Richard North, 21/05/2019  
 


With the spiv Farage churning out the Article 24 myth, this canard is proving harder to kill than a room full of zombies. But then the Spiv is only the latest in a long line of ultras, ranging from Campbell Bannerman to Owen Paterson, to resort to it.

This is the attempt to justify resorting to the WTO option by asserting that Article XXIV of the GATT Agreement permits parties engaged in formal trade negotiations to undertake mutual trade on tariff-free terms with the EU, by way of an interim agreement.

Furthermore, by way of a special dispensation, this interim agreement does not have to comply fully with WTO rules provided it has the approval of two-thirds of the WTO membership.

This, supposedly, relieves the UK of the immediate obligation to conclude a full Free Trade Agreement before settling trading terms with the EU, since the interim agreement may take effect for a period - ten years is often cited – as long as a full agreement is eventually concluded. This, it is held, gives time for the UK to sort out its trading arrangements should we leave without a deal.

However, while there can be no dispute that parties to trade negotiations can make interim arrangements prior to concluding a final deal, any such arrangements nonetheless constitute an international agreement. It thus requires the assent of all the parties to it. It is not something the UK can conclude unilaterally.

Yet the essence of a no-deal Brexit is one where the UK proceeds unilaterally, without concluding any agreements with the EU. In this (and any other) context, no deal means no deal. If the UK leaves without a deal, as Farage currently advocates – then to rely on WTO terms, as he put it – then by definition we cannot have concluded an interim agreement with the EU.

Even then, implementing an interim agreement is no simple thing. The parties to the agreement must refer the details of any such agreement to the WTO, with other information pertaining to the negotiations. Then, if the WTO then finds that such agreement is not likely to result in the formation of a customs union or of a free-trade area within the period contemplated by the parties to the agreement or that such period is not a reasonable one, it must make recommendations to the parties, which are them prohibited from implementing the agreement unless they are prepared to adopt the recommendations.

This latter provision is somewhat moot as a no-deal Brexit creates a situation where there are no discussions being held. There will be no "parties to the agreement" and therefore no mechanism by which an interim agreement can be sought, much less submitted to the WTO for approval.

On that basis, the Spiv – as always – is talking rubbish. But it doesn't matter how many times the Article 24 myth is debunked. Creatures such as Farage will continue to resuscitate it, demonstrating the paucity of their case and their fundamental intellectual dishonesty. The worst of it, though, is the number of feeble-minded people who are prepared to believe what they are told, or to forgive those who so readily pervert the Brexit debate.

Somewhat late in the day, but nonetheless welcome despite that, we have today Chancellor Philip Hammond making what Sky News calls one of his strongest attacks yet on a no-deal Brexit. He will, we are told, declare that the scenario would "knowingly... inflict damage on our economy and our living standards".

Checking back on my own work, I have to remind myself that it was on 29 July 2016 that I wrote my definitive monograph on the WTO Option and its application to Brexit. I didn't mention the Article 24 myth as it did not seem to have been invented then, but I was nevertheless unequivocal in my conclusions.

In order to get there, I had resort to the European Commission's Europa website, and the Treaties Office Database which boasts an advanced search facility. And this readily illustrates that countries cited as having no trade agreements with the EU do in fact have multiple agreements with the EU dealing with trade issues.

Where the likes of the Spiv go wrong is that they assume that only the formally-defined Free Trade Agreement (FTA), held on the WTO register, constitutes a trade agreement. But there are many forms of trade agreement which do not appear on the WTO register, thereby giving a false impression of the state of the art.

This is especially the case with the United States which has its own State Department declare: "The United States and the 28 Member States of the EU share the largest and most complex economic relationship in the world". Transatlantic trade flows (goods and services trade plus earnings and payments on investment) averaged $4.3 billion each day of 2013.

On the Treaties Office Database, I thus found recorded 38 EU-US "trade deals", of which at least 20 are bilateral. Similarly, China has 65 agreements with the EU, including 13 bilateral agreements - ranging from trade and economic co-operation to customs co-operation. None of these are of the simple, tariff reduction variety, but collectively they have enabled China to become the EU's second largest trading partner, with trade valued at over €1 billion a day.

None of these "trade deals" are on WTO register but, with these and other countries that have such deals with the EU, it is difficult to identify countries which do trade solely under WTO rules – there are so few of them. One cannot even cite North Korea, ranking 182 as an EU trading partner, as this country is not a WTO member.

Altogether, the EU has 880 bilateral agreements with its trading partners, and there is no example of a developed nation trading with the EU solely by reference to WTO rules. For the UK to trade with the EU relying on the WTO Option would be unique for a developed nation, creating an unprecedented situation. There is nothing with which a comparison could be made.

As to my conclusions, I was under no illusions that the WTO option was (and still is) a very dangerous and potentially expensive option which could do significant damage to the EU and UK, the effects of which could be long-lasting. The adverse effects of dropping out of the EU Treaties without an alternative agreement in place are so serious, I wrote, that this is not something any responsible person would want to consider.

Not leaving it there, I subsequently wrote many impact assessments, detailing the effects of a no-deal exit. And while there have been some modifications arising from temporary mitigating measures introduced by the European Commission, its Notices to Stakeholders still stand as testimony to the problems we confront.

Many of these have been revised since first publication and make for sombre reading. The latest version of the Notice on VAT rules, for instance, leaves readers under no illusions that leaving without a deal is very bad news.

Singling out VAT specifically is important as this is not a matter comprehensively covered by the Efta/EEA Agreement or the Swiss bilaterals. And, on the Swiss border, it is this issue which accounts for much of the trade friction and the lengthy queues.

Yet, despite these mere facts – and the huge amount of well-founded literature on the subject – buffoons such as Farage continue to pop out of the woodwork, spouting their rubbish. And not content with that, there is that ultimate insult, where they purport to represent leavers as a whole. Hammond is dead right there, accusing no-deal Brexit advocates of trying to "hijack" the referendum result.

Even then, it should not now be taking the Chancellor at this late stage to be warning of the dangers of a no-deal. The facts should be well-established, to the extent that the charlatans who continue to promote this as a viable option should be laughed out of court.

But this is not merely a matter for the opinion leaders. The information needed to come to a reasoned conclusion is readily available on the internet. For those who prefer to make up their own minds by referring to primary sources, these are also easy to get hold of.

When Booker and I started on this game, back in the early 90s, the internet was not fully developed and it could take us a week or more to get hold of a single copy of an EU directive, in hard copy format, for us to study. Researching The Great Deception was a nightmare, with most of the 1000-plus references having been obtained in document form, without recourse to the internet.

Nowadays, a huge amount of information is available at a touch of a button, with sophisticated search engines at our beck and call. There is really no excuse for falling into the Farage trap, buying into his brand of ignorance.

In this age of information, the individual can no longer claim that lack of information is an issue. Those who preach democracy must know that a functional democratic society requires an informed population, and the ease with which information is available brings a new responsibility. If you have an opinion, it should be your own - not one spoon-fed to you by a passing demagogue.

Those people who so uncritically slurp up Farage's rhetoric are responsible for their own ignorance. There is no retreat from this: they are part of the problem.






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