IT HAS long been an article of faith for hard Brexiteers: there is nothing to fear from the World Trade Organisation. Many are suspicious of the compromises that a free-trade deal with the EU may entail, such as accepting its rules or even its courts. So why not just walk out and trade with the EU as other countries do, on WTO terms?
One answer is that Britain’s relationship with the EU is far more intimate than most countries’. The EU accounts for 43% of Britain’s goods exports and half its imports. In services, which make up 80% of British GDP and almost half of exports, the EU market is crucial. Theresa May has dismissed a Canada-style free-trade deal because it would mean “restriction on our mutual market access”. Shifting to WTO terms would be worse still.
It is also misleading to claim that the rest of the world trades with the EU on WTO terms. The Institute for Government, a think-tank in London, notes that all big countries have bilateral agreements on such trade-facilitating measures as customs…Continue reading