Boris Johnson edges ever closer to power, and we wait to see what he will choose to do with it. His plan remains to first try for a renegotiation of the Irish backstop before trying for a tariff-free free trade agreement using the General Agreement on Tariffs and Trade (GATT) Article 24 to avoid a hiatus, and finally exercising the option of exiting without a deal leaving the UK to trade on WTO rules. In our view, there is so much wrong with the Withdrawal Agreement that he should skip straight to attempting to secure a free trade deal.
This week on the BfB website, therefore, we publish several reports on what an agreement under GATT would really mean, to combat several misleading claims. These include those of Director-General of the WTO, Roberto Azevedo, who declared that, if Brexit takes place without a deal, ‘you could expect to see the application of tariffs between the UK and EU where currently there are none’. Along similar lines, the previous Director-General Pascal Lamy (a former EU Commissioner) said that any suggestion that, post-Brexit, tariffs could be kept as they are today is ‘one of the many Brexit unicorns flying around’.
This is not true. Though an agreement of both parties is, of course, required to trade under Article 24, there is no need for this agreement to be as comprehensive as the Withdrawal Agreement. It could be a preliminary agreement, and tariff-free trade could continue as the details are negotiated.
This is the answer that Boris Johnson should have given to Andrew Neil’s question about paragraph 5c of Article 24 of GATT this week. It is important he gets these details right over the next few weeks.
Meanwhile, as Editor’s Notes points out this week, a key plank of Jeremy Hunt’s leadership bid is a plan to reduce the UK’s rate of corporation tax from 19% today down to the 12.5% of the Irish Republic. He claims in hustings that this low rate has helped Irish GDP per capita to rise from 40% below the UK to 40% above. He appears not to know that the Irish figures are hopelessly distorted due to profit-shifting by multi-national companies and that average living standards in Ireland are below all UK regions.
We recently published a pamphlet by three eminent lawyers, Martin Howe QC, Sir Richard Aikens PC, and Dr T.D. Grant, ‘Avoiding the trap of the Withdrawal Agreement – the way ahead for a new Prime Minister’. This week we posted a copy to all 650 MPs individually, accompanied by a letter, which among other things said “So important is this issue that we regard it as our duty to make their analysis available to all Members of Parliament. We are confident that you will wish to make yourself fully aware of what is at stake.” We urge any of our subscribers who have not yet read this pamphlet, which is available on our website, to do so. If you agree with us that this is something that every MP must read, we suggest that you should write to their own MP, urging them to read the pamphlet which they will by now have received.
BfB co-editor Robert Tombs has multiple articles in the Sunday Telegraph this week. One, entitled ‘It’s the declinist Remainers, not the optimistic Brexiteers, who are the irrational ones’, discusses the lack of substance contained in Remainer arguments, which are unlikely to distort our politics for long. He also writes a rejoinder to John Major’s ill-founded claims that Brexit is like the Civil War.
On the 10 July, a group of BfB contributors sent a letter to the Telegraph. to clarify the fact that an agreement under Article 24 of GATT does not need to be a full and detailed as the Withdrawal Agreement. The agreement could a preliminary one, with tariff-free trade continuing under GATT until two sides negotiated a full free-trade agreement:
“If the EU and WTO are to stay true to the intent behind the world trade system, they should acknowledge what Article 24 really means – and how Britain and the EU can use it to general advantage.”
The signatories were: Sir Richard Aikens (Former member of the Court of Appeal), Dr Thomas Grant (Fellow of the Lauterpracht Centre for International Law, Cambridge), Dr Graham Gudgin (Economist, Cambridge) and Professor Robert Tombs (Historian, Cambridge)
On the website this week
Dr Liam Fox, Secretary of State for International Trade, has sent a letter to his constituents about GATT 24 this week, and it was passed on to Briefings for Brexit. We publish it here, with our response.
“With great respect to Dr Fox, we do not consider that his letter to his constituents has refuted a single one of our arguments – rather the contrary.”
Boris’s Brexit Revolution? By Briefings for Brexit
With Boris Johnson’s elevation to No. 10 now certain, Briefings for Brexit speculates on what he is likely to be able to do on Brexit over the next three months. Faced with the intransigence of both the EU and Parliament his task is fraught with difficulty but his determination to leave the EU by Halloween is clear. The survival of the Tory party, and not least his new job, depend on it.
“An amended Withdrawal Agreement thus looks unlikely. Plan B is then a free-trade agreement. To make progress here the EU would have to accept that the Withdrawal Agreement is off the table. Any possibility that Parliament could stop ‘no deal’ and hence keep the Withdrawal alive delays the EU reaching such an understanding, but if Parliament has been kept at bay until late October a last-minute agreement with the EU to begin negotiations on free trade is conceivable.”
Who would not wish for tariff-free trade with the EU to continue after Brexit, to both sides’ benefit? But some important people who oppose Brexit insist that tariffs are inevitable. Dr Thomas D. Grant, Fellow of the University of Cambridge’s Lauterpacht Centre, asks whether they really are. His report explores the meaning of the ‘Most Favoured Nation’ rule in the GATT and WTO treaties, and why this need not be a problem for Brexit.
We’ve also published a shorter blog summarising Dr Grant’s findings, which can be found here.
“GATT… promotes the reduction of tariffs, not their imposition; and it prevents the use of trade as a political weapon.”
External sources of growth – Commission Staff Working Document, by the EU Commission
In our earlier post “A New Tory Project Fear”, we gave a link to an EU study suggesting how beneficial free trade agreements outside the EU could be to the British (and other) economies. But we discovered that this study was no longer available on line. We therefore decided to publish the report on our site. The point is, of course, that FTAs (which the EU has not been very good at negotiating) would be of great benefit to the UK economy after Brexit. The report shows how trade agreements could boost growth via both the demand and supply sides, by securing dynamic external demand and fostering competitiveness-enhancing structural reforms. Brexit gives us a great opportunity to improve our trading relations with the most dynamic parts of the world.
“Potential benefits of pursuing an ambitious external trade agenda include GDP gains of about 2 % or more than € 250 bn and the creation of more than 2 million jobs across the EU.”
by Robert Lee
Economist Robert Lee notes that those MP’s supporting Parliamentary efforts to prevent a ‘No deal’ Brexit largely avoid talking about democracy, independence, and sovereignty, where they are on weak ground. Instead they focus on the “catastrophic” economic damage they expect the UK to suffer if it leaves without a deal. But here too all the evidence suggests they are on equally weak ground.
“If only the bulk of MP’s would listen, and look at the evidence, they would stop frightening themselves and the voters and release the UK from an unnecessary constitutional crisis.”
We are also on Twitter, posting articles and retweeting the daily events that bring Brexit to the fore in the national news.
Discussion also continues over on Facebook. Dianne Parker particularly enjoyed the report on GATT trading terms: “Very very interesting… Let’s hope Dr Thomas Grant is advising the next PM!”
How you can help
We urge our supporters to ‘take back control’ in our present confusion. There are thousands of you. Our MPs listen to their constituents. Write to your MPs. Perhaps send them copies of some of our articles (or links to them), especially when they are relevant to your local conditions – for example, in rural areas, on the threat to British agriculture. Better still, make an appointment to see them at their next surgery: they will take notice when people are lining up at their doors. Make you views known where MPs might be wavering, or where they are working to sabotage Brexit, especially in Leave-voting and marginal constituencies, which Richard Johnson listed in his recent article.
Do also keep reading our posts, and to tell others about us. Share links to our quality content so that others can understand how leaving the EU can be good for the UK economy and for our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.
You can follow us on Twitter: https://twitter.com/briefing4brexit
And Facebook: https://www.facebook.com/BriefingsForBrexit/
An Oxbridge PhD Student
Dr Graham Gudgin
Economist, Centre for Business Research, Judge Business School University of Cambridge
Professor Robert Tombs
Emeritus Professor of French History, University of Cambridge