Policy makers follow the WTO rule book
As a member of the World Trade Organisation (WTO) the UK will need to abide by a number of international rules affecting agricultural and trade policy when it exits the EU.
AHDB has explored the relevant issues within a recent Horizon report which can be accessed here. The report highlights a number of points that will be of relevance to the pork and wider agricultural sectors.
The WTO exists primarily to liberalise world trade, and provides a framework of rules to achieve this. Currently, the UK operates within a legally binding trade schedule which the EU has agreed with the WTO. This encompasses a common external tariff which effectively increases the cost of extra-EU imports, alongside a number of trade deals which give some countries more favourable access. In addition, there are a number of Tariff Rate Quotas (TRQs) which allow limited volumes of some products with no/lower tariffs.
When the UK leaves the EU it will submit its own trade schedule, and be able to decide the level of import tariffs. Initially, these will likely remain the same or possibly lower than EU tariffs, as WTO rules make raising tariffs difficult. How the existing TRQ’s will be divided between the UK and the EU will be subject to negotiation.
The UK and devolved governments will need to establish new domestic agricultural policies to replace the CAP post-Brexit. The WTO sets some constraints on how governments can support their farmers. Types of support are classified as Green, Blue and Amber Box measures, with Amber measures being limited. For this reason a large-scale return to schemes such as ‘Headage Payments’ is incredibly unlikely, as these are deemed trade-distorting.
In summary, WTO rules work to support and facilitate global trade. The UK will need to comply with WTO rules highlighted above for all trade, regardless of whether or not we have an FTA with the EU.
Sarah Baker, Senior Analyst
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