Brexit

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Under a little-known WTO clause, the U.K. and Brussels would be allowed a “reasonable length of time” after Brexit to agree a free-trade deal before trade law would force both sides to impose the same tariffs on each other as they do on everybody else. Such a transitional deal would allay fears about an impending cliff edge in March 2019, when Britain is set to crash out of the single market and face the EU’s steep external tariffs on goods ranging from meat to cars. The provision, set out in Article 24 of the WTO’s General Agreement on Tariffs and Trade, can only be challenged by other countries if the temporary continuation of existing tariffs is not applied to all trade. This makes a special deal for finance or the car industry less likely as part of any interim arrangement. While a “zero-for-zero” interim tariff deal may be legally feasible according to the rule-book, it is also highly unlikely that the remaining EU 27 countries would agree to such an arrangement without significant concessions from the U.K. government on budget contributions and free movement of people. There is also no obligation under WTO rules for either side to agree to tariffs of zero.

Britain’s Brexit Plan B – POLITICO