Some have asked whether Britain’s decision to leave the EU will affect the World Trade Organisation. And the answer is that, in perhaps the most important respect, nothing will change. Britain helped found the WTO, has been a leading supporter while in the EU, and is set to remain one of its leading supporters when we leave.
With a bit of poetic license Britain can claim to have invented free trade. 250 years ago the Scottish philosopher Adam Smith wrote that the market acted as an “invisible” hand, matching supply and demand. Later, David Ricardo developed the theory of comparative advantage, the idea that countries should specialise in exporting what they were good at, and import the rest from others who were better at making it.
Subsequent British economists told us it was not really as simple as that, most notably John Maynard Keynes. We’ve learned about public goods, natural monopolies, externalities and other ways in which the market fails. We’ve also learned that even when it does work, there are winners and losers, at least in the short run, and that, as Keynes said, in the long run we’re all dead.
Successive British governments over the decades – indeed, over the centuries – have found different answers to the reality that you can’t leave everything to the market. But the idea that we are more prosperous when we are more open to trade and investment with the world has endured the rise and fall of an empire, the Great Depression, and the total mobilisation of world war. It is an idea that is pretty certain to survive Brexit as well.
Prime Minister May has said that the UK will not invoke Article 50 this year. That’s the provision of the EU Treaty that launches our two year withdrawal process. Some worry that this delay will prolong damaging uncertainty. But rushing into such an important negotiation unprepared is not the best way to reassure people.
Following a visit to Scotland in her second day in the job, the Prime Minister said she wanted to reach a UK approach to the negotiation and objectives before triggering Article 50. She also plans to consult our European partners before doing so, given how important this will be for them as well, and visited Berlin and Paris in her first week. The UK won’t be going off half-cocked, but it won’t waste time either.
So what does this mean for the WTO, where I am the UK’s Permanent Representative? Well, until we leave the EU, the EU will continue to act on our behalf as it does for all the other Member States, and I and my team will continue to support them. There are important things to be done in the WTO over the next two years, including on e-commerce, and the UK will work hand in glove with our EU colleagues to achieve those objectives.
Despite the fact that the EU acts on our behalf in the WTO, the UK is a member in its own right. However, in leaving the EU, we will need to update the terms of our WTO membership where, at present, our commitments are applied through the EU as a whole. In doing so, we will be working with the EU and other WTO members to ensure a smooth transition. Our goal will be to minimise the disruption to our trading relationships with other WTO members, including developing countries and our closest trading partners.
The WTO is a foundation of the global economy. It upholds the rules that have allowed nations to trade with each other more than ever before. Hundreds of millions of people have been lifted out of poverty in the last few decades as a consequence.
Free trade alone is not a sufficient condition for a fair and prosperous society, as we can see from our own countries. But it is a necessary one. That is something the UK has (mostly) stood for throughout its history.
It will stand for it still.