The WTO vs. Free Trade Agreements: Why the UK Needs Trade Deals After Brexit
One of the central questions following the UK's departure from the European Union is: does the country really need to engage in trade deals with other nations, or is the World Trade Organization (WTO) sufficient?
Breaking Down the WTO
The WTO, while a foundational framework for international trade, is not without its weaknesses. Critics argue that it is outdated and unfairly biased in favor of certain trading partners. Specifically, the WTO allows countries to make exceptions and have favored trading partners, which undermines its objective of fostering a fair international trading system. This practice can be seen as a form of extortion where one partner benefits at the expense of another.
Why Trade Deals Are Necessary
The very idea of a free trade agreement is a contradiction because a free trade agreement inherently requires exceptions to be made and favored trading partners to be identified. These exceptions can be harmful and discriminatory, making the overall system less fair and transparent.
The UK's ability to conduct trade as it wishes, as opposed to the restrictive regulations of the EU, makes trade deals vital. Currently, the UK is bound by EU regulation, limiting its flexibility in setting trade regulations that suit both parties. Once the UK leaves the EU, it will be able to negotiate terms that are more favorable and aligned with its national interests.
UK's Strategic Position
Key to the UK's position post-Brexit is its commitment to maintaining a border-free relationship with Ireland. Given that Ireland is an EU member, the UK cannot maintain a hard border without breaching EU rules. This strategic position puts the EU in a politically difficult situation, as enforcing a hard border would be highly unpopular. Therefore, it is anticipated that the EU will eventually agree to terms that allow the UK to maintain a soft border, which would facilitate trade.
Obstacles and Workarounds
One potential obstacle to the UK's trade deals is the US's stance on the matter. Nancy Pelosi's reluctance to negotiate a trade deal with the UK if a hard border with Ireland is maintained is a significant concern. However, Pelosi's power might be negated by the upcoming US election, and the Democrats' control over the House of Representatives.
In the short term, the UK has several options to circumvent legislative obstacles. For instance, the USDA's recent bypassing of Congress to provide emergency aid to farmers highlights how government agencies can navigate such issues. The UK could utilize similar mechanisms to compensate industries affected by tariffs on UK imports, ensuring a smoother transition to new trade agreements.
Conclusion
The UK's journey post-Brexit is not about relinquishing its trading power but embracing a more strategic and flexible approach. The WTO, while a necessary framework, is not sufficient for the UK's complex trade landscape. By negotiating trade deals, the UK can secure its sovereignty and maintain its standing in the global economy, ensuring a fair and advantageous trading environment for all involved.