Bryce Baschuk @bbaschuk
It starts ...
New Zealand Opposes U.K.'s @wto quota plan:
www.globalmeatnews.com/Article/2018/07/27/New-Zealand-opposes-EU-and-UK-s-quota-split-proposal
“Markets are dynamic, domestic production and consumer demand continues to evolve, and it is important for market stability that New Zealand’s sheepmeat and beef exporters are able to factor that into their marketing plans.”
“We are also absolutely confused by the timing of this proposal – given that the terms of the UK’s exit have yet to be negotiated between the UK and EU."
"Without clarity and details around the future trading relationship between the UK and EU, it is very difficult to assess the implications of their proposal. "
"It is therefore both illogical and unacceptable to be put in a position of having to negotiate an arbitrary split of our legally binding market access rights when there is so much uncertainty about the shape of the future trading relationship between the EU and the UK.”
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Dmitry Grozoubinski @DmitryOpines
1/ NZ blocks draft @WTO UK Goods schedule. This was inevitable.
To allow (not object, to) certification of the UK schedule would be to give up the right to legally challenge anything in it as a loss of market access.
Why did they do it and what does it mean?
2/ In their new draft schedules, the EU and UK are keeping tariff levels (%) unchanged. So what's the issue?
Quatas.
Instead of flat percentages, some of the more sensitive products for the EU had quotas, effectively only allowing a fixed volume into the EU.
3/ Quotas. Cool. So what?
Well, in their new schedule the UK and EU are splitting those quotas (both the ones open to everyone and those only specific other countries could use) based on where (UK or EU) the goods have recently been going.
4/ That sounds reasonable, why are NZ being jerks?
Australian answer: They can't help it, the bastards.
Real answer: Because NZ and others argue it's a reduction of access. If previously they could follow demand to anywhere in the EU 28, now they are locked in to past patterns.
5/ What?
So previously if you had access to a 1000 tonne EU pork quota, you could sell it all to UK one year, France the next or split it wherever the best price was.
Now NZ argues, they are locked into whatever they happened to sell in the three year reference being used.
6/ Oh. Anything else?
Well, as @DavidHenigUK has written the formula the UK and EU used has produced some bizarre and unusable quotas (1 tonne of Canada pork to the UK per annum).
The EU/UK have also admitted they don't actually know where stuff went so the numbers may be off.
7/ OK, I get that, what does it mean for the UK?
It's annoying but not apocalyptic.
Any WTO Member can block certification of a draft schedule forever, but the UK can trade just fine with an uncertified schedule.
8/ So a block is meaningless?
Not quite. An uncertified schedule means Members are still considering challenging the UK schedule in a WTO Dispute as a loss of access.
Thats stressful on its own, and the ambiguity could give others (slight) pause in opening FTA negotiations.
9/ I heard the UK and EU took different approaches to this?
The EU circulated its schedule as a notification of reduced access, basically inviting Members who felt wronged to come negotiate.
The UK plonked theirs down as a technical ratification, like they were fixing a typo.
10/ What's the difference?
Positioning. The EU is accepting the premise of those like NZ that tariff quota splitting could lead to a loss of access, and the UK isn't.
/Thread
David Henig @DavidHenigUK
More on agriculture at the WTO. Summary: The UK cannot be complacent about having a WTO basis for trade by March.
Surprised other media have not picked up - too technical?
John Alty @JohnAlty1
Some comment around about UK WTO TRQs. UK set out its approach to TRQ holders last October and has been in detailed discussions since. No surprises in reactions to our goods schedules @tradegovuk
Bryce Baschuk @bbaschuk
This is true - 7 major agricultural exporters told the UK & EU they disagreed with the proposed tariff rate quota split back in Sept. 2017
Letter here: bit.ly/2O0Eqtr
Countries: Argentina, Brazil, Canada, New Zealand, Thailand, the U.S., and Uruguay
What's changed since Sept. 2017 is the UK/EU quota split is no longer a proposal. The UK & EU have formally forged ahead with an approach that their biggest agricultural importers fundamentally disagree with
The EU recognizes that it must renegotiate w/ the WTO's other 136 members to address the loss of the UK market from its @wto schedule. That is why they are pursuing Article 28 renegotiations.
Link here: bit.ly/2LAlkfd
In contrast, the UK argues that this is a quick technical fix that won't harm their trading partners.
They are pursuing a 1980 @wto procedure known as technical rectification.
Link here: bit.ly/2v48I5R
Here's what happens next:
Over the next three months @wto members will likely raise their objections and seek negotiations with the EU & UK to address any perceived harm caused by the tariff rate quota split.
The EU & UK will then try to appease the concerns of any aggrieved exporters or face the potential for @wto dispute proceedings that could bring uncertainty to the legal foundation upon which they trade with the rest of the world.
To be sure, the UK could unilaterally implement its rectified @wto schedules & operate on an uncertified basis (for a while). Indeed, the EU has been trading on outdated schedules for years. UK negotiators could also appease any aggrieved parties via separate FTA negotiations.
But if @wto members trigger dispute settlement proceedings questioning the legality of the UK schedules and Britain loses the case it will throw the UK's entire trade status into uncertainty. At that point the UK may be called to to renegotiate its @wto schedules via Article 28.
Article 28 renegotiations involve a lengthy and laborious process where the UK negotiates w/ the @wto**'s other 136 members to accommodate any perceived loss of market access. The UK wants to avoid this, which is why they are pursuing the rectification approach in the first place.
If the UK's approach is dragged into @wto dispute proceedings it would put the UK in a weaker negotiating position with potential FTA partners. In addition, any prospective FTA partners might hold off on a new trade deal while the UK's fundamental @wto trade terms are in doubt.
^Some countries may calculate that if the UK loses the @wto dispute case the UK would have to renegotiate their basic trade terms via Article 28, and offer new concessions in return for @wto certification.
Why cut an FTA deal now when you can hold out for a better one later?^
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