EU-UK trade deal could take six years, says former WTO chief

By on 17/03/2017
Pascal Lamy, former director of the World Trade Organisation (Image courtesy World Economic Forum. swiss-image.ch/Photo by Sebastian Derungs)

The former director of the World Trade Organisation has said that a comprehensive trade deal between the UK and the EU could take five to six years to complete.

Pascal Lamy, WTO director general between 2005 and 2013, said on Thursday that the two-year timeframe for negotiations provided by the Article 50 process is not enough. He said that even in the best case scenario, Brexit will be complex and permanently costly – but not an apocalypse – for both the UK and the EU.

Lamy said he thought it unlikely that the referendum decision will be overturned, but he argued that public opinion could end up shifting towards a softer Brexit in time.

“We are entering a sort of race with time,” said Lamy. “The British people decided to leave the EU not for economic reasons but for political reasons. We’re still at the stage where politics trumps economics.

“The big question is how much time it will take for costs to appear, and when these costs appear, if this triggers a new balance between reason and passion.”

He added that anything which has a cost for the UK will also have a cost for the Continent, and that it will take 10 years to evaluate the overall impact of Brexit. He also said the notion that EU leaders want to punish the UK for its decision is “total crap” and has “absolutely no resonance” on the continent.

On Scotland, Lamy said a separate trade deal with the EU would be extremely complicated to arrange; but if the Scottish people decide in another referendum to secede the UK, Scotland could technically rejoin the EU overnight. The only substantive obstacle would be Spain’s reluctance to encourage the campaign for Catalonia’s independence, he added.

If the UK fails to negotiate a trade deal, it will have to fall back on the WTO’s trade terms when it leaves the EU. The UK is already a member of the WTO in its own right, so does not have to reapply once it has left the EU. But it will need to agree its own set of schedules – commitments on the terms of tariffs, quotas and limits on subsidies – as it currently operates under EU schedules.

Speaking at an event organised by the Institute for Government think tank, Lamy outlined the administrative complexities involved in withdrawing from the EU. He listed a free trade agreement for goods, fisheries, and the Erasmus Programme as being among the simpler aspects to negotiate.

More complicated will be environmental issues, public procurement, competition law and enforcement, the European Research Area, and trade defence – using instruments to protect markets against unfair trade practices such as anti-dumping and anti-subsidy measures.

He said technical standards will be a really complex area to negotiate, unless the UK agrees to simply follow continental standards, which is unlikely. The UK’s exit from Euratom, which enforces nuclear safety standards, will be another very complex area, he said.

Lamy previously served as chief of staff to Jacques Delors when he was European Commission president, and as commissioner for trade between 1999 and 2004.

Jeremy Browne, special representative of the City of London to the EU and a former Liberal Democrat MP, said he hopes the outcome of the Dutch elections – in which the anti-Islamic, anti-EU candidate Geert Wilders roundly lost to the serving prime minister – will convince the EU that Brexit has not caused a charge for the exit door.

Also speaking at the IfG event, he pointed out that while there appears to be unity between the 27 remaining EU states, they haven’t had to agree on anything yet. With Britain leaving the EU, he added, many states fear being at the mercy of more protectionist nations.

“If our country is to make a success of Brexit, then we need to be an open, free-trading, economically liberal country,” he argued.

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See also:

Report: ‘Deluded’ UK cannot afford to be smug on Brexit

New European Parliament president sets conciliatory tone on Brexit

May’s hard Brexit: starting position or ultimate goal?

Ripples around the world: Brexit’s implications for Europe and beyond

Former UK chancellor condemns ‘idiotic’ Brexiteer lines on EU talks

UK government allocates over £400m to key Brexit departments

About Tamsin Rutter

Tamsin Rutter is a journalist based in Brussels, Belgium. She writes on a variety of topics, including public services, cities, local and central government and education. She was formerly the deputy editor of the Guardian's Public Leaders Network and Housing Network.

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