Inside Britain’s Other Post-Brexit Trade Talks

  • U.K.’s ambassador to WTO faces unprecedented challenge
  • Britain needs to agree global trading terms outside the EU

Jim O'Neill Says Brexit Showdown Can Be Good for May

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As dawn broke on the U.K.’s decision to leave the European Union last year, Julian Braithwaite was awoken by a phone call from a fellow diplomat in Geneva. The message was more like a warning: your world is about to change.

The British ambassador to the World Trade Organization, until now a job more in name than practice, is tasked with something that’s never been done before: to navigate a seamless move from EU member at the WTO to an independent state. The trick will be to hammer out terms without triggering a vast chain of disputes among the organization’s other 163 members. With European leaders meeting this weekend to prepare their first response to Brexit, Braithwaite’s efforts will help determine what the U.K. can count on elsewhere.

“What is at stake for Britain’s efforts here in Geneva is that upon exiting the EU, they have at least something minimal, but firm to fall back on in terms of trade relations with the rest of the world,” said Marc Vanheukelen, the EU’s ambassador to the WTO.

Braithwaite, 48, couldn’t comment because of Britain’s election campaign. It’s unlikely he imagined trade would be his main preoccupation when he became the U.K.’s ambassador to Geneva-based international organizations such as the United Nations and WTO in 2015.

Read More: The WTO Trade Tangle Facing Theresa May

Before the Brexit vote, he spent about a tenth of his time at the WTO, where the EU or its precursors have represented the U.K. in trade talks for more than 40 years. Today, Braithwaite spends about half his time on trade issues, and he has been recruiting more negotiators. He’s also recalled his deputy from secondment with the UN.

“What the UK is planning to do in the WTO has no precedent,” Braithwaite wrote on his blog. “We want the membership to be comfortable before we proceed, and we know that will take time and patience.”

Essentially, each WTO member’s relationships are governed by a list of terms of trade, such as the tariffs it levies on certain goods. Currently, for example, the U.K. applies the EU’s 10 percent tariff on car imports. After Brexit, the U.K. will have to set its own import tariffs on 9,000 to 10,000 products, while agreeing also to deals on services.

The easiest option may be to replicate the EU’s tariffs, something Braithwaite has said the country will do “as far as possible.”

Complex Talks

The trouble is, it might not be straightforward to win approval from the rest of the WTO to do that. Members may link approval of the U.K.’s plan to wider issues, according to Richard Corbett, a member of the European Parliament representing the opposition Labour Party.

“India may say: ‘Fine, as long as our citizens get easier access to living in the U.K.,’” Corbett wrote on the ambassador’s blog.

The U.K. and EU must also separate the tariff commitments that protect their farmers by limiting the amount of foreign lamb, poultry and beef their trading partners can sell. Countries like Australia and Canada want to cut a better deal for their farmers and may object to the U.K.’s approach if it lessens their access to British and European markets.

Losing Clout?

On Saturday, 27 EU leaders hold an extraordinary summit in Brussels to discuss their collective response to Brexit after the U.K. formally gave notice to leave last month and triggered the two-year legal process.

Prime Minister Theresa May has said she wants to negotiate a deal that gives Britain full control of trade and its borders, meaning it will leave the single market and probably the customs union. Some in the pro-Brexit campaign said that falling back on WTO rules wouldn’t necessarily be a problem for the world’s fifth-largest economy.

That doesn’t mean the U.K. has the same leverage as the EU. While a single WTO member can’t block the U.K.’s proposals, it can refuse to approve them. That wouldn’t prevent the U.K. from trading, but it could lead to another round of protracted negotiations and potentially compensation demands, mini-trade wars and international disputes.

So whether at his Swiss residence over pre-Christmas champagne and fish and chips or around the negotiating table, it’s Braithwaite’s job to defuse those conflicts. Yet the outcome remains uncertain, as each U.K. deal with one country has the potential to unsettle another.

“As you can imagine, sometimes an outcome that is satisfactory to those two is not satisfactory to others so it is kind of a fluid negotiation,” WTO Director-General Roberto Azevedo said in an interview. “This is a first so it is difficult to predict what kind of dynamics we will see.”

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