Speaking at the UK’s Institute for Government, Pascal Lamy, the former head of the World Trade Organisation said that Brexit will be costly for both sides and that concluding a trade deal could take five to six years.
Comparing the Brexit process to removing an egg from an omelette, Mr Lamy predicted that the signing of a trade deal between the UK and the EU 27 would be relatively easy compared to “really very complicated” issues surrounding intellectual property, anti-dumping measures, public procurement and the UK’s contribution to European research and development programmes.
« Whatever deal we succeed in making, and I am pitching for the best deal, the most open, the most simple, the most efficient and the most pragmatic, the greatest deal we can have, is going to be complex and costly”, said Mr Lamy.
“In trade terms – just to take this example – there is no way switching from the internal market to any other regime, [won’t] be costly.
“If you need a passport for your goods, you need a person to rubber stamp that passport – this has a cost.”
British Prime Minister Theresa May is expected to trigger Article 50 of the Lisbon Treaty before the end of the month, from which point the negotiating parties have two years to conclude the divorce proceedings. Ms May has repeatedly stated her intention to finalise a new trade deal with the EU in the same two-year time frame.
In the absence of an agreement after this time trade between the UK and the EU would revert to WTO rules and tariffs.
When asked how long he thought it would take to complete the trade agreement, Mr Lamy said that it would take five to six years and that a transitional deal would need to be put in place covering the time from the end of the Brexit negotiations to the conclusion of a comprehensive new trade pact.
Mr Lamy poured cold water on the assertion made by some in the pro-Brexit camp that reverting to WTO rules would result in savings and rejected Ms May’s claim that no deal would be better than a bad deal.
“Let’s assume … these two years lapse with (no) agreement. The UK starts trading with everybody and the European Union on the WTO terms. That’s worse than a bilateral agreement, by definition. If we sign a bilateral agreement it’s because they are better than the multilateral (lowest) common denominator, so anything that does not have an agreement will be more costly.”