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If the UK leaves the EU without an EU deal, then I thought UK trade would happen on WTO terms. If this is incorrect, on what terms would trade occur?

Is it correct to say that WTO-based trade cannot happen until the UK WTO trade schedules are agreed by all WTO members?

If so, is it correct to say that the UK can continue to trade using draft or uncertified schedules while final terms are agreed?

Is there a provision for a transitional period to accommodate the a state changing its WTO legal interface? eg. Article 24 WTO GATT?

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    I am not familiar enough with the matter to give a full answer. This Reuters article may be of interest; specific quote from the article: "Until now the EU has represented Britain at the WTO, and Britain’s membership rights were not set out distinctly, even though Britain was always a WTO member in its own right. Its June 2016 decision to leave the EU meant disentangling their trade rules to allow Britain to act independently." – JJJ Aug 14 '18 at 10:06
  • Thank you. A side question: is there a “legal framework” within which a state conducts international trade even if it is not yet a WTO member with ratified schedules? – 52d6c6af Aug 14 '18 at 10:11
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    Also of note, EU itself needs to re-negotiate some stuff (TRQs -- tariff rate quotas) "with relevant WTO members" consilium.europa.eu/en/press/press-releases/2018/06/26/… – SX welcomes ageist gossip Aug 14 '18 at 10:23
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Back in 2016 the director-general of WTO said:

Britain is a member of the WTO and will continue to be a member of the WTO. But it will be a member with no country-specific commitments. We have had no other situation like that.

Regarding schedules, apparently temp-schedules might be possible:

The Institute for Government (IFG) has argued that the UK could trade under new draft schedules before they were certified. The IFG suggested that:

At some point the UK will want to certify its schedules, requiring the consensus of all WTO members. But the certification process does not pose an immediate threat to the UK’s ability to trade post-Brexit. We can trade without certification.

The IFG has argued that a possible medium or long-term challenge to the UK is the possibility that other WTO members might contest the UK’s schedules. While this could be “lengthy and expensive for the UK to contest” the IFG has observed that disputes usually take several years to resolve and are not “an immediate threat to our post-Brexit trading arrangements”. However, the IFG suggested that the UK could face opposition if it moved to certify its schedules:

Other countries’ willingness to certify the UK’s schedules will be driven by several different factors. Countries which have recently joined the WTO have had to place tougher limits on tariffs than the UK currently does as an EU member. For example, Russia had to limit itself to a 6.5 percent agricultural tariff, whereas the EU sets higher tariffs on most agricultural goods. Countries like Russia may not be content to see the UK get a more favourable deal than they achieved.

However, on July 24, the UK submitted draft schedules just for goods. As far as I know, the WTO has yet to give any official reply to these, but they have 3 months to do that:

Members will now have a three-month period to review the schedule that has been put forward for certification.

Keep in mind that WTO also contains a GATS agreement on services. GATS is far more patchy, i.e. it excludes air and broadcast services, areas in which UK has interests, especially with the EU. And a GATS schedule hasn't been submitted as far as I know, presumably hoping for a direct deal with the EU.

But in June, the UK has applied to join the WTO GPA, which is a smaller-scale agreement on government procurement; and on this there seems be less friction:

Staying in the WTO is potentially important so that British companies can still bid for government work in the United States, European Union and Japan. Britain is a member of the agreement now only by virtue of its EU membership.

In letters published by the WTO on Tuesday, the EU and British ambassadors said Britain would make an offer on the degree to which it was willing to open its own procurement markets in return for continued membership.

The 46 countries in the agreement have liberalised access to each other’s markets, with an estimated $1.7 trillion annual spend. China is hoping to join, which could add a further incentive for membership. [...]

British hopes for a smooth transition at the WTO have already been dashed by disagreement in agriculture, where major suppliers are unhappy with losing the flexibility they have enjoyed with the EU as one market of 28 countries.

European Trade Commissioner Cecilia Malmstrom told Reuters in Geneva on Monday that the agriculture question was still unresolved.

“There is no progress on agreeing the terms of Brexit (at the WTO),” she said.

I don't know if the UK submission in July means this disagreement on agriculture has been resolved in principle, or if the UK submitted schedules anyway. The news about the July submission are pretty elliptic, other than noting it was a 719-page document... and that

Britain has been laying the groundwork for this step for more than a year, and it sent an informal proposal in October, followed by a proposal for services trade in February.

Here is more background into why this 719-page document was submitted by the UK (basically opposition by Argentina etc. to simply splitting the quotas with EU based on historical averages, as initially proposed):

On 26 September 2017 a letter was sent to the UK and EU Ambassadors to the WTO by their counterparts from Argentina, Brazil, Canada, New Zealand, Thailand, USA and Uruguay. Regarding initial conversations about establishing UK specific WTO schedules, the letter stated:

“We are aware of media reports suggesting the possibility of a bilateral agreement between the United Kingdom and the European Union 27 countries about splitting Tariff Rate Quotas (TRQs) based on historical averages. We would like to record that such an outcome would not be consistent with the principle of leaving other World Trade Organization Members no worse off, nor fully honour the existing TRQ access commitments. Thus, we cannot accept such an agreement.”

The UK’s first international trade negotiation since joining the EU in 1973 had commenced. For the avoidance of doubt the letter [...] also stated that:

“The modification of these TRQ access arrangements cannot credibly be achieved through a technical rectification. None of these arrangements should be modified without our agreement.” [...]

The EU realised that an approach based on simply asserting the split of TRQs would not work, and as reported on 25 April 2018, proposed a full renegotiation, based on WTO Article 28, for their schedules This was approved by Member States in June 2018. The UK Government has said it may follow suit if required for some TRQs, but asserting our new schedules remains the main plan. Secretary of State Liam Fox said recently that the EU reducing their TRQ requires a negotiation, but this is not required for the UK. Contrary to what he suggested, major agricultural countries remain opposed, and this is likely to mean a full negotiation. The UK submitted schedules to the WTO Secretariat on July 19, as the first step in the process.

(Also countries not signing that letter have raised objections too, e.g. Australia did.)

So it's still unclear what the UK's 719-page proposal actually is in terms of level of [re]negotiation...

What is a bit clearer is the reason why all those countries opposed the TRQ split:

exporting countries see a TRQ split as removing the flexibility to export to either UK or EU, and then potentially see produce distributed around the EU. Existing supply chains frequently use the EU mainland as a route to the UK market. There is no data available on how much produce originally imported to the EU27 then enters the UK in this way, but it is known that there are importers who rely on this channel. Their ability to source agricultural produce in the future could be at risk under [TRQ-split] plans. All of this is sufficient for exporting countries to have legal grounds to object to the new UK schedules, particularly as the future EU-UK trading relationship is uncertain.

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