Brexit: the EU and the UK present a common proposal for future WTO commitments
The UK and the EU presented a proposal for an approach to adjust their respective WTO commitments after Brexit. As a member of the EU, the UK has no independent schedule and exercise its WTO membership through the EU schedule. For this reason, the MFN tariffs applied by the UK are the ones defined in the EU schedule.
In view of Brexit, both the EU and the UK will need to adapt their commitments to reflect the withdrawal of the UK from the EU. This process of adjustment will involve negotiations not only between the EU and the UK, but also between these two and other WTO Members.
According to the EU-UK joint proposal, the UK intends to replicate as far as possible its obligations under the current EU commitments for trade in goods. In other words, the UK intends to adopt the current EU MNF tariffs, following a rectification procedure. The UK is working on its own schedule, which is expected to be presented by the end of 2018. For companies exporting to the UK, clarity on this point is crucial as the UK WTO schedule will define the MFN tariffs applicable to imports once the UK will no longer be an EU Member State. With respect to other WTO agreements, London will seek to establish its own commitments on services, and to maintain its rights and obligations under the Government Procurement Agreement.
One of the sensitive points of these negotiations will be agriculture. The EU and the UK intend to split proportionally, the EU maximum levels of authorized domestic support. Furthermore, the current volumes of agricultural products imported in the EU with lower tariffs under the existing tariff-rate quotas (TRQs) would also be split between the EU and the UK, following a common approach on data and methodology. Agricultural exporting countries have already expressed their concern with regard to the splitting of the TRQs. Argentina, Brazil, Canada, New Zealand, Thailand, the United States and Uruguay argue that, the splitting of the TRQs would remove the flexibility existing under the current arrangement, which compromises the quality of the market access commitment previously negotiated with the EU. This would be in violation of WTO rules. Consequently, it is very likely that the splitting of the TRQs would cost the UK some concessions to these countries.
The UK schedules would take effect immediately upon leaving the EU, in March 2019.