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Explainer: what is Gatt 24 and will it fix Brexit chaos?

Ben Gartside
Reporter
Conservative party leadership candidate Boris Johnson. Photo: Ben Birchall/PA Wire/PA Images

Prominent brexiteers, such as Conservative leadership frontrunner Boris Johnson, have highlighted the General Agreement on Tariffs and Trade (Gatt) Article 24 as a solution to the Brexit impasse.

However, this has been hotly contested. International trade secretary Liam Fox debunked the claims in a recent article, fellow leadership rival Jeremy Hunt called Johnson’s claims of a solution “not true,” and Bank of England governor Mark Carney said the process would not work unilaterally.

What is Gatt Article 24?

Gatt Article 24 outlines the criteria by which the WTO organise favourable treatment either bilaterally or multilaterally between trading nations. It is a pathway for exemption from the concept of most favoured nation (MFN) which ensures equal treatment between all trading nations.

Gatt Article 24 says MFN can be suspended if it helps liberalise trade. Article 24 also outlines how equal treatment can be suspended - as a bilaterally agreed standstill agreement, while the schedule of a Free Trade Agreement or Customs Union Agreement between two parties is in the process of being finalised.

Could this be used to soften a hard Brexit?

This however, is not applicable to the UK-EU relationship. As the UK and EU already have a trade agreement, Article 24 is therefore not applicable as a deal between the UK and EU is not leading to further liberalisation of trade.

Article 24 cannot be used unilaterally - a schedule of implementation for a trade agreement between two parties must be agreed beforehand. At this point, Article 24 can be invoked in advance, and while the two parties are waiting for, the agreement coming into effect.

As this is being proposed by it’s proponents as a solution to ‘soften’ no deal, it is not therefore a method of avoiding the backstop, given the requirement for Article 24 to be agreed bilaterally between the UK and EU.

Gatt Article 24 has been designed specifically for parties who are in the process of liberalising trade between them and with a future trade agreement almost complete. The UK and EU are not liberalising trade between them, and Article 24 cannot exist as an alternate deal to the Withdrawal Agreement (WAB).

In comparison to the elaborate WAB, Article 24 only covers trade in goods. Even if you consider it a workable alternative to the WAB, the ability of it to ‘soften’ a no-deal Brexit is marginal at best.

The EU have already been abundantly clear they would not agree to any Article 24-based deal. EU trade commissioner Cecilia Malstrom told Reuters in June: “It is completely wrong...They will have to trade with us and other countries, until there are trade agreements - and we hope that will be a trade agreement - on the ‘most favoured nation’ basis. And that will mean new tariffs.”

International Trade Secretary Liam Fox’s former senior adviser David Henig noted that because of this, the EU would be unwilling to scrap the previously negotiated complex deal in favour of a basic tariff-free deal, as suggested by the supporters of a ‘Gatt Article 24’ exit.

In an oddly contradictory way, the UK already has a standstill agreement in between a deal and the status quo - the implementation period, which has drawn harsh criticism from many of the supporters of an ‘Article 24’ exit, despite the fact that they share many similar aims.

With complex solutions such as Article 24 falling flat, and the EU still willing to grant longer Article 50 extensions to the UK, it seems increasingly likely that the only way a no-deal Brexit can be obtained is via a general election and a manifesto commitment, which many Conservative MPs believe could spell disaster for their party.