What’s the Deal with Britain, the EU, and the WTO?

Analysis by Alex IRELAND

There is currently a lot of misinformation and confusion about how the UK’s membership of the EU affects its ability to negotiate trade deals, and especially its ability to do so in the World Trade Organisation (WTO). A lot of commentators claim that the UK has surrendered its place in the WTO to the EU, and is now either (depending on who one asks) mathematically underrepresented within the WTO or unable to exercise effective power over its trade negotiations. In fact, neither of these scenarios are the case. It is important to clarify this issue, because the economic impact of Brexit is one of the most influential factors in the debate, and trade negotiation issues are taking up an increasingly large portion of the pro-Brexit side’s argument (due in part to the ease with which it’s possible to misleadingly make the EU appear as a constraint on the UK’s sovereignty in this context).

Currently, the UK has its own membership of the WTO, as well as being additionally represented by a separate EU membership which is shared by all EU member states. This means that, technically speaking, the UK is mathematically represented more than all other WTO members except fellow EU member states. It also means that the UK is technically free to negotiate in the WTO both as a sole country separate from the EU, and as the EU.

In reality, the UK does not exercise its sole membership of the WTO, and instead (like all other EU member states) negotiates within the WTO solely through the EU’s membership after having agreed positions with the other EU member states. It is because of this fact that many commentators claim that Britain has a mathematically reduced voice within the WTO, or would gain greater control of its WTO trade negotiations if no longer politically constrained to negotiate through the EU representative. However, neither of these arguments stand up to a more detailed look at how WTO negotiations are carried out.

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United Kingdom representation at the 10th WTO Ministerial Conference in 2015 – ©WTO, licensed under CC BY-SA 2.0

To begin with, the WTO makes decisions based on consensus instead of counting votes. This means that the number of ‘votes’ that Britain controls in the WTO – effectively 1/28 of a vote – is not relevant to the amount of power that Britain can wield. Whilst other states may be negotiating with only a single EU member, rather than a physical group of 28 European country members, they are well aware of the power behind the EU representative. Theoretically, Britain’s part in the EU representative adds as much power as Britain would have had alone, and Britain has as much influence over the EU representative as Britain is due, so – all other things being equal – Britain does not lose any influence.  In fact, there is some cause to believe that the influence of the EU acting together is greater than the sum of its parts, and also some evidence to suggest that the UK may have disproportionate influence within the EU. At any rate – whether or not this is the case – the EU’s effect upon the UK’s level of power in WTO is far from the dramatic picture that some pro-Brexit commentators allege.

The consensus-based model of decision-making has extra implications for Britain’s place in the WTO, and for how Britain’s membership of the EU affects this. The difficulty of creating agreements across the (currently) 162 member states means that coalitions are a necessary part of negotiations, and a number of highly formalised and institutionalised coalitions now exist. Britain’s membership of the EU, and its participation in the WTO via the EU membership, is best viewed as simply one of the many coalitions that populate the WTO. The fact that the more active coalitions in the WTO (such as the G-33, Least-developed Countries Group, and Cairns Group) are formalised is especially important, because it means that the permanence and formality of the EU ‘coalition’ is not necessarily more constraining than any other – and any other that the UK may join in a post-Brexit scenario. For example, the Cairns Group (a coalition of 19 agricultural exporting nations) possesses an official vision statement, and has been holding regular ministerial meetings to decide policy since 1986.

The only difference is that other countries are still able to switch coalitions, whereas the UK is bound – at least by political realities – to its EU ‘coalition’. But there is strong reason not to be too disturbed by this. To begin with, other countries may find themselves realistically bound to their coalitions by less official – but no less real – political pressures. It is likely that the UK, if it left the EU, would still find its choices of allies and coalitions in the WTO relatively limited. Due to similarities in aims and ideology, it is likely that the UK would stay in some form of coalition with the rest of the EU anyway, and face little need to deviate away from this. This begs the question of what exactly would be gained in this scenario by leaving the EU, and would probably only achieve a lessening of the UK’s influence amongst its EU member state partners in the WTO.

In contrast to the claims of some commentators, there is very little for the UK to gain within the WTO by leaving the EU. The UK is already fairly and adequately represented in the WTO according to its economic and political power. Leaving the EU would allow the UK greater political freedom to choose which coalitions to associate with in the WTO, but this is not a need presently required or anticipated to be required in the future. Due to the natural similarity of the UK’s position with that of other EU member states, it is likely that the UK would continue to act much as it has done already – simply alongside the EU’s official member to the WTO, instead of as part of it – and with all the associated risks of lessened influence that this entails.

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