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I've read a few articles lately about Brexit (for example this one at The Guardian and this one at the BBC) that take it for granted that the tariffs and conditions set by the WTO would have to be enforced in the event of a no-deal Brexit.

I'm interested in what would happen if the UK Government decided to ignore those tariffs and conditions.

For example, the linked Guardian article claims that

At present crashing out of the customs union under WTO rules means there has to be a new border with the EU with customs checks. All planes, trains and lorries have to be certificated and checked for tariff liability and regulatory compliance

and the BBC article claims

Under WTO rules, after Brexit, cars would be taxed at 10% when they crossed the UK-EU border. And agricultural tariffs would be significantly higher, rising to an average of more than 35% for dairy products.

The specific numbers and claims themselves are not the focus of my question. What would happen if the UK Government left the EU with no deal, and also chose not to enforce WTO rules?

  • I'm not sure I understand your question. The UK can't really choose to "abide" or "not abide" by the rules that sovereign countries have about goods coming into their jurisdiction from the UK. Or do I misunderstand? The alternative to following the rules (as far as I understand what you're asking) is that goods don't leave the UK, or that the UK becomes the world's largest smuggling operation. – Jared Smith Jun 28 at 13:40
  • Most Favoured Nation is the WTO rule that causes the most "problems" for UK Trade relations following no deal. It is the one that means if the UK imposes no Tariff on imports from the EU, it cannot impose tariffs on any other import. Are you asking what would happen if the UK ignored this rule, and used different import tariffs for different countries in the absence of any Trade Agreements? – Jontia Jun 28 at 15:37
  • My question is inspired by the fact that the likely next prime minister of the UK appears to be campaigning with the policy that (essentially) "We won't meet our financial obligations". I was curious what would happen if this extended into other areas as well (particularly since the UK government seems paralysed on anything to do with Brexit), and I couldn't find anything by googling. – Player One Jun 28 at 23:42
  • The other factor is the future of the WTO itself, since the United States seems pretty intent on dismantling it. – zeroone Jun 30 at 18:27
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The UK government would be entitled to take these tariffs, but they are not obligated to take them. The customs checks on imported goods are the prerogative of the importing country. If the importing country decides that it doesn't want all that money, then that's their problem.

However, the EU would be able to enforce tariffs and import restrictions for goods imported from the UK. And that could turn out to be a problem for the UK economy.

The result would be that imports from the EU to the UK would stay as cheap as they are right now, while imports from the UK to the EU would be penalized by tariffs. This would put UK products at a disadvantage on the EU market. It would get a lot harder for UK companies to offer their goods and services at competitive prices. At the same time, the UK domestic market would still be a place where UK and EU goods compete on equal footing, so the UK companies could not expect to make up for the loss of business in the EU by selling more on the domestic market.

Also, there is another problem: The "Most favoured nation" rule of the WTO. This rule says that if the UK decides to not take tariffs from one country it hasn't got a trade agreement with, then it also has to not take tariffs from any other country. That means any non-EU countries would also need to be allowed to export their goods to the UK for free. So not only would cheap goods from the EU flood the UK market, so would goods from everywhere else in the world.

  • That "Most favoured nation" rule also applies to the EU. If the EU enforces tariffs on the UK, it also has to enforce them on the other countries it has no deal with. A quick search for facts revealed that 77 countries trade with the EU under WTO rules ( fullfact.org/europe/who-trades-eu-under-wto-rules ). Therefore, the EU cannot easily tariff the UK either. – Sjoerd Jun 28 at 23:22
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    @Sjoerd Which would be a problem if the EU wouldn't take tariffs from these countries. But they do. Like Russia, for example, which pays 10% import tariff on cars. The UK would need to pay the same. – Philipp Jun 28 at 23:35

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