Brexit's cliff edge: 'business as usual' not an option
By Tom Miles
GENEVA (Reuters) - Failure to strike a trade deal with the European Union by a two-year deadline would force Britain to adopt World Trade Organization arrangements, bringing with it a host of new negotiations and complications.
In a nutshell, Britain would have to treat everyone the same, whether it wanted to or not, from Russian exporters to Brazilian lawyers and U.S. advertising firms. And that includes its former colleagues, suppliers and clients in the EU.
The British government sees the WTO as a default fall-back position if it cannot forge a new deal with the EU that would allow business ties to continue. But time is short, the negotiations are complex, and Prime Minister Theresa May has said no deal would be better than a bad deal.
Adopting WTO rules, however, would open a whole new range of complexities.
For one thing, countries now at a relative distance like China, Russia and India would suddenly be able to take legal action -- with a threat of sanctions -- should Britain allow some of its firms to keep trading with the EU as they have been.
There would be a legal free-for-all, although the open skies deals underlying aviation between Britain and the continent would have vanished, while the lawyers trying to sort it out might encounter unaccustomed restrictions on their right to work seamlessly across the European continent.
The prime reason is that without a new EU trade deal, Britain would not be allowed to be more open to the EU than it is to other World Trade Organization members.
The WTO's "most favoured nation" principle means offering the same deal to all comers, not only in terms of tariffs on imported goods but also in cross-border services such as insurance, telecoms, engineering and transport. Continued...