No-deal Brexit: Tariffs Won’t Stop

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Brexit Will Restrict UK Exports to Europe
Brexit Will Restrict UK Exports to Europe

Brexiters are “completely wrong,” EU Trade Commissioner Cecilia Malmstrom said on Friday, according to Reuters.

Talking to Reuters, the EU Trade Commissioner explained that Brexit supporters, who believed that there is such a trade rule that will stop tariffs overnight in the event of a no-deal Brexit, were utterly mistaken. She said: “They will have to trade with us and other countries, until there are trade agreements – and we hope that will be a trade agreement – on the ‘most favoured nation’ basis. And that will mean new tariffs.” She clarified that the “most favoured nation” did not mean the UK being entitled to any special treatment.

Trade experts have even dismissed the idea of Article 24, which Nigel Farage and other Brexiters have brought up as a temporary solution. It has been argued that Article 24 of the WTO rules can soften the negative effects of Brexit, as the clause dictates that countries can use it “if they agree to a trade deal and want to declare an interim trade agreement, along with a plan and a timeframe for the full deal to take shape.”

Article 24 is a myth

Earlier this year, Bloomberg had published an article busting the myth of Article 24, which was seen as an attempt by no-deal Brexit evangelists “to dress up a no-deal exit as acceptable.” Jacob Rees-Mogg and other hardliners have used this as a “secret weapon” and the best solution out of the current Brexit impasse. Article 24 allows countries to discriminate in favour of each other, and Brexiters have argued that the UK and the EU could use it to agree on an interim arrangement that can last up to 10 years while a permanent deal is being negotiated. But the complexities of Article 24, as well as its limitations to cover all sectors of the economy, regulations or standards, remove border friction, or address Northern Ireland’s specific situation, make it a problematic clause.

Unfortunately, Article 24 has been used to push the idea of a no-deal Brexit. As Bloomberg argued in the past, if you mention no-deal Brexit enough times, you almost legitimise it: “Repeat something often enough and it acquires a veneer of respectability. Pretty soon, it just becomes accepted. That has been the case with a no-deal Brexit: It was unthinkable even for Leavers during the 2016 campaign; then it was on the fringes of the debate; now it is at its very heart, and accepted by four in 10 voters.” But, as the article also concludes, Article 24 is not a mechanism that could deter all the destruction that a no-deal departure would unleash.

No-deal departure a possibility

On Friday, it was also reported that a Reuters poll showed that the possibility of a no-deal Brexit “has jumped in the past month” as most of the candidates who want to become the next prime minister have adopted a hardline stance. Boris Johnson, as well as other contenders, have said that they will be willing to take the UK out of the EU with or without a deal. As Howard Archer at EY ITEM Club said: “The possibility of a ‘no deal’ Brexit appears to have risen. Many of the contenders looking to replace May as leader of the Conservatives and prime minister have stressed that the UK must leave the EU on Oct. 31 – ‘deal’ or ‘no deal’.”

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