Brexit: Countries begin difficult talks on dividing up Britain's EU trade quotas

European Council give green-light to WTO talks

EU leaders have given the go-ahead to key talks at the World Trade Organisation (WTO) about Britain’s post-Brexit trade status.

The negotiations, green-lit by the European Council on Tuesday morning, will address the question of what proportion of EU trade quotas will belong to the UK after Brexit.

The question is likely to be fraught with controversy because countries around the world stand to lose and gain economically depending on how the quotas are split up.

Under international trade agreements, countries are often allocated export “quotas” by another country - which fixes an upper limit on how much product they are allowed to ship there.

The quotas usually apply to specific products and tend to be applied by countries to protect producers in their own country from competition – unfair or otherwise.

When the UK leaves the EU, countries need to work out what proportion of EU quotas – which were previously shared between the UK and 27 other countries as a single bloc – now belong to the UK.

The UK is very unlikely to simply take one 28th of the EU quotas, given it makes up a much larger proportion of the EU population and consumption. The UK also buys different goods at a different rate to other countries in the EU.

Countries from around the world are expected to use the WTO talks argue that the quotas should be split up in ways that work to their own advantage – to give their own economies an easy boost.

They might for instance argue for an interpretation that they believe will allow them to export more product overall, protect one of their industries, or which might block a competitor from gaining an advantage.

In theory this complicated political argument has to take place between the EU, UK, and every country they trade with, on every kind of product they trade with a quota.

The talks needed the go-ahead of the EU because until Britain leaves the bloc the European Commission is still its representative in overseas trade matters and the UK cannot negotiate trade deals by itself.

The European Council says the talks will be “conducted within a tight timeframe” but says if the withdrawal agreement is finalised then it will roll over its trade deals to apply to the UK until 31 December 2020.

The EU says it will unilaterally split up the quotas if the UK crashes out with no deal in March 2019 and the talks have not been complicated.

These new WTO talks are expected to run in parallel with the negotiations between Britain and the EU about the future relationship between the two countries. Theresa May travels to Brussels on Thursday for a meeting with EU leaders, where subjects including Brexit are expected to be discussed.

A government spokesperson said: “As we leave the EU we need to create a new UK goods schedule at the WTO, covering tariffs on our imports from other WTO members. We have engaged all WTO members, and they understand our intention to establish our goods schedule by rectification.

“As a part of the process, we also agreed an approach with the EU to apportion tariff rate quotas covering certain imported goods, based on historic trade flows, and wrote to WTO members on this last year. We are continuing to speak to them about next steps to secure an outcome which is fair and avoids disruption to existing trade.”