreement exists then trade is done according to the baseline agreements of the World Trade Organisation accords. One aspect of this WTO trading regime is that nations (or blocs) set out quotas for goods that they will accept from other nations under “preferred conditions” i.e. at a lower than normal tariff. All nations have “schedules” with the WTO which apply to trade between nations where no other agreement exists.
15 nations are seeking compensation from the UK and EU as a result of the disruption to trade caused by Brexit. Australia is complaining that their beef and lamb exports had been affected by Brexit problems and Brazil is suggesting that the proposed Northern Ireland solution to the UK’s withdrawal agreement may breach WTO rules. Other nations complaining include the USA, India and New Zealand – all nations with which the UK hopes to sign post Brexit trade agreements.
The major area of complaint is over the tariff-free quotas that these nations have with the EU (of which the UK is still a member) and mainly relate to agricultural produce. When/if the UK leaves the EU, the tariff-free quota to the EU will need to be split such that the UK proportion is removed – this fractures the market for these non-EU nations, of course. The nations complaining to the WTO fear that they will lose out when the new EU and UK schedules are established.
An Australian complaint cites their beef and sheep exports to Europe which some producers have suspended due to the (now missed) 31st October Brexit deadline and uncertainties over the fate of the Australian quota.
A Brazilian objection relating to the island of Ireland and post Brexit trade within the rest of the UK and Northern Ireland relates to concerns that the WTO non-discrimination principle is preserved in that Northern Irish firms do not gain unfair advantage from being both inside and outside the EU customs union.