BRITAIN'S SECRET BREXIT WEAPON: UK can secure 10-year TARIFF-FREE trade if no EU deal

BRITAIN could carry on trading with the EU without any tariffs for 10 years if a free trade deal has not been reached after the Brexit negotiations.

Officials at the Department for International Trade are secretly exploring a little-known clause in the World Trade Organisation rules which would allow the UK to have a decade-long interim free trade arrangement with the EU, allowing more time for a bespoke deal to be stuck once Britain has left. 

The provision, set out in Article 24 of the WTO’s General Agreement on Tariffs and Trade, has been described as a “secret weapon” in Britain’s free trade negotiations with Europe. 

A worry has always been that Britain would not have any deal at the end of the two-year negotiation period, throwing trade rules into chaos. 

Theresa MayGETTY

Britain could have free trade with the EU for 10 years thanks to a little-know WTO clause

But a source at the department said the 10-year cushion meant Britain would never be in the “desperate position of having to accept any old deal because of the time constraints”. 

The source explained: “Many have asked what will happen if we reach a Brexit agreement with the EU but we haven’t finished the free trade agreement with Europe by the point we leave. 

“What we have discovered is that we do have special dispensation under WTO rules to continue our current trading relationship with the EU, which is zero tariffs, until such time as that free trade agreement is finished and the precedent that has been set is that we would have 10 years to do that.” 

The clause allows Britain, as a founder member of the WTO, to have a “reasonable amount of time” to agree a new free trade deal before trade law would force both sides to impose tariffs on each other. 

There’s a big global picture here and the EU can’t afford to disrupt that


The rules state that any interim agreement should “exceed 10 years only in exceptional cases”, suggesting Britain would have a decade to negotiate. 

A transitional deal will allay fears that the economy will nosedive in March 2019 when Theresa May is set to pull Britain out of the single market. 

In the absence of an immediate new free trade agreement, we could face steep EU tariffs on goods ranging from meat to cars. 

Brexit trade dealGETTY

Article 24 of the General Agreement on Tariffs and Trade has been described as a ‘secret weapon’

Although Remainers are likely to argue that a zero tariff deal is unlikely to be agreed by the remaining EU countries without significant concessions from the UK on budget contributions and free movement, trade officials are said to be “quietly confident” about exploiting the grace period. 

An insider said: “Of course it would require the agreement of both parties, but by not agreeing it the other EU member states would be imposing penalties on their own businesses, which is not a great idea. There’s a big global picture here and the EU can’t afford to disrupt that. 

“The Germans totally grasp it. In private, banking officials are saying of Brexit, ‘We think you probably did the right thing for you and in your case we would probably have done the same. We just don’t think you did the right thing for us, which is why we’re cross.’ 

“Where we need to take that next is to say, we understand why you’re cross, but there’s a lot of mutual benefit we could get if we stay in a very open, expansive trading relationship. 

“Deep down they know they’ll end up in a zero tariff trading arrangement, they just need to show they’re negotiating hard to get it. 

“Britain doesn’t want the EU to fail. We want the EU to be a stable, prosperous and secure partner because that would be good for us.” 

Brexit tradeGETTY

The 10-year period would allow time for a bespoke deal to be agreed

The source added that the mood in the City of London was positive, despite Remainers’ threats of an impending exodus to cities such as Paris and Frankfurt. 

“Companies are not going to move to Frankfurt, why would they?” the source said. 

“When CEOs ask why they should continue to invest in the UK, we say, ‘For the reasons you’ve always invested in the UK – a legal system you understand and our skilled workforce. 

“We have the most advanced professional infrastructure and nobody else in the world is going to replicate that in the next 20 years. Equally, nobody’s going to be able to replicate the reputation the Bank of England has as a regulator. 

Brexit trade dealGETTY

Protesters march against Brexit in London yesterday

“People across Europe are now saying, ‘If we harm the City of London we are just going to be harming ourselves because capital sits in New York, London, Hong Kong and Singapore, it doesn’t sit in Paris or Frankfurt. People will continue to come to London because they can make money. We speak English and we’re in the right time zone, which is why we have not lost a single investor. 

“When we think we might be getting close to losing one, we say, ‘So, you understand the German legal system?’ Or, ‘How many of your staff speak Portuguese?’ Or, ‘You trust Italian magistrates to protect your investments?’ by which point they have changed their mind about leaving London.” 

*Tens of thousands of protesters marched on Parliament yesterday to protest against Brexit.