Thoughts on Article 24 of GATT

Some Brexiteers, especially advocates of a no-deal Brexit, have been rather carelessly, loosely and lazily bandying around Article 24 of the General Agreement on Trade and Tariffs (GATT) under the World Trade Organisation (WTO) as if it were a “silver bullet” or “smoking gun”. GATT was signed in 1947 and formally took effect the following year and was initially active under the International Trade Organisation (ITO, the WTO’s predecessor). Article 24 was indeed used, invoked and applied for under the ITO, but has not been used since he WTO’s establishment and founding in 1995. It is also worth remembering that this Article has never been invoked or used for an economy the shape, scale, size or complexity of the UK’s. Furthermore, both sides have to bilaterally agree to a preliminary template/outline/framework for the potential future free trade agreement which the two sides wish to negotiate in the future. Now a potential problem here is that the EU says it will not even begin to officially talk about or negotiate on trade until and unless the so-called “Brexit divorce bill”, the citizens rights and the border on the island of Ireland have all been resolved via the Withdrawal Agreement. However, if we were to leave on or before 31st October without having passed a Withdrawal Agreement, if the EU sticks to its line here, the EU won’t talk trade and so won’t agree to a preliminary template/framework/outline for a potential future free trade agreement. Additionally, as Sir Ivan Rogers pointed out, the EU are probably unlikely to quickly agree to a future free trade agreement in principle so soon after we left without a deal, without paying all the money and without resolving the issues contained in the Withdrawal Agreement. Anyway, after the potential future free trade agreement has been agreed in principle, both sides then have to agree to bilaterally invoke and apply for the freeze on current tariff rates and levels of quotas for a window of up to 10 years while that future trade deal is negotiated under paragraph 5(b) of the Article 24. A final point is that Article 24 only applies to trade in goods, not to trade in services. Yet, in 2013, 79% of UK GDP came from the services sector and, in 2016, UK services exports to the EU accounted for 7.2% of UK GDP. Services accounted for 40% of the UK’s exports to the EU in 2017 and the UK had an £83bn trade surplus with the EU in services in the same year.

Now I say all of this not because I wouldn’t like a potential future Article 24 application to fail, but instead because I’m trying to be realistic and am simply saying that it is not one-sided and is not the simple, quicky, easy or straightforward “smoking gun” or “silver bullet” some would have you believe. Although I do think it would be a good Plan B/safety net as a transitional period if the EU were to unwisely, stubbornly and intransigently still refuse to add an appendage clarifying, replacing or removing the backstop. I’d highly recommend watching the below video too:

Sources:

(1) TDLR News YouTube Channel

(2) BBC News Reality Check

(3) FullFact website

(4) Parliamentary Research Briefings on UK-EU Trade

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